Protagonist Therapeutics, Inc. Aktie

Let's kick off the next session. It is my pleasure to welcome Protagonist Therapeutics. And with me today is Dinesh Patel, CEO of the company. We have a lot to go through. There's a lot of excitement with the product launches and the pipeline that we're going to hopefully learn more later this year. Before we get to them, I'm going to turn it to you for opening remarks.

Yes. Well, first and foremost, thanks for inviting us. That is something we truly appreciate. And hopefully, they will continue.

But I think Protagonist is at an unusually interesting and positive space right now. If you think about it, we are now a commercial company through our drug ICOTYDE, partnered with J&J. We could be looking forward to potential approval of rusfertide in the third quarter. That's when the PDUFA date is in August. And the Phase III data has been outstanding. So that is partnered with Takeda. And if that gets approved, then I guess we'll be a biotech with 2 approved drugs this year. That's nice statistics.

And then the other thing we like to point out is like -- with the success of these 2 drugs, now we are going for repeat performance. That's what our R&D pipeline is about. And if you think about it, the probability of success in our case, I would like to believe, is significantly higher than whatever the norms are for our industry for multiple reasons, right? Our biology targets are very validated. So that's one level of derisking.

Our success with ICO and rusfertide speaks volumes for validation of our platform and our expertise in the field of peptides, right? So that's what it is sharing as well. So it kind of adds up in a nice way, the derisking. And last but not least, I mean, if you look at the statistics of peptides versus small molecules, peptides have higher success rate in through clinical development and through approval compared to small molecules. So things are lining up for us.

And then last but not least, financially also, there is a very big positive for the company. It's like we have ample cash and assumptions of cash coming in, through the royalty arrangements and milestone arrangements both with J&J and Takeda. So we believe that we won't have a need for a regular equity raise in the foreseeable future. And if at all anything, we would like to reward our shareholders with some share buyback kind of approaches down the road.

Okay. Got it. So you mentioned -- yes, regarding the share buyback, I think you mentioned that back in March. What do you need to achieve for that to occur? Do you see this as like a one-time event? Or do you see this as more or less a recurring event?

Yes. So -- we are waiting for the approval of rusfertide because that will really cement our revenue projections. That's the key gating factor right now. And we are not fond of onetime share buybacks. If we do it, we'll do it the right way, have a steady share buyback program.

I see. Okay. So 5 years from now, how do you see Protagonist as a company? Will you ever consider building a full-side commercial team that can support specialty products? And also what modality and therapeutic areas will you want to expand to or not expand to? I'm thinking about like oncology, CV and things like that.

Yes. Those are great questions. And I remind myself and others that, look, with rusfertide, we were already in Phase III before we did a wonderful partnership with Takeda. So yes, for rare diseases, niche markets, we are big believers of -- therein lies the possibility of taking it all the way through commercial. And maybe with the oral hepcidin, the second gen drug that we have, we may aspire to do something like that. And having said that -- and we have the financial strength to do all that. But we are also very pharma friendly, and we have pro partnership. And we believe that partnership with pharma, it's not just about money.

Much more than money is the expertise and the breadth of expertise and scale and all that, that they bring to the table. So we will be always eyeing for partnerships for bigger indications. So for example, with the obesity one, I have no illusions of doing Phase III studies on my over own there, let me put it in that way. So we take things to clinical POC on our own and then for niche indications and niche products, we can develop it all the way through. But for others, we'll be running.

Okay. More questions to come on those topics. So let's switch gears to ICOTYDE. J&J is saying that ICOTYDE could become one of its most successful drugs in the history and potentially grow now greater than $10 billion peak sales. Given that excitement and the launch progress so far, what is your own base case regarding the peak sales? And I'm assuming that you've done your own market research you're planning for the royalty stream coming in. What have you found in your own research?

Yes. I mean ICP is a great product, right? I mean it's not only the first of its kind. It's the only one of its kind, the oral IL-23 receptor blocker that has been approved. So -- and the early indications regarding the launch are incredibly positive. Like yesterday, there was a fireside chat with J&J and the remarks are incredibly positive. I mean if you think about it, the drug was approved on St. Patrick's Day, March 17. During their first earnings call, which was April 14, they claimed more than 1,000 prescribers. Yesterday, they shared it's more than 4,500 prescribers.

And really, they are getting the market share both from experienced and naive populations and the switch from other orals and injectables to orals, all kind of -- I mean, these are early beginnings, but the launch is incredibly powerful. And if you look at our research analyst estimates that the projections are kind of in the $10 billion, $15 billion sort of range of peak sales.

But I think the data that is really coming out -- it's still early days, but it appears very promising. So I think that is very satisfying. J&J is doing an outstanding job. And this is an outstanding drug with an amazing combination of efficacy, safety and convenience. No other drug has all the 3 attributes. So that works in our favor. Right now, the approval is just for psoriasis and Phase III studies in psoriatic arthritis, UC and Crohn's are ongoing. And so it's value and market share can only increase over time.

And what is your expectation for peak sales?

What I would like to say is like my expectation or whatever number I may have in mind is not that credible. It doesn't have value. I would rather have the real numbers do the talking. And like I said, the research consensus estimates is anywhere from $10 billion to $15 billion. But if you look at Skyrizi, it's going north of $20 billion. And TREMFYA is not that far behind.

But over here, the important thing is like here, there is an opportunity to take the market share from injectables and also create a new market, right? The J&J marketing research suggested that 75-plus percent of those that are on injectable in the I&I space, if a good option was available, then they would switch. And I believe ICO is a great option. And half of the I&I population that is eligible for targeted therapy are not choosing anything because they don't like the current choices, don't like injections and don't like the choices that are available in the oral right? So I think this could be huge beyond our normal expectations. Time will tell.

Right, right. And I remember when we talked about this like back in February, I think you mentioned something that was interesting. You said that you see ICOTYDE besides as the first line for like new patient coming in and a great oral therapy. You see that it could be a switch where -- or maintenance switch, right, where patients on these injectable biologics -- and at some point and then you can switch as a maintenance. I mean do you see that playing out? I know we were -- approved and it was kind of the way to go in terms of what given that it's already in the marketplace and now having conversation with J&J and what ICOTYDE is doing, do you see that becoming more of a real scenario?

I mean human psychology plays a big role. And I would like to believe that with an injectable, just at a psychological level, you're going to feel like a patient, you're being treated for a disease or something like that, right? And for chronic indications, I'm like, yes, why do we want to feel that way?

And oral will give you the feelings of as if you're taking your daily multivitamin or whatever that kind of thing. And the convenience of an oral is just unbeatable. And you're right. I mean, people focus on where is the most efficacy. And I'm like, okay, once the disease is under control, right? And now it has stabilized and it's not going to flare up that kind of thing. The maintenance setting becomes the most critical. And time-wise, I mean, the induction phase is 3 months, 4 months, that kind of thing. The maintenance is the rest of your life, and that is where oral will rule.

Okay. I see. And then -- so I think in order to hit some of those numbers, I mean, a lot has to go right because you're talking about the best drug in potentially in J&J.

The success rate with IL-23 blockers like Stelara, Skyrizi, TREMFYA, it's 100% for psoriasis, psoriatic arthritis, UC and Crohn's.

Sorry?

Right? So there is reason for optimism for ICO.

Right, right. So in the next readout of the PSA, the psoriatic arthritis -- so that disease is becoming more of an IL-17 disease. I think you look at what's going on because they're able to address the joints as well as the skin. What is your expectation in that -- from that Phase III readout in terms of addressing both skin and joints?

So with ICO, I mean, J&J has done multiple Phase III studies, right? The pivotal registrational studies and then head-to-head comparison studies with the TYK2 inhibitor. So they have a wealth of data, and they have done a subpopulation -- psoriatic arthritis subpopulation patients within those psoriasis studies, and that has been presented before. And that data is very positive. And if you look at the translation success rate, that's 100% for IL-23 blockers from psoriasis to psoriatic arthritis. So we are feeling very optimistic about the outcome, obviously.

Okay. And then from a commercial perspective, like just kind of given that the IL-17s are becoming more of a trend, becoming more popular in the standard of care for psoriatic arthritis. How do you see the success, the commercial success in, say, how you compare that for psoriasis versus psoriatic arthritis or an oral IL-23?

I think if you look at the [ I&I pie ] and that kind of thing, it's fair to say that derm conditions like psoriasis, psoriatic arthritis. Out of it, psoriasis is a much bigger piece, psoriatic arthritis is a smaller component. But it kind of is split between IL-23 and IL-17 blockers for now. And then, of course, IL-23s will dominate in IBD and IL-17 will dominate in HS and spondyloarthritis that kind of thing. The nice thing with us is like we are covering both grounds like with PN-881, our oral IL-17, which is fully owned by us. So we are in that space as well.

Okay. Speaking of that, obviously, ICOTYDE as regarded a huge success from the protagonist platform. What do you -- I know -- so ICOTYDE was co-developed by you and J&J. What do you learn from that experience? And specifically, what -- from your platform and from what J&J's contribution was and that you can apply to the IL-17 development?

Yes. I think it's an excellent question. And the way to think about this is like to get to a drug, you have to discover it and you have to develop it, right? There is discovery and there is development. When it comes to discovery, our expertise is in discovering peptides. This is a journey we have started since 2008. So we know that very well. But we'll be the first one to admit that when it comes to discovery, each time it's a new beginning, right?

So the expertise, experience and efforts that go in the discovery part of IL-17 are totally different from IL-23. But once you switch to development and as early as preclinical development, definitely in clinical development, that is where you benefit from the experience of ICO, right?

So for example, the skin inflammation preclinical model, it's the same model for IL-17 evaluation -- IL-17 blocker evaluation that we had for IL-23. And in clinical development, I mean, the inflection point for ICO was the comprehensive Phase II frontier study, right? So -- there are learnings from that. So we benefit from those kind of things. It's like we can apply those learnings to our own PN-881 at the right time.

Right, right. So for ICOTYDE, did J&J help part of the discovery as well, did they help define a structure or look at different attributes or certain things that they have to meet? And was there anything that you can take away from that itself and apply to IL-17 like the binding affinity....

Like I said, the 2 targets are so different from each other that you just have to start from ground zero. And getting back to ICO, I mean, clearly, it has been a joint collaborative effort since 2017 and still going very strong. And we started the program in our shop all the way back in 2013. And if you look at -- yes, so it has been a joint effort. But like I said, with IL-17, it's totally a new ball game at the discovery end. In development, there are learnings that you can benefit from.

I see. Okay. And let's move to rusfertide because I do have more questions on IL-17 later. So let's...

Move to like the rapid fireside.

You guys have -- yes. So you have -- I mean, the PDUFA is coming out in August. You guys are already opted out of commercializing the drug. What is your expectation? I mean you guys have done a lot of work in that space and then that led to the decision to opt out. What is the expectation for you in terms of the potential peak sale based on your own market research?

Yes. I mean -- now the drug belongs to Takeda, and they will be the main spokespeople for this, and they have provided a conservative estimate of $1 billion to $2 billion in peak sales. So I'm not going to add anything further in terms of the guidance component. I think that's the right range to stare at this particular junction. What we are laser-focused on is the PDUFA date, is sometime in August. And let's see how things shake out. Hopefully, the drug gets approved and things will be off to a good start.

Fantastic. Okay. Have you done any health economic analysis during your opt-out like due diligence decision? And what -- anything that you learned that you can share?

Yes. I think with regard to the opt out, it was really a decision from a very different angle, so to speak, right? As you know, there was a $400 million opt-out fee. So I was like if I'm staying opted in, then I'm investing that money back into rusfertide instead I could have a better use of proceeds in our new R&D pipeline with that.

And especially because of the fact that if we opt out, then we get 3x higher milestones, close to $1 billion compared to $300 million plus, but more importantly, 14% to 29% royalty worldwide and the 29% kicks at anything over $1.5 billion. So with that kind of cut on net revenues, you're not leaving that much on the table in comparison to a 50-50 profit loss split. So the economics are very fair to both companies. And that was the main driver.

I see. Okay. And then how do you think it will be used initially in the commercial setting? Is it -- I mean, when you look across -- because you guys study rusfertide on top of the cytoreductive therapy, right? You didn't reduce that. It's really mainly for reducing phlebotomy. So in the beginning, maybe like how do you think this drug will be adapted? Is it going to be more of the, like, inadequately control patients? How many phlebotomy were they -- is there a threshold that you have to get on? Just maybe think about from that potential payer scenario.

Yes, sure. So what we found is like in PV is a very erythrocyte -- excessive erythrocytosis-driven disease, right? Per NCCN guidelines, you need to keep your hematocrit below 45%. And in PV patients, you have it over 45%, that kind of thing. So that's the basic definition of the disease. And we were just shocked that there was no erythrocytosis specific agent ever.

So -- and the classical treatment is phlebotomy. I think it's totally updated. It's very suboptimal based. I would like to make the case that [ phlebotomy ] is such a poor choice that was being made only because no good option was available, right? You are, first of all, with the blood draw, you are making patients very iron deficient that leads to terrible symptoms. And even your iron and blood levels go through a roller coaster ride. So there is so much unknown in the body of a patient.

And you can envision worsening of the [indiscernible] and all kind of things. So it's like, okay, people did what they had to do when nothing else was available, but we intend to change that mindset and approach through rusfertide, erythrocytosis specific agent. And in the clinical studies, if you look at the patient population that we were able to garner, it's very simple. It's like, hey, if you are not controlling your hematocrit and you continue to need excessive phlebotomies, then there is an issue over here. You're dealing with a very ineffective therapy.

And that is what rusfertide has been able to solve, right? So I think the utility is going to be very broad. It hopefully will essentially eliminate the need for a phlebotomy. And this is the first drug where actually a symptom improvements code as an official secondary endpoint in the study, right? That is huge as well. And we believe that is because like phlebotomy, it's -- you're taking iron out of the body. In our case, we are not taking iron out of the body. It just keeps recirculating. We are changing the distribution of the iron in the body.

Right. I see. And then when you think about it from a commercial setting, I mean, how the step edits are being implemented? Would you expect like step edit to hydroxyurea and maybe the interferons? Is there like -- and then have you thought about like -- I know you guys are not involved with the pricing research and decision from that. But I mean, is there like a price point where you feel like that would be the sweet spot where you can perhaps like not have all these stringent step edits to it? And then maybe like -- and then what would that secondary look like?

So there are a couple of questions in there. And one answer I would have is like, hey, EHA is happening this week. We have 4 posters on rusfertide. So if one wants to learn more about rusfertide, pay close attention to those posters. I believe there is a poster on how did the drug perform in the Phase III study, both in the low-risk and the high-risk population because that gives you an idea about like the spectrum of utility or the effectiveness of the drug throughout the whole spectrum of the patients and the treatment paradigm.

And in terms of what impact, if any, has on the cytoreductives or the doses and that kind of thing, I think we are sharing some of that as well, if I recall correctly. So I would say, yes, pay close attention to the EHA posters to learn more about rusfertide. And in terms of pricing and all that, that is really up to Takeda. But if you think about it, I mean, this is a rare disease indication. If you look at Jakafi or the latest entrant....

[indiscernible]...

So yes, [indiscernible] is a rare disease.

I see. Okay. Let's switch gears to IL-17. I know we had touched a little bit on it earlier. But going back to my previous question about ICOTYDE and what you've learned from it. Just looking at IL-17 itself, and you guys have -- obviously have a molecule that you already advanced to clinical development. What is special about this? Because it's not just the oral component because you can have an oral may not work that well. Is there anything unique about this besides being an oral peptide that you believe that you have confidence based on -- we saw that for IO or something that you can...

Look, like I said in terms of the learnings from ICO, in discovery, you start from ground zero with each new target. It is in preclinical and clinical development that you can benefit from some of the learnings.

But getting back to IL-17 as a target, first, I mean, if you look at the antibodies, they have already established the rules, and it's like the extent of inhibition of the target, that requirement is different for IL-23 blockers versus IL-17 blockers. So that's one difference to keep in mind.

