All right. Hey, everyone. Welcome to Jefferies Global Healthcare Conference. My name is Roger Song, Senior Analyst cover SMID-cap biotech. It is my great pleasure to have the next fireside chat with Protagonist Therapeutics. We have a CEO, Dinesh Patel. Hey, Dinesh. Well, thank you for inviting us. It's a pleasure to be here. Excellent. I have to say, Protagonist is in a very enviable position in the entire biotech world. You have a significant royalty stream from your great partnership with PhRMA, and you have one of the most exciting pipelines based on your peptide platform. Maybe, Dinesh, take a moment. Soak it in, and then say, okay, what is the state of R for Protagonist at this moment, and what excites you the most for the company? Yeah, I think we had our humble beginnings all the way back in 2008. We have come a long way. In a way, we can also claim to be a company with a commercial presence with the approval of ICOTYDE that is partnered with J&J, and with rusfertide, partnered with Takeda. The PDUFA date is in the third quarter, that gets us qualified, I guess, in the commercial space, so to speak. At the other extreme, we have a very thriving R&D engine. The genesis of all that is our proprietary peptide technology platform and our expertise. One distinction I would make is I would like to make a claim that the probability of success at Protagonist in its R&D programs is probably significantly higher in comparison to what the industry norms may be for a biotech company. There are two reasons for making that statement. One is that if you looked at our targets, we are working on biological targets and pathways that are already validated largely by injectable antibody drugs. That kind of takes away some component of the biology risk that is usually associated in new undertakings. The second is our approach has been validated now with one commercial drug, one under priority review. Hopefully, it will get into commercial in Q3 as well, that sort of thing. Those two components de-risk us, and then on top of that, we have a very strong financial position. It's fair to say that we can fund all of our R&D programs to clinical proof of concept. It's pretty clear that we are not going to dilute our shareholders with the financing in the foreseeable future. If at all anything, we may be concentrating their positions potentially through share buyback programs by the end of the year and assuming rusfertide also gets approved in Q3. Dinesh, you've been humble. I think you've made quite a few very exciting statements on both commercial, and then the pipeline, and then the financial. This is basically the key thing for all the biotech at your stage. Let's maybe zoom in for your most exciting commercial product, ICOTYDE, which is partnered with J&J. J&J in the last earning call, they basically say ICOTYDE will be one of the, if not the most kind of exciting, the biggest product they ever had, ever for J&J. That puts us think about $10 billion even are kind of a starting point. Maybe tell us, based on your communication with J&J, it's been a long kind of gray partnership. How much you think J&J has really put the effort into this program, and then how much you can share with us the relationship with J&J at this point? First things first. J&J is an outstanding partner. It's like for a biotech company, partnership with J&J is like a dream come true. Of course, then the biotech has to deliver, which in case we did with ICOTYDE. To just offer a perspective, we have been working with J&J since 2013, at least. Our Series B of financing when we were a private company was led by JJDC, the investment arm of J&J. It worked out well for them. They have close to 4% ownership of the company, especially since they haven't sold a single share. It's a win-win. To their credit, it took a few years for both parties to ink a deal in 2017. They have constantly been supportive, and the division of labor typically has been we discover, we do preclinical, we do phase I studies, and then we hand it off to them. ICOTYDE is the outcome of a joint effort between both companies and getting it approved. In a way, this is just the beginning. It has been approved for psoriasis, if you look at the history of successful IL-23 blockers, Skyrizi, TREMFYA, Stelara, they are approved in all four indications, psoriasis, psoriatic arthritis, UC, and Crohn's. As you know, ICO is being studied in phase III studies in the other three indications also. I think this is a product that is going to get bigger and broader each year. Of course, J&J, their executives, including the CEO, they have been very vocal in their excitement about ICOTYDE. This could be their largest drug ever, and very rightfully so. Yeah. We came back from AAD. I have to say, J&J made the biggest splash they have ever made for ICOTYDE and then the unicorn sign there. That's right. It is a unicorn, right? Yeah. It's a bigger unicorn. Maybe just ask some pointed question. Everyone going to look at the script, I know we've been tracking this. I think so far it's not reflected in the third party, IQVIA or Symphony yet. J&J vocal about how many script prescription they already prescribed, I think 1,500 something. How should we think about those number reconcile with the database we have seen? That's number one question. Number two i s, how Protagonist will start to reporting those royalty or the sales and then as the quarters come? Yeah, I think both are very relevant and excellent questions. What I would say is, right now these are the early days, so you can anticipate at least an order of magnitude discrepancy between what you will pick up from IQVIA and Symphony of the world versus what the real data may be. Let me give you a granular example. If you recall, ICOTYDE was launched on or approved on St. Patrick's Day, March 17th. J&J had their earnings call on April 14th, where they said, "Oh, more than 1,500 scripts have been written, filled, and from more than 1,000 prescribers." Two, three