The other thing I would add is like with IL-17, with the outstanding performance of BIMZELX, it's pretty clear that you need activity against both A and F isoforms. We believe we are the only or one of the few companies that have been able to kind of have that attribute in an oral peptide. And that is the uniqueness about 881, right? We have both A and F spectrum of activity. And guided by the antibodies, we have a good understanding of what level of target inhibition is needed. So in a way, in Phase I study, the drug exposure levels will allow us to determine if are fulfilling that criteria or not.

Right. And you mentioned BIMZELX, I was also [indiscernible]. Did you run sort of like the side-by-side comparison because other companies do that in the preclinical development where they just kind of run like competing assets out there and see how it performs against different metrics. Have you done that like with BIMZELX or others?

Yes. I mean, preclinically, there is only so much that you can do. And even if you do a lot, it carries very little value, right, at the end of the day. But we have established the preclinical POC in the skin inflammation model in an unequivocal manner. And typically, it's like, hey, if an antibody is available, so the cross-reactivity component plays a role, right? Sometimes you don't have antibodies that will be cross-reacting, let's say, to the rat model or something like that, in which case, then we cannot use. But if a competitor is available, we would definitely be using it.

I see. So you have done those analysis. We just haven't seen it yet. Okay. Got it. And then -- so since I think you mentioned that when you guys have the data available or when the trial completed, the Phase I trial completed, you will not share the data with the public? Is that still the case? Or are you...

And look, we are not trying to be arrogant or stubborn. It's just that we felt that previously, we were very disclosive of all of our preclinical data and some of the [indiscernible] pointed out to us that we were teaching too much to the competition. So then we are like, okay, we have something that is valuable. So let's be a bit secretive and tightlipped about it. That's how we are looking at it.

And again, we are not being arrogant, but it's like -- unlike most biotech companies, and we were in the same shoe a few years ago, but not anymore. It's not as if on the heels of good data, we'll be urging to do an equity financing. In fact, if at all, anything, we are saying we won't have a need for any kind of equity-based financing or money raise in the foreseeable future. So that necessity or need is not there as well.

But having said that, what we are guiding towards is like, look, the Phase I, we will see all the data in Q3, and that is the time when we will be ready to share our decision of the next steps with [indiscernible].

Right. So if the decision is positive then you said you're going to advance to Phase II. Again, we're in the dark. We're not going to see what that data looks like. What can we assume? Should we assume that the data is comparable to BIMZELX for injectable biologics? Or should we assume more like ICOTYDE profile where it may not be as potent as injectable biologic, but it's good enough. Like how should we think about it?

Yes, yes. So there are 3 outcomes: a no-go, in which case, it's like the data we got did not fulfill our requirements or we could be doing a single high-dose proof-of-principle kind of study where it's like, hey, let's -- the data looks good, but let's confirm or we could be going for a full-blown comprehensive Phase II study like the FRONTIER study that was done with ICO, the FRONTIER Phase II study, in which case, you can make a qualitative assumption that we really like the data that we saw, and we are just going for it. And the science, we also learn a lot by talking to the KOLs and all that. And there is a good understanding of the level of target inhibition that is necessary. And so the drug levels will teach us a lot.

Right. Okay. So basically, pay attention to the Phase II design that will...

[indiscernible].

Okay. Got it. And then I think you also mentioned that this is a hot target, and I agree with that. And there's people knocking on your door asking what is this asset. Would you start that partnership exploration before the beginning -- before you kicked off the Phase II? Or like how are you thinking about it?

Yes. There is so much value in engaging with companies early on. That is what we did with rusfertide as well as with our oral IL-23 programs. And so yes, there is no scarcity of interest with IL-17 or other programs in our R&D pipeline. So that's just a healthy dialogue. But at the same time, we are also saying we have all the money that we would ever need to get to clinical POC.

So you wouldn't wave, right? You would...

We are full speed ahead.

Full speed ahead, okay.

[indiscernible] is the most -- currency, yes.

I see. Okay. Let's spend the last couple of minutes on the obesity program. What is your overall development vision in this given sort of the complexity, the hyper-competitiveness, very fast-evolving, price eroding nature of the market. I think we see now price down to $149 per month for some of these direct-to-consumer cash pay programs. I mean, what -- why do you think this market is so attractive?

Well, first of all, I mean, this is an opportunity of unprecedented scale in our sector in its entire history. And this is not a one-drug-fits-all or the first or second drug going away with all the winnings and that kind of thing. The market is still evolving. It is expanding. So there is a lot more to do, and everybody is very busy.

What we focused on is like, as usual, differentiation, differentiation, differentiation. So the first strike is with an oral triple and Retatrutide, the Phase III data is outstanding. So that bodes well. We are the one with an oral GGG, right?

And so we look forward to taking it forward in clinical studies. The clinical studies by themselves are going to be -- even the Phase I studies will be very informative because you enroll patients with higher BMI and you start observing weight loss. Obesity is a big field, but also it's a very cost-conscious fill.

So the cost of goods and all that is something that you factor in right from the beginning. It's almost like a nonscientific target product profile you have to have if you're going to develop drugs in the obesity space, right? So we are very aware of that. But if you think about it, our deep-rooted expertise in peptides and the way now everybody is interested in peptides. A lot of expertise is building COGS and cost of synthesis. The economy of [ scale ] combine altogether. We are mindful of the cost and we can manage it.

Right, right. Yes. So I mean, speaking of the cost, I mean, these Phase III programs are fairly expensive. You have one....

We definitely partner...

Without diabetes and then there's a lot of outcome study you can also do. I mean, is there a point in time that you would take this asset to and then just either stop there and look for a partner? I mean, obviously, you would be exploring partnership all the way. But if you don't have a partner, you would just kind of stop and shelve it. I mean how -- like how are you thinking about this?

So far, we have not had an issue in the history of the company of not having a potential partner. So hopefully, we'll continue with that statistics. And keep in mind, it's not just about one GGG oral drug. We are creating an entire portfolio, both around incretin and non-incretin kind of approaches as well. So we believe we'll be a very attractive value proposition to multiple pharma companies at the proper stage with a whole basket, whole portfolio of very highly differentiated anti-obesity agents.

And have you already started those conversations? Have you already started some of these partnerships?

That has always been interest from multiple parties at any given time in all of our assets.

I see. Okay. So we are unfortunately out of time. It's been a very exciting time indeed for Protagonist, and it's been a pleasure hosting you, Dinesh. I'll turn it to you for final remarks.

Super exciting for me as well. Thanks for inviting us. And look, I think we are a company that has a commercial presence. We are very validated. We have a rapidly expanding R&D pipeline that is very derisked in multiple ways, and we have all the cash in the world to fund our programs and assets up to clinical POC. And pending rusfertide approval by the end of the year, I mean, if that happens, then we certainly look forward to rewarding shareholders with some kind of a share buyback program mechanism.

Fantastic. Thank you again.

Welcome to Protagonist Therapeutics March 18 Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, Wednesday, March 18, 2025.

I will now turn the call over to Dr. Corey Davis of Lifesci Advisors. Please go ahead, sir.

Thank you, Latanya. Hello, everyone, and thanks for joining us this morning. Joining me from Protagonist are Dr. Dinesh Patel, President and CEO; Asif Ali, CFO; and Dr. Samuel Saks, Clinical Development Adviser. Earlier today, Protagonist issued a press release announcing the FDA approval of ICOTYDE for the treatment of moderate to severe plaque psoriasis in adults and pediatric patients, 12 years of age and older who weigh at least 40 kilograms who are candidates for systemic therapy or phototherapy. A copy of this press release is available on the company's website.

As can be seen on this slide, we will be making forward-looking statements on this call. These may include statements relating to the safety and efficacy and the therapeutic and commercial potential of our investigational product candidates. For further information relating to risks and uncertainties related to our business, please see the periodic reports we have filed with the Securities and Exchange Commission. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 18, 2026. Protagonist undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by applicable securities law.

With that, I'll now turn the call over to Dinesh Patel. Go ahead, Dinesh.

Thank you, Corey, and good morning, everyone. Today marks a major milestone for Protagonist. We are very pleased to announce that ICOTYDE has received U.S. FDA approval for the treatment of moderate to severe plaque psoriasis, and we want to congratulate Johnson & Johnson on this great success. What makes ICOTYDE or ICO very unique is that, first and foremost, it is the only oral peptide targeted therapy that works by blocking the IL-23 pathway, and it does so by targeting the IL-23 receptor. This is in sharp contrast to the approved antibodies that are obviously injectables, but unlike ICO that targets the receptor, these antibodies work by targeting the IL-23 ligand. So it is truly a first of its kind IL-23 pathway blocker.

Next slide. Before getting into any details, let me take this opportunity to offer a brief historical perspective on our journey from a concept to FDA approval. ICOTYDE, previously known as PN-235 to use Protagonist initial nomenclature for this peptide during its discovery and preclinical phase, is the ultimate outcome of relentless research and development activities in the IL-23 program that began in our laboratories 13 years ago. And it represents an immensely important validation of our peptide technology platform and our ability to generate innovative medicines. I'm incredibly proud of the Protagonist team for the scientific work, persistence and execution that helped this program from discovery to approval.

I also want to congratulate Johnson & Johnson or J&J on outstanding clinical execution and for maintaining a strong and productive collaboration that has been in place since 2017, and that has helped advance this concept of oral peptides for chronic diseases from discovery through development and now to FDA approval. J&J has been an outstanding partner, and we look forward to our continued partnership with them for years to come.

ICOTYDE is an important new first and only of its kind and best-in-class oral first-line treatment option for patients with plaque psoriasis, delivering the IL-23 pathway blocking injectable biologics like skin clearance that is accompanied with outstanding placebo-like safety, and all of this with the convenience of a needle-free once-daily oral pill. This combination of efficacy, safety and convenience of an oral pill makes icotrokinra a compelling choice and should be a very favorable treatment option for individuals with inflammatory and immunomodulatory-driven chronic diseases like psoriasis.

Turning briefly to the approval itself. The FDA approval decision was supported by a robust body of clinical evidence in a large patient population from a comprehensive Phase III program. Across 4 Phase III studies enrolling approximately 2,500 patients, ICOTYDE met all primary endpoints and demonstrated an extremely favorable safety profile.

Next slide. The breadth of the psoriasis program has led to a very broad label and is based on studies in both adults and adolescents, evaluation in high-impact disease sites, as well as 2 head-to-head studies showing superiority to the active comparator Sotyktu. The results from these studies have been published and presented at medical conferences and are now largely reflected in the FDA-approved label.

Besides today's approval, we are also very encouraged by the ongoing clinical studies to evaluate ICOTYDE in additional indications beyond psoriasis. We see very meaningful potential in these programs and are very optimistic about the outcome since historically speaking, all the 3 major IL-23 pathway blocking injectable antibodies, namely Stelara, Skyrizi and TREMFYA, they have had a successful outcome in all 4 indications, that is psoriasis, psoriatic arthritis, ulcerative colitis and Crohn's disease.

Having said that, we do recognize that these are ongoing studies and the actual data will define the opportunity more precisely over the coming years. Taken together, across the approved psoriasis program and the ongoing studies in additional indications, ICOTYDE is supported by a development effort that exceeds 7,000 patients. We view ICOTYDE as not just a product, but rather as a pipeline in a product, a multi-indication, multibillion-dollar immunology franchise.

Next slide. Now let's move to the financial aspects of the partnership with J&J. This approval has clear economic significance for Protagonist, leading to an immediate $50 million milestone achievement from this approval and now kicking off a royalty-based revenue stream going forward.

Since the initiation of our collaboration with J&J in 2017, Protagonist has now earned a total of $387 million in milestone payments. We still have around $580 million in future potential milestones, and we believe that Protagonist has a very good chance of achieving all of these milestones in the coming years. To break it down further, this $50 million is comprised of $155 million in development milestones summarized in the table on the left and $425 million in sales milestones summarized in the table on the right.

So the $155 million in development milestones, as you can see, are based largely on NDA filings and approvals in additional second and third indications, which should be achievable based on clinical studies currently being pursued in 3 additional indications. With the $425 million in sales milestones, the highest hurdle milestone is based on reaching $5 billion in annual sales, which should be achievable, we believe, in the coming years.

So seldom do we get a chance in our lifelong careers, 40 years to be specific in my case, to say that we could potentially achieve all research, development, regulatory and sales milestones from a pharma licensing and partnership deal. Beyond milestones, we are also eligible for tiered royalties ranging from 6% to 10% on global net sales with a weighted average of 7.25% at $4 billion annual sales and 10% for sales over $4 billion.

Our royalty-based earnout each year will obviously depend on the annual sales and the table at the bottom provides a simple illustration of the actual pretax royalty-based dollars that would be earned at various levels of annual sales exemplified as ranging from $5 billion to $20 billion.

Taken together, these numbers and percentages speak to the win-win nature of the partnership, and it also speaks volumes for the blockbuster category potential of ICOTYDE. This is also a good opportunity for us to clarify Protagonist role going forward in this collaboration. Because J&J is solely responsible for all aspects of the commercialization of ICOTYDE as well as the ongoing clinical trials, they are the best ones positioned to describe specific launch activities and provide guidance on all commercial expectations going forward.

Next slide. From Protagonist standpoint, today's approval highlights the strength of our core expertise in discovering oral peptides and the value of our collaboration model. This is a meaningful scientific achievement and in our view, an important demonstration that rationally designed oral peptides against well-validated clinical targets can deliver highly differentiated therapeutic profiles in large, well-established blockbuster category markets.

The success of ICOTYDE, together with multiple assets now advancing across our R&D pipeline, validates the durability and productivity of our unique peptide technology platform that is geared towards optimizing intrinsic potency, oral stability and oral bioavailability in an oral peptide agent against validated targets previously deemed to be approachable only through injectable biologics. It is evident that our proprietary discovery engine can generate candidates with the potential to move from concept to clinic to approval, and ultimately toward commercial value creation.

Next slide. Now let's turn our attention to the other assets in Protagonist pipeline. In addition to the ICO approval, as shown on the left, we are also expecting FDA approval for our first-in-class hepcidin mimetic, rusfertide for polycythemia vera sometime in the third quarter of this year. In partnership with Takeda Pharmaceuticals, the NDA was filed on December 29 of last year, and we are thrilled to have received priority review earlier this month from the FDA.

If successful, rusfertide's approval would further reinforce the breadth and maturity of our platform. As most of you know, we have a provision to opt out of our co-development and co-commercialization arrangement with Takeda, and we are strongly leaning towards opting out, which will, in turn, qualify us for a $400 million opt-out payment fee and allow us to transition from the current 50-50 profit loss sharing arrangement to an out-licensing deal with enhanced milestones and royalty-based economics. Takeda has been an outstanding partner, and they have a very strong experience and presence in the hematology space, and rusfertide is a high-priority asset for them, which fits nicely in their heme portfolio.

Moving from our late-stage assets, ICOTYDE and rusfertide, let's now shed some light on our new wave of emerging R&D assets, which we commonly refer to as our second act or repeat performance. In the inflammation and immunology or the I&I space, we have PN-881, our first-in-class IL-17 oral peptide antagonist with activity against both A and F isoforms, and it is currently in a comprehensive Phase I study. We expect to complete this study by midyear and we'll share our decision on the next steps with PN-881 in the third quarter.

In the heme space, as a complement and follow-on to rusfertide, we are developing an oral hepcidin functional mimetic PN-8047, which is currently in IND-enabling studies. Incidentally, 8047 is a small molecule and not a peptide. At the core level, we are focused on strong differentiation at Protagonist and are agnostic to the actual chemical nature of our assets.

Besides I&I and hematology, we are extending our peptide expertise to the anti-obesity space, which is currently largely dominated by the injectable peptide, semaglutide and tirzepatide. PN-477 is our oral triple GLP, GIP, GCG agonist, and it is being developed both as a weekly injectable and a once-daily oral agent. We expect Phase I clinical studies to commence in the second half of the year, and it should be feasible to achieve preliminary clinical proof of concept in the Phase I study itself by observing weight loss in healthy volunteers with a higher BMI index.

Finally, we continue to add new programs such as IL-4 in the I&I space and amylin in the obesity space, wherein we believe there is an unmet need and where a strong differentiation could be achieved with our approach. Our 2 late-stage assets and our 2 pharma partnerships have placed Protagonist in a very strong financial position. Based on the cash we have on hand today and with the anticipated future cash generation from the 2 partnered assets, we believe we have the financial resources and organizational experience to fund all of our current R&D programs to clinical proof of concept, and to continue investing in a growing pipeline of new peptide-based and small molecule-based programs in the future.

What makes us so unique, is that we anticipate carrying on all of our R&D activities now and in the foreseeable future without any equity offering based financing and dilution to our shareholders. In fact, with respect to capital allocation, we'll be giving serious consideration to all forms of returning capital to shareholders with tools like share buyback programs, which will lead to more concentrated positions for our shareholders. We'll constantly be striving for maximizing shareholder value through all of our operational, financial and strategic activities.

I would also like to emphasize that we always have been and will continue to remain strong believers in value-creating partnerships with pharmaceutical companies. And certainly, our partnerships with J&J and Takeda serve as great examples of successful win-win collaborations. Keep in mind that our partnership with pharma is not just about bringing non-dilutive cash into the company. A true pharma partner offers the incredible advantage of experience, expertise and ability to scale.

Going forward, we can envision pursuing rare disease indications on our own all the way through FDA approval. But for broader indications, we'll be strongly leaning towards fair pharma partnerships, with more financial participation through clinical development with the anticipation of preserving better economics down the road. We'll continue to pursue win-win structures that align capabilities, maximize value of our science and create meaningful returns to shareholders.

Next slide. So in summary, today's approval of ICOTYDE is a defining moment for our company, our people and our platform. It marks the slow and steady transition of a research program that originated in our laboratories 13 years ago into an approved therapy for patients. And it validates the power of our platform to produce differentiated drug candidates with real therapeutic and commercial relevance.

I would again like to congratulate the teams at Johnson & Johnson and Protagonist whose unwavering commitment allowed us to reach and exceed all of our goals in the IL-23 program, culminating in the approval of ICOTYDE for psoriasis that we are so pleased to announce today. Drug discovery and development requires patience, resilience and collaboration and reaching this point is deeply meaningful for all of us. I also want to recognize the patients, investigators and caregivers who participated and contributed in the comprehensive ICOTYDE clinical program. Everything we do, we do it with the ultimate goal of transforming patient lives. With the approval of ICOTYDE, the pending FDA decision for rusfertide this year, and the financial resources to support the next generation of R&D programs and assets, we are increasingly confident that this is the beginning of a multiyear product-driven growth cycle for Protagonist Therapeutics as a company.

And with that, I will now ask the operator to begin our Q&A session. Operator?

[Operator Instructions] The first question comes from Roger Song with Jefferies.

Huge congrats for the approval, a little bit earlier than we thought, but congrats. And looking at the label, I think it's pretty impressive how clean the safety label language looks like. Notably, this TB test requirement comparing to IL-23 biologics since this is optional. Just curious about your thoughts. I know probably J&J is a better position to comment. But just how you think about this requirement and consideration for TB test because a lot of doctors is talking about it. And then how did you achieve that language, if you have any comments?

Roger, so yes, clearly, we are a few months early in this announcement. And hopefully, that's a good surprise for everybody. And with respect to the label, I think in a way you answered the question, I think J&J is the best party to give any detailed answers. But what I can reflect on is like, hey, even 13 years ago, when we were trying to decide which targets to work on, we, on purpose avoided working on TNF blockers, even though Humira was the dominant product at that time, and very consciously chose IL-23 pathway and the alpha 4 beta 7 integrin pathway because we believe that safety was of paramount importance that could be achieved with this intervention of these pathways. And that has obviously come to fruition today with the approval of ICOTYDE as an IL-23 pathway blocker. Sam?

I would just say, in general, again, not to comment specifically, but in general, we had heard from investors repetitively sort of, I'd say, misinformation that there was going to be various testing requirements with ICO, be it for TB or liver or other aspects. And as you point out, it's really clean with respect to the requirement to do any specific testing. So that is going to be a great thing for the launch.

Excellent. Just a quick follow-up. Now this is J&J going to driving force for the launch and then we're moving on to your own program. AADA 17, just use this as an opportunity, just give us some comments around how you think the learning from ICOTYDE can translate to AADA. And then in terms of the safety and efficacy profile, what's your expectation for -- compared to the biologics?

Yes. I think in our case, the big advantage is that by working on pathways that have already been validated by the biologics, we almost have a cheat sheet in terms of what to expect. And that has turned out to be so true with ICO. And I would say we expect kind of a similar type of behavior and expectation with the IL-17 blocker as well.

Now in terms of the lessons learned or the similarity or differences, I mean, as you know, each target is different. And so in terms of the specific of what a peptide molecule looks like, what ICO looks like versus PN-881, I can assure you that is a day and night difference, totally different entities. So in each instance, you have to start from scratch. Having said that, though, some broad learnings about that, hey, potency is of paramount importance, oral stability is a must, and engineering some permeability to achieve some oral bioavailability and having a slow clearance. And some of the fundamental learnings is something that can be applied all across the board in all of our programs.

One thing to remind you, Roger, is one of the claim to fames of peptides because of their enhanced potency is high specificity. So that's one of the reasons you achieve these kinds of labels is because there's less chance of off-target effects when you have that kind of potency and specificity.

The next question comes from Doug Tsao with H.C. Wainwright.

Dinesh, congratulations. It's been really remarkable journey for the company, and we look forward to seeing you get your second approval not too long in the future, which would be a really great accomplishment. Just maybe as a follow-up along the lines of what Sam just said, do you think given the tolerability profile we've seen and the clean label on that front, does this sort of perhaps provide a road map for some of your other oral programs in terms of what those labels might look at, especially in terms of sort of off-target effects. I mean there might be some side effects that are sort of unavoidable. But does this sort of really highlight a potential clinical advantage beyond just sort of the oralization of these markets, but perhaps sort of a greater tolerability profile as well?

So, I think -- this is an excellent question, and we cannot answer it enough time, I would say. Safety is of paramount importance. And the simple realization is that, hey, with peptides, you have a larger number of binding interactions compared to small molecules. So just logically speaking, you're going to come up with something that is much, much more potent than a small molecule. And with that kind of high level of potency, what also comes along is amazingly high level of specificity, and it minimizes the chances of off-target kind of side effects. So that's a big advantage that we believe should translate all across the board in our approach of oral peptides. That's how we are looking at it.

But as Dinesh pointed out earlier, because these are validated targets, we're not looking to ICO for the toxicity profile, let's say, IL-17 A and F and 881. We're looking to the antibody that covers those targets because that -- that's already a commercial product and treating lots of patients. So we would get surprised, quite frankly, if any of our peptides have any other toxicity besides those that are already known from the validated therapeutics.

Yes. And once again, that is a sharp contrast to what you may expect from small molecules where the real surprising and ugliness may come much later in an advanced clinical study.

And just as a follow-up, Dinesh, I guess what I was sort of -- I think is striking about the label is not just the sort of safety profile versus other small molecules, but even the advantages from a labeling safety standpoint versus -- be it Stelara or even TREMFYA, where ICO looks to compare favorably. So I was just curious if you thought that might be something we should expect or think about as a potential for the IL-17 and other programs?

It's hard for us to comment on any labeling thing in terms of J&J. But as was already pointed out, this is a receptor blocker. So it is completely unique. But J&J did all the direct negotiations with FDA. So we would have no comment on like why the label looks the way it does.

And Doug, to answer your question in a general way, I mean, these are the early innings for oral peptide approaches, right? And as you know, there are 2 very fundamental differences in the pharmacokinetic aspects of the drug with an antibody, which would be an injectable, you are starting with a maximum concentration on day 1 and then it wanes out over a matter of days or weeks, something like that.

With the oral peptide approach, it's a daily ritual of having some level of drug levels in circulation each day. So different kind of titration and dosing. It's almost like theoretically, with an oral peptide approach, you are providing more frequent but moderate level of the drug to the individual. And just in general, the lower the dose, the better. So let's see how it all plays out. But yes, the overall safety profile of ICOTYDE is just outstanding at all levels.

The next question comes from Evan Seigerman with BMO Capital.

Malcolm Hoffman on for Evan. Thinking about the ICONIC-ASCEND data coming up soon, how should we think about the significance of that data set for ICO? ICO has already shown strong strength against oral I&I agents. How do you think about the potential for superiority here and what that could mean for revenue uptake in the future?

Well, the data will be the data, but the intent, obviously, which J&J has articulated, so I'm not saying anything that they haven't already said is they're trying to make this the frontline treatment of choice. And that's the usefulness of that study. How it turns out, even they, I think, would say, let's see the data.

But yes, if you look at the adolescent data and the idea behind like doing a head-to-head comparison with Stelara, basically, ICO has all the makings of being a first-line therapy of choice for patients.

And they were very clever with the deucra or Sotyktu studies in terms of doing things proactively as well. So as Dinesh had said earlier, boy, we could have a better partner.

The next question comes from Jon Wolleben with Citizens.

Just two for me. One simple one. Can you remind us of the patent protection on ICOTYDE? And then also with Skyrizi doing so well, maybe can you compare and contrast your profile versus Skyrizi and what could drive adoption for an oral here?

Yes. Jon, so good points. And we are very pleased with the extent of patent protection we have over here. It's fair to mention in broad strokes that it is extending to 2040 or slightly behind that, right? Now in terms of Skyrizi or any injectables for that matter, TREMFYA could be another comparison. I think -- and J&J has communicated this incredibly well. There are 2 different opportunities over here. What their marketing research suggests is that amongst patients who are already on treatment, which is with the injectables because the IL-23 injectables are the ones that are offering the best combination of efficacy and safety.

Amongst those patients, more than 75% or rather 75% to 90% will be willing to switch to an oral agent if a good option was available. I mean, ICOTYDE's label, in my opinion, clearly makes it a good option. So let's see how that goes. And again, J&J is the one that is doing the heavy lifting over here. But in broad strokes, the first category is like taking market share from the injectables.

But now here is the additional thing, right? An equal number of I&I patients, a few million of those that are actually qualified and eligible for targeted therapy treatment options, they are not choosing any treatment right now because: a, they don't like injections; and b, they don't like the current oral options that are out there. So this will give ICOTYDE and J&J a great opportunity to create a new market for ICO as well. So I would say ICO could be very well positioned both to grab some market share from the existing injectables as well as expand the market and create a new market of its own by becoming an attractive option for patients who are currently on the sidelines.

We will be on the watch. Thanks, Dinesh, and congrats.

The next question comes from Srikripa Devarakonda from Truist Securities.

Congratulations. This came certainly earlier than expected. One question we've been getting from investors. This has been a great partnership between J&J and Protagonist teams. A question is the relative contribution of Protagonist to the optimization journey, and this relates more to how much of the know-how in the optimization of these oral peptides continues to be proprietary to Protagonist. In other words, I think people are -- want to be more comforted around your ability to protect the know-how. And then another question, I think there's a food effect on the label. I was just wondering if you think there could be any sort of impact on longer-term compliance.

Kripa, It was nice to meet you a week or 2 ago. And of course, our lips were sealed at that time, but it's good to come out in the open today. So in terms of the partnerships, as we keep saying, this has been a fantastic partnership, and both parties have benefited immensely. And in terms of know-how and who is good or great at what, I think both groups have utilize their strengths towards uncovering ICO and bringing it where it is today. And of course, as you know, this is a joint co-inventorship with inventors from both camps. So that is as simple as that.

In terms of the know-how and the future utility and things like that, I mean, obviously, I'll speak for Protagonist. As you can see from our expanding R&D pipeline, almost everything we do, except for the exception of the oral Srikripa Devarakonda, that is all peptide-centric, right? We oscillate between injectable peptides like rusfertide or oral peptides, be it for the obesity program or the oral IL-17, and in the future IL-4 and other programs. So our expertise, we have been building and expanding on the core expertise all the way back from 2008. So there is a lot of residual know-how, and that basically is our secret sauce, which allows us to come up with this kind of highly differentiated assets in otherwise what would be a very competitive and crowded field.

One would expect that if J&J -- and if our technology was no longer proprietary to us based on this collaboration, that J&J would have a whole host of oral peptides or peptides in general in their R&D portfolio. I haven't heard anything recently.

Yes. The -- now in terms of the food effect, things like that, it is very simple. You take -- and as you know, this is a one pill, once-daily oral pill. So you take the pill first thing in the morning with an empty stomach and you can take it with water. And you just have to avoid solid food for the first 30 minutes. I don't know of that many people who require solid food in the first 30 minutes after they wake up. So I think compliance should not be an issue.

That's good to know. And congrats again, very exciting.

The next question comes from Etzer Darout with Barclays.

This is Luke on for Etzer. Congrats on this update. Given the success of icotrokinra, are you looking to replicate its PK/PD profile with your oral IL-17? Is there anything that you'd like to see optimize as we think about the healthy volunteer study? And then looking forward to the study initiating in the second half, should we expect the size and scope of the IL-17 study to be similar to the IL-23 trial?

Yes. No, very good question. So I think in terms of what we would expect with our oral IL-17 PN-881. Yes, the overall profile of the peptide is of such nature that, as you know, it is incredibly potent. It is the first of its kind as an oral agent to have activity both against the A and F isoforms. We have made sure that it is very stable. And we definitely have an eye for achieving higher level of absorptions and oral bioavailability. So the -- it is -- and those were the same things that we were able to achieve with icotrokinra, has incredible potency, amazing oral stability and adequate degree of oral exposure. So those are the similarities in the approach with oral peptides.

And our focus with 881 is, of course, going to be on the drug levels that we observe in healthy volunteers, right? What are the levels about the EC50, EC90, those kind of criteria. And that in turn would dictate what kind of Phase II study in psoriasis, we would undertake as a follow-on to the Phase I study. Currently, our guidance is that, hey, we will complete the Phase I studies by the middle of the year, and then we will carefully analyze the data that we have in front of us. And then it is in the third quarter that we will share our decision about our next steps with 881.

Yes. And let me just clarify that IL-17 biology is completely different than IL-23. So our targets that Dinesh just articulated are not based on ICO. They're based on the injectable antibodies that target IL-17 A and F. So that's, again, with validated targets, that's how we define our goalpost, so to speak. With respect to pharmacodynamics and normals, it's not very relevant to IL-17. So we -- again, we know what we think are actionable pharmacokinetic levels. So that study is really aimed at finding the right formulation and dosing instructions to take into a Phase II study for the peptide.

The next question comes from Thomas Smith with Leerink Partners.

Let me add my congrats on this huge milestone. Just a couple from us, please, on your earlier pipeline. First, on the planned expansion into the obesity space. Could you talk about some of the learnings from the ICO oral peptide experience and how you could apply that to your dual and triple agonists? And can you just remind us what you're trying to optimize for with these compounds? Is it greater weight loss, better tolerability, less frequent dosing or maybe some other attribute besides just the oral dosing component? And then second, with respect to the capital return plans to shareholders, can you just expand on your latest thinking there between share buyback or dividend and when you think you'll have more visibility into the timing for that capital return?

Yes. Maybe answering the second question first. In terms of capital return, we have been conveying since the beginning of the year that we have serious intentions of some sort of capital return to shareholders in a meaningful and a programmed way. I'm a big believer of like events actually have to happen rather than assuming they happen before we act on something. So today, until yesterday, ICO would most likely get approved. Well, now it is approved.

So one of the similar things on the financial side is like, hey, in our Takeda co-development, co-commercialization, 50-50 partnership, we are strongly leaning towards opting out. While it must translate into -- we are actually opting out because that is what really would trigger the $400 million influx of opt-out fee into Protagonist war chest. So I think it is really in the second half of the year or more specifically in the third quarter of the year. And hopefully, by that -- I mean, in the fourth quarter of the year. And hopefully, by that time, rusfertide is also approved. So there are milestones associated with that as well. But in the fourth quarter, we'll be able to provide more granularity on what we exactly would opt to do. But as of today, and we have the ability and right to change our mind. But as of today, what comes to mind is share buybacks in a moderated way and a consistent way. That's what comes to mind.