days later, when we looked at the Symphony number, that was like 58. That's a 25-fold difference. I don't want to get too granular with these numbers, but J&J most likely should be working its way through specialty hubs and that sort of thing. Right now, it's the stage of establishing the presence and the market and that kind of thing. That will continue, but of course, J&J will report the updates during their quarterly earnings. Eventually at some stage, whether it's for Q2 or Q3, time will tell, but we will have to start reporting. Separate line. A separate revenue line from the royalty income generation. Right? Most likely what we'll be doing is we will report based on what our earn-out is going to be for a particular quarter from J&J. Right? Usually it takes one and a half, two months for the actual money to come into the bank, so to speak. Yeah. Basically, the rev rack will, along with the J&J, because usually J&J typically is the first reporting for the pharma side. Right. After that, when you report, you will recognize that revenue, but the money going to come in a month or a month and a half afterwards. Exactly. Right. Exactly. Right. Got it. Okay. Oh, that's exciting. By the way, we took a look at the consensus number for J&J for the ICOTYDE, as well as Protagonist for the royalty. I think the street is still in the value, particularly for the long term, the peak or the hype and growth, I think still way undervalued the revenue J&J can make if they think it's the biggest product. Unless they think J&J biggest product only $3 billion, $5 billion, this is not the case. Also Protagonist as well. Right. Yeah. We are very patient. The data will speak for itself, whether it's scientific data or financial data. Eventually, it all settles down. You may recall, Roger, actually, I think it was three earnings call ago that J&J and typically pharma will be conservative by nature, but over here, they did mention that their own forecast, and this is three quarters ago, I think, for ICO, for 2027 was $1.4 billion, which is twice of what the consensus analyst estimate was around $700 million. Yeah. This is before the drug was approved. Yep. That's right. I remember J&J call, I even count the question that they got asked about the ICOTYDE last quarter. Among the pharma side, maybe 80% of the question is related to ICOTYDE, which is very humble too. Yeah. In their own words, I think recently they were asked about what is most underestimated in their pipeline, in the J&J pipeline. ICO was one of the three products that was mentioned. Yep. In that context. Because see, ICO is incredibly proven and safe mechanism. IL-23. For chronic indications treatment, safety comes first. It's all about safety. We have that in the bag, and these are early days, and things are just going to ramp up. Yeah, no. Also, the oral component, J&J has done extensive market research. They believe that potentially more than 70% of the patients could switch from injectable to oral if a good option was available. We believe ICO is a great option. About half of the I&I population that is actually eligible for targeted therapy is sitting on the sidelines. Yeah. They don't like the current options of injectables or whatever options are available in the oral. They truly have an opportunity to create a new market out of ICOTYDE. Yeah, totally. By the way, no, psoriasis is just the first indication, but I think the label looks squeaky clean in terms of safety. No need for TB screening. Yeah. I mean, can you believe that? Yeah. That's about as good as it gets. Yeah. Yeah. That's right. We saw a special panel at the AAD this year. They literally talk about the TB testing and why they still need to get there. A lot of physicians still think it's very onerous to have that monitoring or requirement. Okay, good. I remember, Dinesh, we used to spend majority of the time talking about ICOTYDE. I want to move on from here. I want to talk about your pipeline. That's right. But before we. There is a limit to basking in the glory of achievements from the past, right? Let's look forward to the future. Let's look forward. Before we talk about your pipeline, for sure, but I don't want to lose sight of the rusfertide because it is getting priority review. I was there the plenary session last ASCO and then a lot of the assessment there. How you think about this opt-out decision, and then what does that mean to Protagonist, you think for rusfertide? Yeah, no, I think, look, it's a very interesting situation. I mean, the rusfertide phase III data, we couldn't have asked for better data, and especially scoring on the secondary endpoints of symptom improvements. As you know, at EHA now, we are presenting four different posters. We'll encourage the interested parties to pay attention to that as well. With rusfertide, we have priority review. The PDUFA date is in Q3, so everything is lined up. Now for us, it was a question of, until recently, it was a 50/50 co-development, co-commercialization partnership. Of course, right from the get-go, even when we inked the partnership in January of 2024, Takeda was always interested in an outright license. A provision was made wherein they are like, "You will have the option of opting out at some junction, and we will make that component very attractive." They were right. Net-net, we decided to opt out. Let me offer some granularity around that. By opting out, what we are achieving is $400 million as opt-out fee in total, and then an extra $25 million in the FDA approval kind of milestone. It's a scenario of a total of $425 million. If we instead opted in, what it meant, in a way, was I am investing an extra $425 million in rusfertide, and if I opted out, I'm taking that money and saying, "Well, I have invested enough in rusfertide. Now let Takeda take charge," and we could be investing that money into our pipeline of the future. That is what we have done. The other way to look at it is, this is going to be a new drug launch, initially, if it was a 50/50 profit-loss thing, for the first quarter or two, whether we are participating in loss or breaking even, whatever that kind of thing. We are devoid of all that drama. Our earnings are just based on 14%-29% cut of the revenue, right? Let's say after a few years, this becomes a big product. At that time, are we going to regret that we opted out? The answer is absolutely not, because as you know, we have 29% royalty cut for things that are over $1.5 billion, right? This is 29% of net revenues, it's significantly higher numbers in terms of net profits and that kind of stuff. I think it's a win-win situation for both parties. Takeda is very attentive to this drug. This is one of the three major drugs in their pipeline. They are an incredibly talented company. They were the ones who brought ENTYVIO to the IBD community. ENTYVIO is one of the safest drugs. This is a company that very much knows what they are doing. We are in good hands. rusfertide is in great hands with Takeda. Absolutely. I think the number definitely validate this deal or the opt-out option is very attractive, right? 29% royalty. You don't spend a penny. I think that's probably the highest royalty rate I have been modeling for. Yeah. It's a good arrangement. Yeah. Okay, good. All right. We do want to spend the rest of the time on your pipeline. You have a lot, right? Based on the platform, you have IL-17, you have the obesity franchise, leading by the triple G, and then you do have the oral hepcidin. You announced a couple of new targets. Maybe spend more on the IL-17, because this is a more near term, right? You will make a decision if how you want to move into the phase II, mid-year this year or third quarter in the coming months. What are the key profile or what are the target profile. Right. You are looking at before you move into phase II? How should we think about the phase II strategy from here? With the oral IL-17 approach, we have the advantage that this is a pathway that has been proven and established by amazing antibody injectable drugs like BIMZELX and COSENTYX, right? Based on the performance of those antibodies, we have a good understanding of, hey, what is the level of inhibition of the target that one would want to achieve to drive it down to good efficacy levels? In our phase I studies, it's a pretty comprehensive phase I study. We have more than 100 healthy volunteers in the study. We are studying all aspects of our drug, but the idea is to develop a full understanding of the drug levels and the best forms of oral delivery at the end of phase I study, which will be in Q3. Our benchmark is drug levels, exposure levels, especially the trough levels at 24 hours, because ideally we want a once-a-day pill kind of thing. The benchmark is going to be the EC50, EC90 levels of the drug. That's what will guide us. In terms of what we would announce is, we will announce a decision of go or no go after reviewing the phase I results. If it's a go, there are two scenarios. It's like one could be where we may say, "Oh, we will do a quick single-dose or the high-dose proof of concept study." We may say we are doing a comprehensive phase II study planning for success so that at the end of the phase II study, we get a very good idea of the dosing regimen that we can take directly into a phase III study. I would say stay tuned. Third quarter is not that far away. Yeah. I think that's very helpful because you've been saying, you'll be guiding, you may not give us the phase I data right away as you disclose the next update, but you also say how you design phase II may signal what kind of profile you're seeing. Maybe just the level of disclosure we're going to see regarding the IL-17, would you give us the signal on the phase II strategy there when you do that, or it's just a simple go, no go decision at that point? I think there will be enough that we will share so that the folks like you and others will at least get a good understanding of what we, Protagonist, are thinking of our phase I data. All right. We stay tuned. I know you're still finalizing it. Just give you a sense, what we try to looking at, we want to get enough comfort or confidence that you will do a move into the phase II. In terms of the benchmark, we have the biologic side and A and F, also we know small molecule in the earlier stage seems to have some hiccup. What is your benchmark in terms of the I think you mentioned that C trough and exposure, the QD, the EC50 and EC90. Any specifics you're looking for compared to the other approach? I would say it's all of the above, see, one thing that's in our favor also is ours is an oral peptide with activity both against A and F isoforms. The small molecules generally have struggled in terms of activity against the F isoform. Bimzelx has made it very clear that it's very desirable to have activity against the FF isoform also. Peptides in general are going to bring more specificity and potency against the biological target, right? That's a big plus in comparison to the small molecules in general. I think we are well set. Like I said, our phase I is going to be very data rich. That's how it has been designed. There will be a lot of learnings from that, which will influence how we go about our phase II study. Great. Then just the last question about the IL-17 is, I understand you can decide to either do a proof of concept or do a full-blown dose ranging for phase II. How should we think about the indication and then the overall clinical strategy by frequency and then the patient population? Yeah, I think so. With IL-17 blockers, you are going to go for indications such as psoriasis and HS and spondyloarthritis, that kind of thing. I think for every drug, psoriasis has been the first indication that has been evaluated, and very rightfully so. The way we are looking at it is if we go into a phase II study, of course it will be a placebo control study, things like that. I think even by