In terms of the obesity space, I would say it's also like what are the learnings from ICO and it is -- what are the attributes we would want to have an anti-obesity agents based on the learnings from ICO. I would also say we also have to keep an eye on the competition that is out there, right? So -- in general, when we choose a disease area to work on, of course, we want to address an unmet need. And I believe in the obesity space, there is a huge unmet need. I mean there is a lot that is going on, but we are just scrapping the surface in my opinion. So the unmet need is there. But at the same time, there are many players there. So the second criteria that is equally important is that along with the unmet need, we should be able to offer something that truly has a high degree of differentiation. And that's where our first act in the space, the oral triple G serves as a great example.

We believe we are the -- definitely the first ones or one of the first ones that are coming up with an oral triple G. And it's not just a mad chase toward maximizing weight loss, also that -- although that will be a key characteristic of an oral triple G. But we have also gone through great troubles to adjust the relative potencies of the GLP versus GIP versus GCG agonism based on which we believe based on the literature data that we are also trying to optimize for other attributes besides maximal weight loss, such as improving GI tolerability and tilting the ratio of weight loss more in the category of fat loss versus -- and preservation of muscle mass loss. So hopefully, that answers the question on the obesity candidate.

The next question comes from Tara Bancroft with TD Cowen.

This is Ikenna on for Tara, sharing our congrats as well. I had a question. Can you tell us about pricing, the rationale and gross to net assumptions that may impact royalty payments?

Yes, that is definitely a J&J question, I would say.

And royalty payments, we can -- can you comment on what the royalty payments are based on?

I mean, yes, the economics we know, obviously, it's 6% to 10% royalty with -- and we've given further guidance that 7.25% is the weighted average at $4 billion and then above $4 billion, it's a 10% royalty rate. But as to your other question, as Dinesh and Sam said, that's pricing and gross to net is not something that we can guide to. That's a J&J question.

I had a quick follow-up, if you don't mind. on its usage, could payers eventually require that therapy requirements with a failure on ICOTYDE before injectables or vice versa? And can you talk about...

That's a J&J question. We are -- so any commercial question, you have to ask J&J. But they're going to be very vocal. They have been talking about this as one of their biggest launches ever, if not biggest. They're very excited and vocal. So you're going to have no lack of information flowing out of J&J on this product.

What you will hear from us is on a quarterly basis, what was the revenue generation from ICOTYDE based on the royalty payment arrangement.

The next question comes from Yun Zhong with Wedbush Securities.

Congratulations on the approval. Maybe a follow-up question on the obesity program. And so you introduced the dual agonist program in addition to the triple G agonist. So I just wanted to -- I understand that you want to build a portfolio for obesity, but any additional comments that you are able to share in terms of maybe your plan positioning when it comes to, for example, resource allocation and suitable patient population? Any comments you're able to share, please?

Yes. So I really like this question. And in a way, if you think about it, this is our admitting the fact that obesity is a rapidly evolving field and nobody has a crystal ball, and ultimately, which will be the most desired target or the combination of targets and poly-agonism, I personally believe that there will be many winners and especially if you keep in mind the comorbidities that are also affiliated with this approach. So in a humble way then what we are doing is like, hey, let's create multiple assets and then -- but with a strong differentiation of having an oral drug as much as possible.

Although, as you know, we are developing both oral as well as subcu form of our agents. And that is also an acknowledgment of like it's like, hey, we don't know what the preferences would be. There could be some instances for some periods of time where an injectable would be a welcome choice. Working on a dual along with the triple is also the same kind of spirit, if you will. It's like triple could be -- we are hoping it will be outstanding. If you look at the Phase III data of retatrutide, the triple agonist from Eli Lilly, the data is very, very impressive. But what if down the road, somehow the dual becomes a more optimal choice. So we don't want to leave anything for chance. And the whole idea, and we will continue in this way. And as you know, we have also acknowledged our presence with the amylin agonist and polyagonist kind of approaches. The whole idea in a way is to create an amazing portfolio of numerous anti-obesity agents over the coming year or 2. And then, of course, that would hopefully be very appealing and be a very high-value proposition to a big pharma who would be a very interested late entrant to the party.

Okay. Great. So the follow-up question on J&J partnership. Does your existing partnership with J&J on ICO provide J&J the first to negotiate right to, for example, IL-17 program and/or obesity programs, please?

It does not. There's no such agreements, no sort of contractual terms that would cover any of that -- our remaining programs.

It's a very clean arrangement. It's confined to the IL-23 program and obesity is certainly of our stretch. But just to clarify, they have no such rights even for the oral IL-17 program.

The next question comes from Richard Law with Goldman Sachs.

This is Jane on for Rich. Congrats on ICO's approval. So I have two questions. First, as you mentioned there is potential for share buyback. So does that predicate on after you can partner more pipeline assets out or the current resources are sufficient? And what condition will allow for the share buyback? And my second question is about the pipeline programs. So are you going to share Phase I data for IL-17? And then when will you explore partnership for the IL-17 and the obesity programs?

Yes. No, I think these are interesting questions, and then we can make some general comments. The share buyback is a decision based on our overall conclusion, and you are pointing it out very nicely. Is it from the revenue that we'll generate from the existing partnerships? Or is it also based on the partnerships we may do in the future because we do keep emphasizing that, yes, we are big believers of joining hands with big pharma. And I would say, yes, it's a combination of both. And what I can also clarify is like we are certainly not compromising on our ability to scale our R&D operations to broaden the discovery efforts in numerous targets, some of which we have announced and some of which are under the hood. So it's a problem of the riches. It's a nice problem to have and the abundance of financial value creation basically lends us to state that we want to return some value back to our shareholders in an efficient way, and that's where the share buybacks come in.

In terms of the IL-17, I think what we have shared and clarified last year is that, hey, we did extensive sharing of preclinical data when we announced our oral IL-17 881 and when we announced our oral triple G anti-obesity agent 477. But going forward, we'll be a bit stingy in terms of sharing the actual data for 2 reasons in a way, and this is with full sincerity and humbleness. One is like now we are at a stage where we don't need to share the data and wow the Street with like, wow, look, here is wonderful data and then next week, do an equity offering. If at all anything, we are clearly saying we are not going to do an equity offering, never say never, but we are not -- we have no plans of an equity offering in the near future. And second, and again, this is with full humbleness. We just don't want to teach too much to the competition. So we'll keep it under reps.

And then could you comment on when will you explore partnership for the IL-17 and obesity programs?

Yes. As you know, partnerships are -- is an activity that is a constant activity. If you look at our J&J partnerships and the Takeda partnerships, I mean, these are dialogues that go on for years, not just with the final party, but multiple parties at any given time. So oral IL-17, I mean you can just assume it's a really hot asset, and there is great demand for it. I can tell you that much. So we do the act of playing the musical chair and continue to have a sincere dialogue with parties. As and when a partnership is inked, well, that is -- that happens when there is a meeting of minds and the checkbooks.

One of the things I would point out is one of the reasons that we're saying that we are going to have excessive cash here, even though we have such a robust pipeline, is these assets validate quickly and cheaply in Phase I and II studies. So in terms of your partnering question, we want to get clinical POC. That's where we think we get adequately -- we get the best deal constructed, and that's going to come relatively quickly for some of these assets.

The next question comes from Geoff Meacham with Citi.

This is Nishant on for Geoff. Going back to Dinesh, your comment on compliance regarding the food effect. I just wanted to get a sense whether -- what kind of rates you have seen in the clinical trials, whether there was any food effect related kind of issues with the patients that they have kind of dropped out and just getting a sense of actual data from clinical trials.

And then on your strategy overall, you have mentioned in the past that for some of the rare disease like oral hepcidin asset, you could go all the way other than partnering. So just getting a sense of your priority in terms of like partnering versus taking assets all the way through, whether that could change for other assets as well.

I want to address this issue about compliance and point out, and you can look this up is J&J has presented long-term data on this compound. It's necessary in psoriasis to present up to 1-year data. And one of the remarkable things about their long-term data is although patients are feeling improvements in itch and pain and things in a matter of 48 weeks. The persistence on the study to week 52 and the maintenance of the effect they saw at week 16 is outstanding. And I would encourage everyone to look at all that data because, obviously, in -- even in a study, if you're taking a drug over a year, you're going to get the compliance that's the compliance. That is very good for them.

First and foremost, taking the drug with an empty stomach first thing in the morning and not having any solid food for 30 minutes, it's not a high -- it's not a hurdle at all in my opinion to compliance. That's number one. And the second thing that I would just reiterate what Sam said, you start seeing or feeling this effect of really from itching and pain in the first few weeks. And that's just human psychology. You feel the drug is working, you're going to continue with the treatment. And this is the most convenient form of treatment that one could ever think of. And as we started talking about in the beginning of the call, the safety, just amazingly clean safety. So when you add all that up, the compliance part in our opinion, is a nonissue.

J&J has also presented in this long-term data, patient satisfaction data. You can see this published at EADV and other places. They've shown that they have data on how people love this product.

Yes. Now in terms of the oral hepcidin, I mean, that's a good question. Now keep in mind that even with rusfertide, we were in Phase III study on our own when we announced the partnership with Takeda, and the original intent was like we will take it forward all the way through approval and commercialization. So I think it's no different for oral hepcidin. The intent is like, yes, this is a rare disease indication, and this is something within our domain. We are fully capable of developing and getting it approved on our own. But at the same time, the whole idea is like what is the best way to maximize value creation with an asset. And if joining hands with a pharma is the answer, then that is what we will do. At the end of the day, our focus, laser-like focus is on maximizing shareholder value.

The next question comes from Brian Cheng with JPMorgan.

Congratulations for the approval. Two from us. So we noticed that there is a head-to-head data against deucra included in your label. Will the label be updated ahead of the commercial launch once you have the ICONIC-ASCEND trial that's testing ICOTYDE head-to-head against Stelara later this year? And then for the PFA trial primary completion in the first half, will we be getting clinical data in the first half this year? Curious if you can give us a better sense of the time line for PFA as well.

So I think, again, Brian, these are questions -- these are great questions, but I would say they are best answered by J&J. And whether it is -- what is the outcome of the ICONIC-ASCEND study, where there is a head-to-head comparison with Stelara. And does that influence the expansion of the label? It's J&J, who will answer that question.

We're laser-focused on two things: how big are the payments? And when are we getting them?

Yes. And psoriatic arthritis, I mean, you are very observant. It's the completion of the enrollment up to the primary endpoint stage in the naive population, that's going to happen by the end of May. Now to what extent -- and when J&J chooses to share what level of data, once again, that will be up to them. Our job will be to fully cooperating with them.

I think as I had mentioned in my call, I mean, if you look at the historical track record of the IL-23 blockers, Skyrizi, Stelara, TREMFYA, that is 100% hit rate, right? All 3 of these drugs have had positive outcome in all the 4 indications, so not just psoriatic arthritis, but also Crohn's and UC. And as you recall, our Phase II UC data is just outstanding. 30% clinical remission is something to write one about. So, so far, we see very good outcome and very good translation, both in the derm space as well as in the IBD space. And we remain optimistic about the outcome of the ongoing clinical studies in the 3 other indications.

And just to touch on your comments earlier about how you think about partnerships in broader indications and you're more focusing on the smaller indications. How active are you today in securing partnerships for assets targeting the broader indications like obesity? Are you actively looking today? Or do you think that you will need to have some clinical data to secure a more fruitful partnership for you?

I think, yes. Great question. These are moving targets. And as I mentioned before, it's always healthy to have a dialogue with pharma companies under a CDA and you get great feedback, and it brings in valuable insights, that sort of thing. It also provides early warnings if there is something that would be concerning, that sort of thing. But I think it's fair to assume like if I were a big pharma representative, I would be definitely interested in touch, but would certainly want to see some sort of clinical data before becoming a big believer of the asset.

So now the advantage is like in the obesity space, just in a Phase I study by enrolling a few healthy volunteers with a higher BMI index, you can actually observe weight loss to some degree. And the smart people can easily make conclusions on the overall effectiveness of the drug at such an early stage as well. So I think we definitely still have some work to do, but chatting with pharma under confidentiality, under a CDA is a norm for Protagonist.

And I would say, Brian, that -- with respect to the targets that are furthest along, IL-17 and obesity, it's not like we have to go knocking. People come knocking on our door. These are very hot targets that a lot of people are interested.

Thank you. There are no further questions. I will turn the call over to Dr. Patel for closing remarks.

Thanks. Thank you again, everybody, for joining us this morning. The approval of ICOTYDE is a proud and historical moment for Protagonist, and we look forward to carrying this momentum forward as we continue advancing our R&D pipeline and preparing for the important milestones ahead. Thank you again for your continued interest in and support of Protagonist.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Hello again, everyone. I'm Etzer Darout, senior biotech analyst at Barclays. It's my pleasure to welcome Protagonist Therapeutics to our fireside. With me today, I have Dinesh Patel, the Chief Executive Officer and President at Protagonist. Dinesh, maybe just to start off, for those maybe less familiar with the story, if you could just provide an overview of Protagonist, and then we'll move into Q&A.

Sounds like a plan. First and foremost, thanks for inviting us. And I have to mention that this does take me down memory lane. Protagonist, we did our IPO back in 2016, and Barclays was one of the bank that helped us achieve that component of going public. So thanks for that as well to Barclays.

So yes, right from the get-go, we have focused on creating innovation through novel peptides. So that's our bread and butter, and we have expertise both for injectable peptides, but also for oral peptides, and we have been able to put it to good use over a period of time. Maybe over a period of time is a bit of an understatement because we have been doing this since 2008 when nobody cared about peptides. It was an unknown entity. Of course, now over the past few years, the landscape has changed, and we are glad that it has changed.

But fast forwarding from 2008 to now, what has then happened is like we have 2 wonderful assets, which showed outstanding Phase III data last year. And on the heels of that, we are assuming, hoping that they get approved this year. So the first drug I'm talking about is icotrokinra or icotyde. This is an oral IL-23 blocker, and this is the first and only. So there is amazing scarcity value as well. And this is a journey that we started with J&J all the way back in 2017 when it was just a preclinical program.

So we have come a long way and now the first indication for which approval will be seek is for psoriasis. And then the drug is also in Phase III studies in all the other 3 indications where IL-23 blockers have had 100% success, right, namely psoriatic arthritis, UC and Crohn's.

The other asset then is rusfertide. This is a weekly injectable metric of the natural hormone hepcidin that is in charge of iron homeostasis. And we felt that, hey, polycythemia vera, that's a disease. It's characterized by excessive red blood cell production, right, excessive erythrocytosis. So it made sense to come up with an erythrocytosis specific agent. And again, there is no such thing that is out there right now.

So we are the first and only over there as well. And that is something unlike the J&J deal, which was partnered at a preclinical stage here, we partnered with Takeda in January of 2024 when we were already in a Phase III setting on our own. It's a rare disease indication, right? So it is something we could take forward further.

Takeda is an amazing partner. They have a focus in the heme space, and we are so glad we have joined hands with them as well. And about a week ago or so, we announced that we received priority review. So that is going to hopefully accelerate the approval by a few months. And so -- and with ICO, the NDA was filed in July of last year. So it would be an amazing coincidence if both drugs get approved, let's say, sometime in the third quarter of this year. So we are looking forward to that.

So that's the outcome of 16, 18 years, whatever you want to call it, or at least 12-plus years of efforts in these programs. And now what we have -- since we believe we are validated, we have proven ourselves multiple times. We are going for the second act like a rapid performance, right? And the next wave of assets is, again, continuing in the I&I space with an oral IL-17 program. The drug is in a Phase I study in healthy volunteers. We also have preclinical studies going on in the IL-4 program. And it's like, hey, if you can create an oral, ico is like whatever you want to call it, it's an oral equivalent to a Skyrizi or TREMFYA big one. So similarly with there be an oral BIMZELX, right? That's the idea with the IL-17.

And then over the last few years, as we all know, the anti-obesity space gets a lot of attention. And chemically speaking, the two approved drugs are injectable peptides. So that was like an invitation for us. It's like, okay, can we create some solid differentiation through oral peptides. And the first thing that we have is an oral GGG. It's the one of its kind. And over there, we will get into clinical studies in the second half of the year, that sort of thing. And we also have an oral GLP/GIP, a dual. We have acknowledged our presence in the amylin agonist program as well. So we want to create a whole portfolio of different assets. And then last but not least, in the heme space, the second act is the oral hepcidin. So that's basically the story in a nutshell.

Great. As you think about the preclinical evaluation of all of these assets, prior to moving them into the clinic. How are you measuring sort of success and then the ability for those assets to translate to the clinic, looking at exposure, particularly it's peptides. And so that presents a challenge in and of itself. So how are you measuring what success looks like prior to going into?

It's a fantastic question, and it's fair to admit that we almost torture ourselves with exhaustive preclinical evaluation. And to your point, it's like, hey, is it going to work as an oral because let's face it, with peptides, you're going to be limited with the oral bioavailability component.

Now we make up for that with just outstanding picomolar-like potency, which also gives us amazing specificity, right? And now advances are being made in terms of enhancing oral bioavailability. But one thing that we do is we go through a lot of preclinical models where our drug will be administered orally. And then we would like to see that preclinical proof of concept being achieved in animal studies when our drug is administered orally. So that's kind of a generic way of describing it. And it's fair to say that we take at least 3 to 4 months longer than what a typical preclinical assessment would look like because we want to make sure that we pick the right candidate.

Yes. Great. And maybe on icotrokinra in psoriasis, we've seen at least one successful superiority study. We also have ICONIC ASCEND comparator, ustekinumab. How do you plan to leverage those, again, studies as you think about initial launch in psoriasis, as you think about the types of physicians that you're going to want to target, how do you ultimately want to leverage those data sets?

I mean these are extremely important questions, but I have to be very upfront about it. J&J is the best entity to be answering these questions. They are the ones doing the heavy lifting. But as you can imagine, they have done some amazing things, right? They -- like you pointed out, went for a head-to-head superiority study with the only approved TYK2 inhibitor deucra. And our data is fantastic. The primary endpoints were achieved. And whether that makes it to the label or not, that's between J&J and the regulatory agency.

They also went ahead and kind of did a subpopulation analysis and presented amazing data in the adolescent population. And as you know, now by the end of the month, they are completing this head-to-head study with their own injectable STELARA. To me, what all that is telling me is like, obviously, they are big believers of icotrokinra or icotyde now. And they could be gearing this towards like first-line therapy, something like that. Right.

Right. Maybe a question on rusfertide but not necessarily on the injectable program. But again, when you think about the potential for an oral hepcidin functional mimetic, how should we think about the positioning relative to rusfertide in terms of cannibalization is always something that people are going to talk about. Could they be complementary? How do you think about an oral agent versus sort of the injectable agent?

Rusfertide is like a kid that is completing college and is pretty soon going to have a job and have his or her income, whereas the oral is like still maybe in junior high or something like that, right, that kind of thing. But jokes apart, it's like there is enough time delta between the 2 drugs and rusfertide is an outstanding drug. It's the first drug of its own kind, erythrocytosis-specific mechanism. Takeda is a fantastic partner. So we don't see any overlap or that kind of -- yes, overlap or one thing taking away the market from the other. If not, I think it's a continuity of dominance first with rusfertide and then hopefully with the oral icotrokinra.

Right. No, that makes sense. We've had questions around the competitive landscape or evolving competitive landscape for rusfertide. People have talked about some upcoming data sets from Silence Therapeutics. Maybe your thoughts around the competitive landscape just broadly in PV and then your thinking around like what that ultimately -- that space evolves to?

Yes. And I mean, in a way, we are flattered that people. Other companies are also embracing the core mechanism of hepcidin, right, as a way to offer treatment in polycythemia vera and whether it is Silence or whether it is Disc Medicine, and these are great companies, and we wish them all the best of luck. What I would say, though, is like let's pick the TREMYA 6 mechanism and other mechanisms of that type. Those are mechanisms whereby you are trying to really enhance the production of endogenous hepcidin. And that could have its pluses, minuses, limitations, things to watch out for, that kind of thing, whereas our approach is very clear. We use hepcidin as a starting point rather than as a drug because I'm a medicinal chemist by training. So for me, hepcidin is a great starting point. And then it's like, okay, what do we fix?

Let's create a mimetic that is a more potent, more stable, has drug-like properties, and that is what we achieved with rusfertide, and it is titration to affect things like that, right? So one of the things to watch out for "longer-acting drugs" would be like keep in mind, this is the biggest side effects that one should be concerned about over here is exaggerated pharmacology, right? Because now you are making the patient anemic and that is not desirable.

So I think with a weekly injectable that we have, we are in a very balanced position, if you will, and we titrate from low to high and then find the balancing act of like which is the right dose, that kind of thing. And measuring whether your drug is continuing to have the effect or not is a very simple blood test. You measure the hematocrit level. So I think we are happy with where we are. And the other component is, of course, we are years ahead of everyone else. So we're going to have for a number of years, right, the Phase II ourselves.

Great. Maybe switch gears to PN-881 or IL-17. You have a healthy volunteer study that we'll get an update on this year. How are we thinking about what success looks like for that study and how that study ultimately helps inform what a Phase II program would look like for an oral IL-17?

Yes. Oral IL-17 and 881, that's like our second act, if you will, right? As my kids have been telling me all my life, anybody can get lucky once. Can you do it again? Whether it's creating another successful company or another asset or we'll have 881. The preclinical data has been outstanding. Like we were talking other -- we went through like a very exhaustive evaluation. And you're asking that great question, what would success look like because we are doing just a Phase I study in healthy volunteers.

Very comprehensive study, though. And the idea would be like we want to get definitive ideas about the dosing regimen, what is the ideal dosing regimen, right? So if we believe the drug is working, then that would enable us to go for a full-fledged Phase II study in psoriasis patients. Now what we are looking for, the antibodies, oral -- I mean, injectable antibodies have taught us a lot, right? It's like what should be the level of target inhibition that you should be achieving that would translate into efficacy.

So what we have done is like based on that, and we have achieved amazing [indiscernible] potency, right, picomolar kind of potency against the target. And another characteristic we have, which is [indiscernible] is we have activity against both A and F isoforms. We don't know of anybody with an oral approach that has that right. So we have made it as full proof of possible.

But getting back to your question, this has given us an understanding of what are the drug levels we need to achieve through oral administration that would give us the confidence at a translational level that, okay, this should lead to efficacy in patients. And so that is what we are striving for in a Phase I study.

Now the other thing to keep in mind is like our peptide, it's almost like 100x smaller in size compared to the big antibodies. And so in theory, one could assume we may have better tissue penetration, skin penetration, that sort of thing. And that could give us an extra advantage in terms of overall efficacy scores down the road. Having said that, we are not counting that in our "mathematical model" of like what are the drug levels we need to achieve based on what the antibodies have taught us in order to feel pretty assured of efficacy.

Right. And one of the questions that we get around the oral IL-17 program is how much of this does Protagonist want to execute on their own versus ultimately finding a partner for a large indication. How are you thinking about business development around oral IL-17? Is this an asset that you can take to the finish line yourself? Or do you ultimately view sort of maybe the same road map as we've seen with...

Another fantastic question, and I'll give a slightly detailed answer. So as you know, with the money we have in the bank and then we have also kind of admitted that we will be most likely opting out, let's say that out of the Takeda thing, which is going to bring an influx of another $400 million and the $75 million upon approval as a milestone payment and another $50 million from J&J, if ICO gets approved, right? And then the revenue streams, we are not even -- and revenues are perennial.

So there is a lot of money, will the company Protagonist have the financial capability to fund its own studies, not just up to clinical POC, but even in Phase III studies, even for larger indications, the answer is yes. Are we going to do that? The answer is no. Here is the reason why. It's not only about money, right? It's look at the amazing strength that a pharma brings to the table, right? It's like ICO, by the end of the day, counting all the 4 indications, it's being evaluated in 7,000-plus patients. What an amazing job, right? Think big. Pharma can do that. As long as we get our cut a fair cut, we will be okay.

So our approach would be, in simple terms, it is like we will take all of our assets to clinical POC. But after that, I'm a big believer of pharma partnerships because of the things I mentioned about. Now we may have a higher participation. With J&J, when we did the deal, it was at a preclinical stage. The arrangement was we discover, we do the preclinical and IND-enabling and Phase I studies. And after that, Phase II and beyond, they take care of it. Now we may say, you know what, no, Phase II, let's do a 50-50 cost sharing. Phase III, let's do a 30-70 cost sharing. So we could get more creative so that we can retain more back-end economics.

But at the end of the day, for big indications, yes, we would love to have a pharma partner. For the niche indications, the rare disease indications like our oral hepcidin, that is where we definitely can have a mindset of like, let's do it alone all the way through the finish line. So it's those kind of things. But the beauty is we envision we'll be doing all these things without -- never say never, but most likely never having to raise money from outside, right? So we are not going to dilute away the shareholders for the foreseeable future.

Right. Great. And maybe with that, we could spend the next few minutes on obesity. Obviously, dominated now by the injectable peptides. You've had an opportunity to see all of the commercial dynamics, what's happening in the clinic with different agents. I guess how are you thinking about how the set of molecules that you're developing, where they can ultimately fit in the treatment paradigm for obesity?

Yes. So look, I think in obesity, it checks all the boxes for us, right? The 2 approved drugs are injectable peptides. So we are like, yes, we can make a difference over here. At a very simplistic level, we look for 2 things when we choose a project. It should be an area where there is significant unmet need. And second is through our approach, we should be able to offer some very strong differentiation.

So over here, clearly, the area is getting very crowded, but I believe that this is an opportunity of a lifetime of unprecedented level for our industry. It could be what AI is for high tech, the whole obesity and comorbidities could be for pharma sector. And we may just be scrapping the surface. This may just be the humble beginnings. And as usual, so many undertakings are there, that kind of stuff. But even then, we said, you know what, and we consulted a lot with the KOLs. And what came at the top of the chart was like, hey, can you create an oral triple? And the answer was, yes, we can do that. So that is what we have chosen, right, an oral triple GLP, GIP, GCG. But in talking to the KOLs, we also gained an understanding of what could be the relative potencies of GLP, GIP, GCG that could be considered optimal. And could that translate into not just better quantity of weight loss, but also better quality of weight loss.

So I'm referring to better tolerability, which could be achieved through better GIP agonism and better lead muscle mass preservation that could be achieved through the GCG component of energy expenditure, that kind of thing. So we have tried to optimize those components also as much as possible. And we believe we are the only or one of the very few oral triples that is out there.

And in talking to the KOLs, it also occurred that, hey, some of the markets with some patients for some periods of time may belong to injectables. So we are developing both a weekly subcu and a daily oral. And the PK characteristics are fantastic. We see drug accumulation. So we do believe that down the road, maybe the weekly subcu could transition to monthly subcu in a maintenance setting. And same way, the daily oral pill could be a weekly oral pill or something like that. So we like what we are seeing. But the other thing is like we're not falling in love with just one asset. We want to create a portfolio of assets over here.

So we have already announced we have a dual, right? And we have already acknowledged our presence with amylin, mono and polyagonist, that kind of thing. We'll create a portfolio of assets. And I think down the road, it will become more clear which could be preferred in which kind of subpopulations and also within -- when you consider the comorbidities, right? So if it is, let's say, NASH/NASH kind of livercentric indications, maybe the GCG component does become important over there. That's where the field is leaning towards.

So I think we are still learning. And we just are taking a very humble approach over here. It's like let's create a portfolio with different kind of characteristics and then let's see where we will land at the end of the day.

Yes. Yes. No, great. And you've talked about potentially achieving maybe early clinical proof of concept with single ascending, multiple ascending dose studies. I guess this is sort of design, right? But is this really based on just what the analog that you've seen in clinical development and being able to assess exposure in an initial -- whether it be 28-day weight loss and then assuming that maybe that would be durable? How long...

Whether it is a 13-week weight loss, that kind of thing. No, exactly. It's like we are observing. We are learning from others, why not, right? Knowledge is free. So -- but that would be the idea. And by the way, that is another general advantage with our approach, like in a Phase I setting, you can get your clinical POC. That is very true in the obesity space. You enroll healthy volunteers with a higher BMI and you will get your readout even with the oral hepcidin, for example, we'll observe the effect on serum iron levels and the related biomarkers, and we will get a good understanding of where we are going.

So I think then if you add up everything that's in our R&D pipeline, the clinical POC is just going to sneak up on us. It can come sooner than what most people may be anticipating.

Great. It looks like we're up on our time. Dinesh, thank you so much for a great discussion. Thank you for our listeners as well for listening in.

Yes. Thank you for the wonderful time. Great questions.

Good morning, everyone. Thanks for joining us for another session at the 44th JPMorgan Healthcare Conference. I'm Brian Cheng. I'm the senior biotech analyst here at the firm. On stage, we have the CEO of Protagonist Therapeutics, Dinesh Patel. I'll now pass the mic to their CEO, Dinesh, for a short presentation, followed by a live audience Q&A.

Dinesh, the stage is yours.

Excellent. Good morning, everybody, and thank you, Brian, for the kind introductions. It's a real privilege for Protagonist to participate at this prestigious conference, and this is for the sixth year in a row now. Just a quick reminder that we will be making forward-looking statements during the presentation and throughout the conference.

So this slide provides an outline of today's talk, and it also highlights how the next 12 to 24 months are going to be a phase of immense growth and value creation at Protagonist, driven by 2 potential blockbuster approvals and launch, multiple clinical readouts, new discovery programs and a very strong cash position, right? Starting on the left then, this could be the year when we could be completing our very long -- decade-long journey from concept to commercialization through 2 specific assets, icotrokinra, partnered with J&J and rusfertide, partnered with Takeda.

And in the middle, we are highlighting our development candidates, all working on validated biological targets, but with highly differentiated assets addressing specific unmet needs and spanning over multiple indications. Also, unlike ICO and rusfertide, these are fully owned by the company. 881 is potentially a best-in-class oral IL-17 antagonist. 477 is a triple agonist that marks our entry into the obesity space. And today, we are very thrilled to announce 2 new development candidates, namely a dual GLP-GIP agonist, 458 that adds to our obesity portfolio and an oral hepcidin functional mimetic, 8047 that could complement rusfertide.

Moving to the right, we have added IL-4 and amylin as new high-priority discovery programs with a long-term perspective of expanding and strengthening our pipeline. Finally, we are very fortunate to have a very strong position, which enables us to not only fund our internal programs, but will also enable us to return meaningful capital to shareholders. So with this outline, now let's go through an overview of these assets and programs, starting with ICO. Icotrokinra highlights one of the most important partnership in Protagonist history, namely with Johnson & Johnson, which started all the way back in 2017.

And it underscores both the strength of Protagonist discovery platform and the value of such strategic partnerships. And ICO, we believe will hopefully set a new standard of care in psoriasis and subsequently in other IL-23 mediated indications. ICO by virtue of being the first and only in-class oral IL-23 pathway blocker in late-stage development, it has 2 big advantages. First-mover advantage and also great scarcity value. So taken collectively together, the 4 indications where IL-23 blockers have historically found success, psoriasis, psoriatic arthritis, UC, Crohn's, these represent a total commercial opportunity north of over $80 billion. And the opportunity for ICO in particular, comes in 2 different ways.

First, taking share of the market from the current drugs and second, creating its own new market. So all the approved IL-23 blockers today, STELARA, SKYRIZI, TREMFYA, these are blockbuster drugs, but these are all injectable antibody drugs. And marketing research data clearly suggests that almost all, 90% of the patients who are on injectable still will happily switch to an oral if a good option was available. The second finding is that from millions of people that are eligible for targeted therapy, more than half of them are not opting for anything for 2 reasons. They don't like injections, and they don't like the options that are currently available in the oral camp. So ICO, through its amazing combination of biologics-like efficacy, stellar safety, convenience of once-daily oral pill, it could benefit from both the existing market and also create a new market of its own.