looking at the blinded data, one could start guessing about the potential performance of the drug, that sort of thing. The sequence is going to be let's do the phase II psoriasis study first, and if that looks promising, then we will be very aggressive in pursuing other indications very, very quickly. Fortunately, we are not a company that has to announce positive phase II results and then go out and raise money. We can just say we are good and we go aggressively with the other indications without wasting any time. Okay. All right. I don't know about the other side, how they think, but I like it. From a research perspective. Okay, good. Maybe let's move on to the obesity franchise. It seems you picked a winner because when I saw the reta phase III top-line data, I think, "Oh, yeah, that seems to be very promising." Not saying they will take the entire market, but at least the profile looks very strong. You have your triple G. Maybe tell us how you designed the program, how you compare to retatrutide, Lilly's drug, and then what's the clinical strategy from there? I think in the obesity space, there are two extremes or two ways to look at it. One is the two major approved drugs, Wegovy and Zepbound. They are injectable peptides, although Wegovy is now available as an oral as well. What got our attention is, hey, these are injectable peptides. Our expertise is oral peptides, we have to be in this area. Obviously, the area is very crowded, and in a way, one could say, hey, you guys are latecomers, which we may be. We really, right from the get-go, had a very strong emphasis on the differentiation part, right? We wouldn't work just on an oral GLP. In fact, what we did is we went to the KOLs and basically said, "What is on your wish list?" It's like, "What would be a dream come true kind of scenario for you?" Everybody mentioned oral triple G. as the first choice. The second ask was, "Can you work around amylin, come up with an oral amylin polyagonist?" That sort of thing. We focused on the oral triple G, but right from the get-go, we also decided that this is going to be a portfolio play in its own right. We are working on multiple different targets in the obesity space, and see the scope and opportunity is just so huge over here. Especially if you blend in the comorbidities angle, then the scope becomes even bigger than ever before. I think our approach of working on multiple kinds of modalities and different kinds of targets, coming up with multiple assets, it's going to be very useful down the road and very attractive. The other beautiful thing over here, I cannot emphasize this enough, in phase I itself, by enrolling healthy volunteers with a higher BMI, there is a good chance that you will start picking up on the clinical proof of concept, right? Whether your drug is achieving weight loss or not, that you will start getting preliminary signals about it. We believe it's a very exciting chapter in the history of Protagonist. You are absolutely right. We believe that the injectable triple G retatrutide from Eli Lilly is going to be an outstanding drug. Their recent data is just fantastic. Our advantage will be we will be both subQ as well as oral. That was another thing we decided based on the KOL feedbacks. It was like, "Hey, for some patients, for some portions of time, a subQ may be desirable." I'm like, "I'm not even going to entertain this debate of oral versus subQ. Let's do both. Both. It's easy enough to do both." There is a very specific advantage of having the same drug substance, both as a subQ as well as oral, right? If you look at in the field of anti-infectives, that has proven to be very successful and effective. The final thing is ours is sort of an oral triple G with some differentiation from retatrutide at least at a theoretical level. Again, this was based on consultation with the KOLs. If you look at the GLP/ GIP/ GCG ratio in retatrutide, the GLP/ GIP relative potency is different from what they have in Tirzepatide, their dual GLP/ GIP. What we decided to do was engineer the Tirzepatide like GLP/ GIP dual potency. Add the GCG kind of potency on top of it. That's the other differentiation we have. Of course, this is all towards the desire of maximizing weight loss, curbing the muscle mass loss. Hopefully also curbing the nausea and vomiting kind of side effects. Time will tell. We have planned for perfection. The real findings are in a clinical setting. Okay. Awesome. Last minute, in terms of I know you are still early on your pipeline development, and then how should we think about the spending and the R&D or G&A guidance, and how should we think about the partnership strategy giving the success of your lead program before, and then also the early pipeline. Last quick question is the share buyback. You've been talking about this and when should the investor expect you to give us some more clarity? Yeah. We have multiple things in our pipeline, and I mean this in a positive way. We are not prioritizing anything. We are pursuing everything because these are highly de-risked targets. We have the financial bandwidth to pursue all of that. I tell people, think of Protagonist as if there are three companies under one roof, right? There is the royalty company, there is the I&I company, there is the metabolic company, there is the Heme company, that sort of thing. In terms of share buybacks, we are looking forward to rusfertide approval in Q3, and I think if that happens, then cumulatively we'll be in a position of amazing strength, and by the end of the year, we should be in a position to announce a share buyback program. Ideally, we would hope this is not like a one-time gig, but rather a perennial activity, depending on the revenue stream that continues from our two commercial drugs. Of course, we'll fund our R&D on our own dime, and we'll be capable of doing that up to clinical POC at least. Excellent. All right. Thank you, Dinesh, and thank you, everyone. Yeah. Thank you, my friend.