So collectively, when you put all these facts and figures together, it easily justifies a consensus forecast of $10 billion plus in total market value exceeding over $80 billion. This slide summarizes all the Phase III clinical data from various studies in psoriasis, and we'll keep this high level because this has already been shared before. But in terms of efficacy, you can see that high rates of skin clearance by all different measures are consistently achieved by week 24 and the responses are durable over extended periods. Besides efficacy, we believe equally important is safety. And honestly, it's not that often in our careers that we got a chance to say that, gee, our drug exhibits placebo-like safety.

I guess that says it all. So taken together, ICO delivers what dermatologists and patients have been asking for all along, right, biologics-like efficacy with the convenience of an oral pill and without compromising safety. So these study results form a comprehensive data package that formed the basis of NDA filing last year. Now moving from derm to IBD conditions. Here is a cross-trial comparison of Phase II UC study results of ICO with not just the IL-23 injectables, but also all other approved IBD drugs, including oral small molecules. And with a clinical response of 64%, ICO's efficacy is really at the top of the chart. These study results demonstrate the best-in-class potential for ICO in inflammatory bowel diseases, especially if you add the amazing safety profile of ICO compared to the other choices in the field.

And of course, this has triggered pivotal studies in both UC as well as in Crohn's in the hands of our partner, J&J. So this is a concluding slide for ICO. It provides critical events and time lines, and it highlights the great breadth and momentum of ICO, starting with the potential commercial launch for psoriasis this year, followed by completion of pivotal studies and significant commercial expansion into other indications in the coming years. In terms of near-term catalyst, Phase III ASCEND study and the Phase III biologics naive psoriatic study, they will be completing their primary endpoint phase of the study.

ICO is an incredibly important asset to J&J immunology franchise. And their expertise in this area through STELARA and TREMFYA will be a great asset for commercialization of ICO. And finally, the pronunciation of icotrokinra just got easier. J&J shared the brand name yesterday, it's Icotide, so much easier than icotrokinra, I guess. All right. Now let's talk about our next asset, rusfertide, that is also eyeing an approval launch this year.

Rusfertide, as you recall, is a synthetic peptide mimetic of the natural hormone hepcidin, whose function is to control iron absorption, storage, distribution in the body. And by controlling iron, obviously, it is controlling red blood cell synthesis. So PV as a reminder now, is a rare disease characterized by excessive production of RBCs, and the primary treatment goal as per NCCN guidelines is to maintain hematocrit below 45%. So this provided the rationale to evaluate rusfertide, a very RBC-centric option for PV, and the study results have been outstanding. Rusfertide Phase III VERIFY study results were presented last year at a plenary session at ASCO.

And it was really gratifying to hear an independent discussant describing this as practice changing and recommending it as part of standard of care for PV. The study met not just the primary endpoint of clinical response, but also met all the 4 secondary endpoints, including patient-reported outcomes. The core mechanism here, of course, is rusfertide's ability to control RBC synthesis and offer consistent hematocrit control. So patients on rusfertide treatment arm, they control hematocrit like magic, whereas the patients in placebo arm who are on standard of care, they see a rise in their hematocrit levels.

And after 32 weeks when rusfertide is added to that treatment regimen, hematocrit levels are normalized fairly quickly. So it's really a titration to effect, and it demonstrates rapid onset of action. So rusfertide is showing a lot of promise as a potential first-in-class RBC-centric treatment for PV, and our partner, Takeda, has made a conservative estimate of peak revenue potential of $1 billion to $2 billion for this drug candidate. Now PV is a rare disease, but with pretty high prevalence number, north of 152,000 patients in the U.S. alone. And out of the 78,000 or so patients on treatment, their choices range from phlebotomy to hydroxyurea to interferon to Jakafi in HU-refractory patients.

And polytherapy cycling through different treatments, it's quite a common occurrence for these patients. A very, very consistent observation amongst all these patients is that a vast majority of them, about 78%, they failed to control their hematocrit in a consistent manner. And this is true for all stages of treatment. And this is a clearly large unmet need and RBC-specific unmet need. And then, of course, it could be addressed by an RBC-centric agent like rusfertide, right? And therein lies the strong differentiation and the commercial appeal of rusfertide. So we now have a very comprehensive clinical data package from various studies, which form the basis for the NDA submission last month. And remind you that rusfertide is an orphan drug for a rare disease.

It has Fast Track status, Breakthrough Therapy Designation, all of which should allow for an expedited dialogue with the agencies. And we anticipate potential approval followed by an almost immediate launch by our partner, Takeda, in the second half of the year. I would also point out that Takeda has strong experience and presence in the heme space and rusfertide is a high priority for them, which fits nicely in their heme portfolio. So this now completes our overview of 2 mature and partnered assets, Icotide and rusfertide. And now let's shift gears and talk about the next set of emerging and fully owned assets in our R&D pipeline, starting with 881. PN-881 is potentially a best-in-class oral IL-17 antagonist.

It's almost like a second act for us in the inflammatory and immunomodulatory space, the first act being icotrokinra or Icotide rather. IL-17 is a clinically and commercially validated target with utility in multiple indications. And IL pathway blockers are almost on equal footage with IL-23 blockers in the psoriasis space with a current market share of about $9 billion ballooning to over $17 billion by 2034. And besides psoriasis, they also extend their utility to other indications, right, psoriatic arthritis, HS, spondyloarthritis, things of that nature. Current agents are all injectable antibody drugs. And the best-in-class injectable is BIMZELX or [ bime ] from UCB, whose unique feature is potency against both the A and F isoforms.

So therefore, we embarked on discovering an oral peptide with BIMZELX-like A and F potency, and that is what we achieved in 881. And we have presented extensive preclinical data last year for 881. We finished the IND-enabling studies and commenced a Phase I study in the fourth quarter of last year. It's a pretty comprehensive 5-part phase study in about 150 volunteers comprised of SAD, MAD assessment of various solid dosage formulations and food effect. And the primary endpoint is focused around safety. The secondary endpoint is largely PK-centric, focused on drug exposure levels and identifying the optimal oral dosage formulation.

And we expect study completion by midyear, which in turn would then influence the design and initiation of Phase II study in psoriasis by year-end. Let me now take this opportunity to introduce one of our new development candidate today, 8047. See, Brian, we always save some new announcements for this prestigious conference, an oral hepcidin functional mimetic. So in -- if 881 was a second act to icotrokinra in the I&I space, then similarly 8047 can be viewed as a second act to rusfertide in the heme space. The rationale behind 8047 is pretty straightforward. Rusfertide has already validated the hepcidin pathway as a therapeutic approach for erythrocytosis mediated diseases.

And it's an outstanding drug. It's a weekly subcu injectable. 8047 is an oral option that can nicely complement rusfertide, and it can maximize the total addressable global market of hepcidin mimetics. And I do want to point out that unlike all of our previous candidates so far, which have been peptides, 8047 is a small molecule. We did an extensive comparison of various modalities that is peptidic versus small molecule leads and ultimately settle for a small molecule as the final choice over here. And this is just a summary of the potency of 8047, very similar to rusfertide, both entities are very potent, more stable and have superior drug-like properties in comparison to hepcidin. We have run extensive preclinical studies.

And of course, we are saving this data for presentation at future medical conferences. IND-enabling studies are underway, and we expect Phase I initiation by year-end. A very noteworthy point here is that in healthy volunteers itself, we'll be measuring the effect of iron levels, and we'll be able to establish an early clinical proof of concept. The next phase, obesity, as we know, it's a pharmaceutical opportunity of unprecedented scale. And today, it is largely dominated by 2 products, semaglutide and tirzepatide, and these are both peptides and injectable peptides, right? So this was -- it was only natural for us to apply our expertise in oral peptides and develop highly differentiated assets for this chronic condition.

And with that in mind, we are developing 477 as a novel oral GGG agonist with the objective of maximizing weight loss, offering better quality of weight loss and improving tolerability as well. And oral GGG, we believe, is one of the first-in-class category drug candidates here. And while that's where our focus is, we are also developing a subcu to maximize optionality and flexibility for both the patients and physicians. Also, early preclinical data shows a drug accumulation, which may facilitate the once-daily oral transiting to a once-weekly oral down the road and the once-weekly subcu morphing into a once-monthly dosing down the road. Time will tell. Both oral and subcu form of 477 are currently in IND-enabling studies, and we expect this to enter Phase I studies this year.

And once again, over here, a Phase II study with proper choice of healthy volunteers and proper design of SAD/MAD studies could provide a fairly decent and quick early clinical POC in a Phase I setting itself. Now obesity is a huge opportunity. It's rapidly evolving and changing. And there is going to be a strong need for multiple products to cater to different subpopulations and comorbidities. Therefore, we have always had the mindset of building a whole portfolio. And I'm glad to make 2 new announcements today. Once we -- one, we have identified 458 as a new novel dual GLP-GIP agonist. And tirzepatide, as you know, is the best-performing, best-selling dual agonist, but it's an injectable. So our differentiation is oral, although we are developing both oral and subcu to preserve optionality.

And second, amylin is a very important non-incretin target in the space, and this is a high priority target for us. So now this kind of completes our overview of clinical, preclinical discovery efforts. And now let's talk about the financial strength of the company. So for the financial overview, we intentionally chose this particular image as a backdrop. It's almost as if the individual here is representing Protagonist and proclaiming its financial independence. Okay. So we ended the third quarter of last year with around $679 million, which is sufficient to fund all of our operations at least through the end of 2028. And it is very important to stress, and my CFO, especially wants me to stress and clarify that this cash runway forecast through 2028, it does not include any future milestones, fees or royalty-based income that we would be receiving from our partnered pre-commercial assets, ICO and rusfertide.

And let me offer more granularity, some of it for the first time actually on the potential future revenue generation from these partnered assets. So let's start with the economics around the J&J collaboration with Icotide. We have already received over $300 million to date in the partnership and are eligible for receiving another $600 million in future development and sales milestones. There are over $200 million as development milestones over the coming years based on success around second and third indications. So practically speaking, very achievable. And we have previously guided to a 6% to 10% royalty range. Today, we are offering more clarity. So we'll be kind of averaging around 7.25% in annual revenues up to $4 billion, after which anything over $4 billion is subjected to the 10% rate.

And the royalty-based revenue table below is by no means a sales or revenue forecast by us. It's just an illustration. But an annual sales of $5 billion could lead to $400 million pretax revenue earn out, whereas if this becomes a $20 billion product at peak sales, then you're getting close to the $2 billion ZIP code. And now let's move to the next money tree, rusfertide, which is partnered with Takeda. Here, besides the normal milestones and royalty structure, we have a special provision to the current 50-50 co-development, co-commercialization partnership structure. So 120 days after the NDA filing, and the NDA filing was filed last month. We have a 90-day window wherein Protagonist can decide to opt out of the co-co arrangement, thereby converting into an out-licensing deal at a practical level.

And the economics are very attractive if we opt out, $400 million onetime opt-out fee, 3x higher milestones and 14% to 29% royalties on a worldwide global sales basis. So not surprisingly, we are strongly leaning towards opting out at this stage, which will be sometime in the second or third quarter of the year. Now besides the $400 million opt-out fee, we also expect to earn about $100 million in development milestones centered around regulatory approvals. And the royalty range is 14% to 29%. The weighted average, and this is new information, is around 21% to -- at up to $1.5 billion annual sales. And then the royalty rates progress to 29% for annual sales exceeding $1.5 billion. And as you can see in the illustrative table below, how increasing annual sales of rusfertide can translate into significantly higher revenues.

Now finally, let's cover the sales milestone centered around the 2 products. And typically, sales milestones are stretched out and aspirational at best. But in our case, we believe all of these, which are totaling over $1 billion are potentially achievable over the coming years. So this completes our financial overview. And we have provided not just the regular forecast, but also offered much more clarity today than ever before on potential milestones and royalties from ICO and rusfertide. And once again, these are not counted in our cash runway forecast through 2028. So let's finish the talk with what we started with. Protagonist is -- we are at a great inflection point in -- as a company -- in the growth trajectory as a multibillion market cap biopharmaceutical company.

And we have different catalysts lined up over the next 12 to 24 months, and these range from the commercial launch of 2 different partner products, ICO and rusfertide, thus initiating the second act, both in the I&I and the heme space with oral IL-17 881 and oral hepcidin 8047, respectively, working towards building a portfolio in the obesity space with GGG 477, now also the GG 458 and early-stage amylin agonist. And at last but not least, adding a new very high priority target, namely IL-4 in the I&I space. And finally, having enough cash to not only fund all internal programs to clinical POC, but also returning value to shareholders through opportunistic share buybacks and further down the road, maybe even offer dividends.

And this is just a schematic concluding R&D pipeline slide and commercial pipeline slide, actually highlighting various catalysts and inflection points over the next 12, 24 months. Finally, let me conclude by extending a special thanks to the entire Protagonist team, comprised of employees, advisers, consultants, patients, physicians, caregivers all across the globe for their unwavering support and dedication throughout our journey. And thank you all for your attention. And with this now, we'll be happy to answer any questions. Thank you.

Thank you, Dinesh. I'd like to welcome Protagonist team to come on the stage as well for the Q&A session. For those of you who are in the audience, if you have any questions, please feel free to raise your hand. For those joining us virtually, you can also submit your questions on the portal. Maybe Dinesh, you can introduce who's on stage for those who are joining us on virtual...

So next to Brian is Asif Ali. He's our CFO. After that is Arturo, who's just getting seated, our Chief Medical Officer; and then Sam Saks, our clinical adviser.

Dinesh, thank you so much for joining us here. It's always great to have you. When you look at your portfolio today, I know that you refer each asset as your kids. So a lot of your kids are now grown up, and you're still raising additional kids. So...

We are fertile.

Where do you want to take Protagonist this year? I mean, let's say, we talk again in December and perhaps 5 years down the line, where do you see Protagonist? What do you think Protagonist is going to be known for?

Yes. So I think Protagonist is going to be known for great science, creating highly differentiated assets, whether it's in a new indication or a rare indication or whether it is in a very crowded space, be it obesity. Science ultimately differentiates us from everything and anything that may be out there. So I think that's the mark we would want to leave. And what we are finding out is like you don't have to give up things just because the company is evolving or growing, right? I mean if you look at the typical nature of biotech, I mean, we have seen company after company after companies. They started with discovery and then they get a product, and they have to develop it and they are like, oh, now we have to cut off discovery or that sort of thing.

And in our case, it's just the opposite. If at all anything, we are expanding discovery. I guess the genius is in making sure that you have enough of a cash runway. So we have been able to do that in a skillful manner. And ultimately, I mean, what matters the most is like how do we maximize shareholder value. And in a way, the benchmark is very simple. What is the value of your stock? What is the market cap of your company without further dilution and that kind of thing? And today, we are a $5 billion market cap company, and we aspire to get into the $10 billion, $20 billion category in the very near future.

Today is the first day that we started to see a lot more color in terms of how we think about breaking down the royalty streams coming from Icotide and also rusfertide. How will you want to divide resources among internal R&D pipeline? You also mentioned stock repurchase, potential dividend. How should we think about the division of potential resources?

Yes. So I mean, it's a very dynamic situation, right? And -- but of course, no sacrifices will be made in funding our discovery to clinical POC. After that, even if we have cash to go further, I guess it becomes a matter of practicality. And I mean, today, we can also state that, let's say, if it's a rare disease asset, like the oral hepcidin, over there, we may have the mindset of taking it all the way through approval and commercialization, right? But in the obesity space, I would very much prefer a pharma partner when we are doing, let's say, Phase III studies.

Now it's not just about the money. We have too much money, but it's also like pharma, they bring incredible experience, expertise, their abilities to scale. Look at the wonderful things that J&J is doing with Icotide, right? So -- and it brings a great different form of validation. So those are the attractive features. As you know, we are always pharma friendly. So we'll continue to do that. And then in terms of capital allocation, that kind of comes after we fulfill the first requirement. And currently, the math suggests that we'll be able to do both. So we'll do it in a meaningful manner. But maybe Asif, you could chime in and share additional thoughts.

Yes, happy to. I mean that's -- I think you hit the key messages. It's a balance between capital return to shareholders while also complementing our discovery programs. And you saw the breadth of what our ambition is earlier in the presentation. So it really will be a balance. And as Dinesh said, at any time, it will be dynamic, and it depends on where and what progress we're making in that ambition.

Great. Before we get to the new data, I always appreciate that, but I want to touch on the upcoming data coming from 881. I think one is you had a lot of experience developing ICO. How confident are you in this program? And as we think about the healthy volunteer top line midyear, where do you think investor need to focus on?

Yes. So with 881, we presented extensive preclinical data last year. And that's about as much as you could do in a preclinical setting. And -- but at that time, we also communicated that, hey, going forward, we are going to be a little shy on sharing data right away for multiple reasons. So that's the path we are following now with 881. I guess with 881, the big signal one should wait for is like are we going into a Phase II psoriasis study or not. And that's about as much as we'll be able to share. But maybe Sam, Arturo...

Let me just say that we know the actionable levels from the antibody. So in terms of IC50, IC90, the pharmacokinetics here are very value creating because the target is already painted, and we just have to hit it.

And you all saw the trial design for the Phase I study. It's very comprehensive, and we would be obviously testing different doses that give us the optimal PK, similarly, testing different formulations. So stay tuned.

Yes. And we are, I mean, obviously, planning for success. As I mentioned, it's a very comprehensive Phase I study, and we are taking a leap of faith, evaluating solid dosage formulations, and we will see what the data teaches us by midyear.

The -- maybe switching gears to oral hepcidin. It's definitely a surprise that this is a small molecule. How different could this new molecule behave compared to rusfertide, which is a peptide? And can you also remind me if Takeda has the right -- has the first rights to in-license this program?

Yes. So excellent question. And look, at the end of the day, we concluded that we should be agnostic to whatever modality it be. Sure, our expertise is in peptide therapeutics, but just like anything else, we just have to be open to all different scenarios. And in this case, we did extensive comparison with a peptidic lead and the small molecule lead, and the small molecule won. So that's it. And just a digression. But hey, recently, we had a VP of Chemistry, who was the VP of Chemistry at Dicerna that acquired by [ Novartis ]. Now he -- Dicerna, as you know, is focused on oligos. And so we bring yet another level of expertise. Now I would also share that I have known Charlie Xiao for decades. I hired him in 1993 at Affymax. So we go a long way back.

Any questions from the audience?

Just to follow up the question [indiscernible] Takeda.

Oh, yes, yes, sorry. Yes, yes. So this is a fully owned asset by Protagonist, and Takeda has the right of first negotiation.

Until what period of time do they have that right...

The question is until what period of time until they have the rights.

I don't think it is period sensitive. That's my recollection. And we have had rights of negotiation arrangements previously in other kind of setups. And I think it's an easy thing to give and live with. It doesn't take away anything from your full ownership on the entity.

Just on the obesity front, today, you disclosed 2 additional programs in the obesity side on top of the GGG that you disclosed last year. How do you think about rolling these assets out? Because ultimately, I think earlier today in your remarks, you talked about on the obesity front, this is more -- this is definitely anchored towards partnering with a pharma. How do you envision within the next couple of years, building these 3 assets out so that one or more of these assets will be attractive to attract a partnership?

Yes. I think our mindset is that, look, with obesity, we are just scratching the surface. I mean if you look at the market research data, it's like about 3 million, 4 million patients are being treated out of 300, 400 that may be eligible. So this market would grow by 2 orders of magnitude. And what's the hottest thing today, it could be all very different a few years from now. And we are already seeing that, right? It's like now all of a sudden, amylin is the most shiny object or very long-acting drugs could be the next thing. So you just have to be on your tippy-toes, and we like it that way.

So we are just increasing optionalities, right? Our expertise is oral, but yet we are like in talking to KOLs and all that became apparent like, hey, creating a subcu optionality may not be a bad thing. So now it's the same API, same drug substance. So it hardly matters to us in terms of extra efforts or something. It's so convenient for us to develop both. So we'll keep our eyes and ears open and keep adding different assets to the portfolio.

You have a pipeline of a large-cap pharmaceutical company. And today, you add...

Except for the valuation, the market cap. Yes.

And today, you add dual inhibitors, both oral and subcu on top of amylin, which are all really interesting. How do you think given the size of the company? I mean, clearly, you have a lot of cash and you're going to have more cash. But how do you think about executing on this plan? Because it's quite a pipeline before and you've added substantially to it today.

Yes. We will build the company and have the resources, both financial and operational resources as needed. We are constantly on the lookout for great people, people with the proper skill set. So we look forward to scaling the company, and we are super excited about it.

Maybe just lastly, the last assets that I want to touch on is the IL-4 on your earlier slide. What is the plan for that asset? And how should we think about where that fits into your whole portfolio?

Yes. I mean, as you know, IL-23, IL-17, IL-4, these are probably the 3 hottest targets in the I&I space. And [ dupi ] is like a great role model. It's an injectable. And so that is what we'll be striving for in an oral IL-4 blocker.

Well, that's all the time we have. Thank you so much for joining us.

Okay. Welcome, everybody. I'm Doug Tsao, senior analyst at H.C. Wainwright. We are thrilled to have with us Protagonist Therapeutics, represented by the company's CEO, Dinesh Patel. I've known Protagonist for over a decade now, which makes me feel a little old. But it's been really remarkable to see the company's progress. When I first met Dinesh, the company was pretty much in like Phase I stage with PTG-100. And now the company is on the cusp of getting its first drug approved. So it's been a great -- and not just its first drug, probably its first 2 drugs approved. So with that, you recently received breakthrough designation for rusfertide for polycythemia vera. -- which is sort of the second time you received it. And you had -- previously had breakthrough designation. It was taken away based on some preclinical findings. I guess, from your perspective, is it safe to say the agency feels comfortable both with the profile as well as the efficacy. And I'm just curious what led you to reapply for breakthrough designation?

Yes. No, I mean, look, first and foremost, thank you for inviting us. We never take anything for granted, whether it is invitation at conferences or things in our pipeline, no matter how validated you are. R&D is R&D. You have to be on your tipites all the time. So thank you. Yes. With rusfertide, it has been a great journey, right? It's one of those things where we said we are going to innovate on our own. It's a hepcidin mimetic first of its kind. So in the early beginnings, as you know, we had tried quite a few things, beta thalassemia, HH and then finally, polycythemia vera. And the drug works in HH. In polycythemia vera, there is such a huge unmet need, and that's how our journey started. And then as you learn things, you get more familiar with the drug and you create your development program. So the latest thing is that we got spectacular Phase III results where we met not just the primary endpoint of freedom from phlebotomy for patients, but we also scored very nicely across all 4 secondary endpoints and some of the endpoints were related to patient-reported outcomes, right? In PV, with phlebotomy, especially, you are depleting patients out of iron in their body. So they have fatigue, brain fog, those sort of things. And of course, we got the opportunity to highlight the Phase III data at ASCO as a plenary session where the odds are incredibly low for being selected, right? They chose 5 abstracts out of 5,000-plus submissions. So I think it is the Phase III study results that has really turned the corner in every manner that you can imagine. And so we felt very confident reapplying for the breakthrough designation based on that. I mean if you look at the definition, of breakthrough designation. It is like, hey, your clinical findings are of such nature that they are suggesting a potential of your drug to have an improvement over the current treatment. And our data clearly suggests that this is the first ever erythrocytosis specific agent that will be -- that has the potential for treating erythrocytosis in polycythemia vera patients. So I think that probably is -- it's the new data that sheds new light and showcases the new potential. And at the ASCO plenary, if the discussant who is an independent individual is saying making comments like this could be practice changing. This should be part of standard of care. I think that's how we arrived at the breakthrough designation. And it also shows that the agency is doing its job. It's looking at what the data dictates and then acting accordingly. And now we are privileged. We'll have the privileges of the breakthrough designation basically.

And so presumably, you'll now have priority review, right, a 6-month review. How does that or does it have any effect on your sort of opt-in, opt out decision and timing?

Yes. So with breakthrough designation, I mean, you get expedited reviews and things like that. But we are not going to count our chickens before they hatch. So right now, the guidance is like we are not factoring in the possibility of a priority review kind of component. So it will be like, hey, we expect to file the NDA, we and our partner, Takeda, by the end of the year. So let's say, in December and then a year from now, you could be expecting approval. Now of course, if we get the priority review, that would shorten it by a few months, right?

And you have spoken about it is a $1 billion to $2 billion opportunity in PV. And you noted that you got a lot of feedback from KOLs at ASCO. And obviously, subsequently, I'm sure you're in constant discussion. Has your perception of the market opportunity changed? And has that feedback sort of made you maybe incrementally more bullish?

Yes. So I mean, if you look at the prevalence numbers in the U.S. alone, it is around 150,000-plus patients, right? And about 70% of those, so about 85,000 are actually getting treatment of one kind of the other, and you can find their data in the databases, that kind of thing. What we are finding though is like more than 2/3 of these patients, they have one common problem. They are not controlling hematocrit levels below 45% in a consistent manner with the current standard of care, whatever they may be using. And our drug, as I mentioned, it's a very erythrocytosis specific agent. And if you look at our Phase II study patient population, Phase III study population, that is the common denominator. It's like the standard of care is not working. Hematocrit is not controlled, and these patients could benefit from rusfertide. So in theory, that 2/3 of the population, so to speak, just in the U.S. alone, right? So about 50,000 patients, roughly speaking, that is the target population that could, in theory, be benefiting. And so I'll leave it at that. And Takeda has put out a forecast of $1 billion to $2 billion. We believe we are comfortably at the high end of that spectrum rather than at the low end of the spectrum.

And Dinesh, I mean, I go to the opt-in and opt-out decision that you face. And I'm just curious, is there -- do you see the -- in terms of if you opt in or opt out, right, even if you opt in, you don't necessarily have to build a commercial infrastructure, right? And so really, in some ways, the decision really comes to sort of, a, your sense of the overall market opportunity and whether you would prefer to get some additional cash upfront. How do you has that shifted your sense of -- or how is your thought process evolving in terms of the opt-in and opt out?

Yes. So I think at a practical level, we need to make that decision, let's say, by the middle of next year because the -- that optionality comes into play 4 months after the NDA filing and there is a 90-day period. So let's say, if we do the NDA filing in December, then from April through July is the time frame when we need to make that decision. So we still have ample time to make that decision. But here, I will offer a slightly new perspective on how to think about it. If we opt out, we get $400 million as an opt-out fee, right? And then there are also differences in milestone payments. Milestones are higher if we opt out. The first one being the NDA approval. If we opt out, it's $75 million versus if we are opted in, it's $50 million. So there is a delta of $25 million right there. So $400 million plus $25 million, that's $425 million. So look at it this way. If I stay opted in, it's almost like Protagonist has made an investment of $425 million into rusfertide. So we are like doubling down on rusfertide, so to speak, right? Whereas if we opt out, we are saying we have invested enough in rusfertide the opt-out terms are excellent, right, 14% to 29% royalty worldwide, where 29% is very much within reach. It is within this range of $1 billion to $2 billion guidance we have provided, right? So it's not like a pie in the sky kind of crazy number to qualify for that. 29% is a good number. So I think with opt-out, it's difficult to lose. And with opt-out, we now get this extra $425 million that we could think of doing a couple of things with it, right? Investing in our own R&D, -- as you know, the J&J deal we did on ICO that was all the way back in 2017 when it was a preclinical stage asset. Well, now Protagonist is in a different situation. So we could hold on to our assets for longer time periods, at least up to clinical proof of concept, that kind of thing. And ours is a validated platform and a validated team. So we feel comfortable investing in our own R&D in a deeper and longer way. The other thing would be also looking at external innovation. It's -- we are a technology platform company. There are ways and means of improving and strengthening the platform through things like formulation, AI, those sort of things. And we don't have to be experts in everything, right? We could be inheriting those things from outside as well. And then, of course, opportunities or early-stage assets where I would feel comfortable that my discovery team is saving at least 12 months, if not 18 months on a new program or something like that. So we will look for those opportunities. But we also believe that in spite of doing all that, investing in internal R&D, looking a little bit at external innovation, we'll be left with ample cash if we opt out. And then keeping in mind the royalty streams that come from the 2 pharma companies, both J&J and Takeda. Right now, share buyback on a regular basis, not a onetime thing, also appears to be an attractive and very tax-efficient option. So it will be like do all of that.

And Dinesh, one of the other events -- or actually, one quick on the opt out. So you have noted that it's 4 months after the decision plus 90 days. If you do get priority review, does that get abbreviated? Or could you opt out a potentially.

No, the opt-in opt-out is more to -- the clock starts ticking from the day the NDA is filed.

Okay. So then you have a plan to nominate oral hepcidin by year-end. And there -- a number of different ways that you could go with that. And does progress with that program influence the opt-in opt out? Or are you thinking of opportunities separate from PV? As you noted, you have sort of data in HH and the other areas that you could potentially go with a hepcidin.

I think it's a fantastic question. And I mean, mechanistically, rusfertide and oral hepcidin, they are very related. But in terms of clinical development or in terms of partnership with Takeda, -- those are 2 very independent and separate things. Now we totally fully own oral hepcidin. Takeda will have the right of first negotiation. So that's about as far as the connectivity goes. Now in terms of utility, also you are making a good point. I mean, PV is an obvious one. But there could be other indications where there could be benefit from once-daily oral dosing and moderate concentrations of your drug versus the once-weekly injectable that currently -- that's how rusfertide is being used. So those are the kind of things that we could explore and see if with an oral hepcidin, the clinical utility could go above and beyond PV.

I guess I wanted to turn to ICO, right, because that's one of your other key assets. And how do you see it differentiating from the competition in the IBD space in particular?

Yes. So ICO has been an amazing journey, and I cannot thank J&J enough for what an amazing job that they have done in the clinical development of ICO. As you know, they already filed the NDA. They filed it in July for psoriasis, so touch wood 12 months from July. So next year in July, we will see where we stand. But as you know, IL-23 blockers, I mean, they have a presence both in the derm and IBD space, right? So in psoriasis. Now a couple of things. One is IL-23 is a very proven mechanism that is both efficacious as well as very safe, right? The other thing is we still are the only oral IL-23 blocker that is out there. And if you look at all the things that J&J is doing, for example, let's say, in psoriasis, I'll get to IBD in a minute. The Phase III data is excellent. They have done a head-to-head superiority study with deucra, the TYK2 inhibitor from BMS. Over there, we scored positive. They are planning to do a head-to-head with their own drug, STELARA. The adolescent population data is outstanding. If you add all this up, what it means is like not only is this an only oral IL-23 drug that would find utility that way, but it also is marching towards maybe this is because it's a proven and established mechanism through Skyrizi, TREMFYA, all that, it could be a first-in-line therapy option. That's a huge, huge opportunity. And their own marketing research has suggested that about half -- more than half the I&I patient population that is eligible for targeted therapy, they are not opting for any because they don't like the injectables because they are injectables. Injectables work, but they are injectables. And in oral, honestly, there is a toxicity baggage with the kinase inhibitors, right? You just can't escape from that. So this will be the first option that is both efficacious and safe and oral. So you can also envision new market penetration in the I&I population, including both the derm and IBD conditions. And even those who are on injectables, 75% have expressed interest in switching to oral if a good option is available. And hopefully, that's what our drug is. Now in IBD, actually, if you look at our UC data, it's outstanding. 30% clinical remission at a higher dose, that's about as good as it gets in UC. And this is on a proven mechanism. And based on this data, of course, it's Phase II data, but it's like this could be the best -- one of the best UC drug -- oral drug that could be out there, actually, not just in comparison to oral, even with injectables or through different mechanisms. 30% is high. It's very high. And in a way, this is not just by chance, right? The very first thing we did when we started the program in 2014, we opted for the receptor, not the ligand, which is what the antibodies are targeting. There was a reason the receptor is overexpressed in the GI tissue compartment of IBD patients. So maybe that logic is playing a role. I mean this could be a bigger IBD drug versus a bigger psoriasis drug. Time will tell. And J&J clearly is voting with its feet. They have already announced that they are going in Phase III studies, of course, in UC, but also they're in Crohn's. And target is validated. There is so much familiarity. They know all that one needs to know about IL-23 blockers, things like that. So I think ICO could have an amazing presence in the IBD space.

So I wanted to turn to 477 because the obesity space has become incredibly crowded, both with people trying to develop next-generation incretins, both injectable, oral. You have new approaches like NRLP3 inhibitors. I'm just curious how you see yourself with 477 differentiating from not just what's on the market, but what is potentially coming to market.

Yes. So I'll digress a bit. CW through an amazing party yesterday night, right? Maybe analysts were not allowed, I don't know, but everybody enjoyed it. But if you are such a late entrant to such a huge party, which is the obesity space, think of it as a huge party, then how do you create your presence or how do you get noticed, especially when you enter STING is already performing, that sort of thing. So that's -- yes, we are late entrants in the obesity space, but it's like our key mantra all along has been in whatever we do, there will be one common prominent thing, differentiation. We have to be differentiated in a positive way from anything and everything that is out there. So we went straight to the KOLs in IBD and said, look, we have a platform, amazing platform. We can create anything. Give us a profile. So that's where the GGG came to the top. And in a way, we are the only company that is an oral GGG with this kind of exposure and presence. And if you look into the details, we have also paid careful attention to the relative potency of GLP versus GIP or GCG. We don't have much time, but I encourage people to look at our previous presentations when we announced that clinical candidate, things like that. So we have gone through great pains to create an entity that is just outstanding, very well differentiated. We have done head-to-head comparisons with retatrutide, of course, in a preclinical setting. There are reasons to believe that our drug is as good or actually better in some of these studies in Sino and monkey compared to retatreutide. But once again, I'll use a qualifier. This is preclinical. We don't want to get carried away. But it showcases like what is the level of differentiation that we aim for and especially when we are late entrants, but then it's a huge market opportunity. And that's why we opted both for the oral and subcu, right? It's like -- I don't want to predict the future, if I don't have to, why to take any chances, develop both. Now I believe for majority of the time, majority of the patients will use the oral. But talking to the KOLs, it seemed like if you had the subcu option, that was also desirable in some instances. And the switch with the same chemical entity from injectable to oral will be very convenient.

Do you expect the oral and the injectable to sort of pursue the same indications? Or is there an opportunity to sort of have them or could they potentially sort of diverge in terms of their development path?

Yes. So definitely the same indications and time will tell. This is where the science is still evolving, and we'll have to explore those things clinically, right?

Okay. And just maybe really quickly because we are in theory out of time, but we'll go into stoppage time. I don't know if you're a soccer fan, but just touch on 881 and what you think differentiates that molecule. And we've seen some sort of separation between the IL-23s and the IL-17 sort of overlapped an indication pursuit, but now have sort of gone their different ways. Sort of what is your thinking around where -- the direction you want to take that asset?

Yes. So I think there are 2 kinds of differentiation, and I'll be brief. It seems the IL-23 blockers, clearly, IBD is their domain, very unique to them. And it's psoriasis and psoriatic arthritis where I think there will be the overlap. And I think both IL-23 and IL-17 blockers will have a presence. Now of course, IL-17, their separate domain is HS and spondyloarthritis and things of that nature. But collectively, these 2 category of drugs, I mean, they will dominate the whole I&I space, and we are fortunate to have presence in both. Now with regard to our oral IL-17, once again, the same thing, differentiation, differentiation, differentiation. Compare our peptide to other oral small molecules that have been out there, we are more potent by orders of magnitude. I mean, really hundred-fold, 1,000-fold more potency, that is something to write home about, right? And then also the spectrum of activity, the best-selling drug and the best drug that works to IL-17 mechanism is BIMZELX and its unique feature is that it blocks both A and F isoforms. We believe our peptide is the only one out there in the public domain that has demonstrated blockade against all 3 AFFF isoforms. So that's unique as well. And we will hope that logically speaking, we should expect those kind of things to potentially translate in a clinical setting. Time will tell. Well, 881 is already marching into a clinical study. Our guidance was fourth quarter. So -- but the study has been sketched out there on clinicaltrials.gov and the journey has started.

Okay. Great. Well, with that, I think, unfortunately, we got to wrap up. I think we -- I only got to about half of my questions. So we'll have to save it for another time.

Excellent. Thank you.

Welcome to the second day of the Citi Biopharma Back to School Summit. I'm Geoff Meacham. I'm the senior biopharma analyst and my team is 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 and self, 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.

Well, 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 -- that 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. And that is why one of the major focus 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 like better potency, better specificity and efficacy, those sort of features and characteristics.

Has the -- 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?

Yes. 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 also orally bioavailable and that has created a broader spectrum of opportunities that we could go after.

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 as it seems to me to be pretty straightforward, but I want to get your view of that?

Yes. 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 discussion 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 designation based on the Phase III data. So if at all, for us, the regulatory agency has been very favourable 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 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 the -- on the PB 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?

Yes. 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 Nimbles 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.

I wanted to ask about like your joint strategy. The market, you said like 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 like peak sales numbers?

Yes. 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 forum of increasing awareness was when they 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. But 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. And 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. And then, of course, Takeda also brings in the Japan angle as well, as you can imagine. So I think there is a lot of synergy and complementarity in terms of what both parties bring to the table.

And the partnership you have with Takeda, it's -- you still haven't made like 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 -- 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-in 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 9 to 12 months to make that decision, right? The decision kicks in 4 months after the NDA filing and the NDA filing is projected towards the end of the year.

What would be the…

And 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% to 29% royalty and the 29% number, it's not like very far-fetched. The current guidance of $1 billion to $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 that -- 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 like 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, it's -- is that the right way to think about it?

Yes. So whatever guess work 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% to 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, have you -- do you already -- have you pre-identified investments outside of obesity, for example, that you could maybe speed up? I'm just trying to think of like the reinvestments in the platform that you could maybe accelerate with that, otherwise you wouldn't be able to?

Yes. 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 future -- 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 from 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 like keeping some commercial control on rusfertide in your opt-in, opt-out decision? Is there any like thought process behind that decision?

Yes. 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, “the 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.

So maybe move to icotrokinra. The NDA has filed by J&J. So how do you assess kind of the next steps with icotrokinra approval and then the market penetration in [indiscernible], we have already oral available in the market, so how do you like think the launch or approval could go in psoriasis?

Yes. 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 [indiscernible]. 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 4 indications.

So psoriasis, we already have the data behind us. The NDA is filed. Psoriatic arthritis, the 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 ICO, the enrolment 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 favourably for ICO 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 a 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 orphan sort of more rare -- I mean, atopic derm used to be -- deemed to be a rare disease, and now it's obviously a pretty well addressed. Same thing with HS. So what's that -- how much does that play a role in kind of the longer-term NPV of the product?

Yes. No, I think that's a great question. My reading is that with IL-23 blockers, you probably will be focused on this big 4 indications, 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.

Clearly, J&J has given peak sales projections in just the core indications. But what's Protagonist 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?

Yes. So the royalties span from 6% to 10%, where the -- 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 plus. 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. And keep in mind that the marketing research that was done has provided a lot of good evidence. So 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.

So 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? And 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 ICO 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 [Deucra], the TYK2 inhibitor, right, and shown superiority. They already published adolescent data where ICO’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 ICO 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 ICO 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.

Yes. 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 2 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 ICO, 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 continue to talk specifically about J&J and ICO. 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 favourable to Protagonist and its shareholders in the long run.

Maybe one last question on ICO 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 had -- initially had some struggles getting to like sales were like slow and progressive. What gives you confidence in like being able to capture a larger share of the market from -- of course, now you have 2 competitors in the overall 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 like use free drugs and other kind of ways to…

So I think there are 2 things, right? One is like -- and look, I'm a scientist and a chemist by training. But if you look at Sotyktu, in general, Sotyktu, these are JAK inhibitors, and we know the history with JAK inhibitors. There is always this “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 travelled before quite extensively, but via injectables, right? So Skyrizi and Tremfya and even Stelara, which is an IL-12/23 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 yes, there is nothing but a very positive sentiment for this drug all along.

And then moving on to obesity, you recently disclosed 477, some preclinical data and your strategy that you're going to go with oral and injectable. So maybe like considering like recent data from companies like Lilly and others, how do you position -- you think your drug could be positioned versus like other drugs and in terms of like GI profile and efficacy-wise, like where do you see the profile is moving forward for your drug to achieve good market share?

No, 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 2 things that rise to the top. Number 1 was like, hey, can you come up with an oral triple-G? That will be the most favourable. The second in queue according to the KOLs was a dual GLP amyloid. 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 [indiscernible] and in dogs with retatrutide and our drug shows amazing profile.

In terms of the -- 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 like 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 of that we have made of GLP versus GIP versus GCG, it takes into account all of these factors. So we created -- 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 subcu, 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, 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, but I can also envision conditions and situations and scenarios where some portion of the population for some period of time may want an injectable. And this is such a huge, huge market that we didn't want to leave anything at the table. So that's why we are developing both a subcu as well as an oral.

Just on that note, when you think about the latest -- there's a lot of assets that are oral and 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 derisk the program and sort of find out early. I mean, the...

Absolutely.

Okay. So GGG, I think, historically has had tolerability issues, but great efficacy, but you sort of want to know early...

And who knows what it will be with an oral GGG, right? And then once again, it's like an oral and a subcu, and that will be another measure of what may be more favourable, that sort of thing. But I think you're absolutely right. See, one of the advantage that we have with our approach of working with discovering and innovating very unique peptides. That's our differentiation. That's our expertise.

But we don't take the biology risk. We work on validated targets. So 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. So you're absolutely right. In Phase I studies, right, it's like -- if you look at how obesity agents are -- anti-obesity agents are being evaluated these days in a 4-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 that's -- 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, with that, we're out of time. So Dinesh, thank you so much. Yes. Great dialogue. Appreciate the time.

Excellent. Thank you.

Welcome to the Protagonist Therapeutics June 30 Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, Monday, June 30, 2025. I will now turn the call over to Dr. Corey Davis of Lifesci Advisors. Please go ahead.

Thanks, Julian. Hello, everyone. Thanks for joining us on our call today. With me from Protagonist are Dr. Dinesh Patel, President and CEO; Dr. Newman Yeilding. Chief Scientific Officer; Asif Ali, CFO; and Dr. Sam Saks, Clinical Development Adviser. We also have [ Dr. Kirk Ways ] an endocrinologist with expertise in metabolism and a clinical adviser to protagonist on its obesity development program, who will be joining us for the Q&A session of the call.

Earlier today, Protagonist issued a press release announcing the formal nomination of a triple receptor agonist development candidate for obesity. Copy of this press release is available on the company's website. As can be seen on this first slide, we will be making forward-looking statements on this call. These may include statements relating to the safety and efficacy in the therapeutic and commercial potential of our investigational product candidates.

For further information relating to risks and uncertainties related to our business please see the periodic reports we have filed with the Securities and Exchange Commission. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, June 30, 2025. Protagonist undertakes no obligation to revise or update any forward-looking statements or reflect events or circumstances after the date of this conference call, except as may be required by applicable securities law. With that, I'll now turn it over to Dinesh Patel, Go ahead, Dinesh.

Thank you, Corey, and good afternoon, everyone. We have gathered today to deliver on our guidance of announcing a novel, well-differentiated oral peptide-based, anti-obesity development candidate. As a reminder, we define a development candidate as a novel chemical entity with adequate preclinical characterization and proof of concept and one that is ready to move forward into IND-enabling studies.

PN-477 is a novel anti-obesity development candidate, and it is a triple agonist with remarkable potency against the GLP, GIP and GCG receptors which are all well validated incretin and non-incretins biological targets in the obesity field with each target offering unique characteristics to optimal body mass composition. While our initial guidance was just about a well-differentiated oral anti-obesity agent, and the unique oral stability characteristics of 477 is, in fact, the most differentiating aspect of our candidates, we are opting to pursue parallel development of both a once-daily oral and a once-weekly subcu injectable formulation of 477 with the intent of offering maximum optionality to patients, payers and practicing physicians for treating this chronic condition. As you can see, PN-477o and PN-477sc, the oral and subcutaneous forms, respectively, of this novel triple agent are a great addition to Protagonist and diverse R&D pipeline of early and late-stage assets shown below.

Moving to Slide 4. Obesity represents 1 of the biggest, probably the biggest health care challenges of our lifetime. Obesity rates have exploded in the U.S. and worldwide over the past half century, such that today in the U.S., almost 3/4 of our population is overweight or obese with nearly 40% qualifying the criteria for obesity with a body mass index or BMI of at least 30. This obesity epidemic is being met for the first time with new therapeutic agents, and there are 2 major drugs in the market and both are injectables.

These 2 agents, namely semaglutide and tirzepatide are collectively treating slightly over 1 million patients which is a big number, but represents less than 2% of the total drug treatment eligible patient population, clearly implying that there is a lot of unmet need and significant room for improvement with new therapeutic agents with superior properties. There are numerous challenges and limitations with the current anti-obesity drugs, including accessibility and availability, magnitude of efficacy as well as tolerability and mode of administration that could be affecting overall utility and compliance.

Both approved agents are weekly injectables and is well established that avoiding a needle through an oral agent is a highly desirable feature in new medicine, especially for treating a chronic condition where you are expected to continue treatment for the rest of your life. So it was very compelling for us to apply our proven expertise in the field of oral peptides to the discovery of novel and oral anti-obesity agents.

I would also point out that while the field of anti-obesity drugs is very, very crowded with hundreds of clinical studies underway and for all the right reasons, it appears significantly less crowded the moment you shift your attention from injectables to oral agents. And with a focus on orally stable peptides as anti-obesity agents, we then turned our attention to the next important question. And this is, which is the best biological target or set of targets we should focus on with our oral peptide approach. So as mentioned before, going to the next slide, there are only 2 major drugs on the market.

Semaglutide is a mono GLP receptor agonist marketed by Novo Nordisk. And tirzepatide is a dual GLP, GIP receptor agonist marketed by Eli Lilly. Both drugs have reported impressive weight loss, but there is significant room for improvement and to address the huge unmet need. In that context, several new agents targeting both incretin and non-incretin mechanisms are being pursued, but almost all of them are largely injectables.

While the science is still evolving and a lot remains to be proven, the most noteworthy development in our mind is the triple agonist as exemplified by Retatrutide from Eli Lilly, which is currently in Phase III studies. Not surprisingly though, Retatrutide is once again an injectable, and we concluded that an oral triple GLP, GIP, GCG receptor agonist with the right balance of absolute as well as relative potencies against the 3 receptors and the right type of physiochemical and pharmacokinetic characteristics so that it could serve as an orally stable agent could lead to significant improvements that are highly desired in the current therapies. This decision of developing an oral triple agonist agent is based on an extensive survey of both the approved and emerging therapies and in consultation with the key opinion leaders or KOLs in the field. So based on this rationale, we set out to discover an oral triple agonist peptide using our proprietary peptide technology platform.

And the outcome of this intensive and dedicated effort over the past 18 months is PN-477, an orally stable singular peptide with very impressive absolute potencies and an optimal balance of relative potencies against the 3 targets. Some of the improvements we are seeking with our oral triple agonist approach are first and foremost, providing a more convenient option that is an oral agent. Second, addressing the large population of patients who may require a greater magnitude of weight loss than currently achieved by the approved drugs, including the possibility of more effective treatments for the various comorbidities associated with visceral adiposity.

Third, a triple agent could potentially offer improved tolerability, specifically gastrointestinal or GI tolerability, which may have contributed significantly to approximately half of the patients discontinuing treatment within the first year of therapy with current agents. And fourth, a triple agonist could help improve fast mass loss and reduce lean mass loss, leading to a more favorable fat-to-lean mass ratio and driving optimal body composition.

And finally, while not listed here, we are also hoping to achieve longer durability of response with our candidates. Lower dosing or less frequent dosing would be very desirable, especially if it could lead to more convenience and lower tolerability issues in a maintenance treatment setting. So our CSO, Dr. Newman Yeilding, will walk you through the extensive preclinical data package and this will make it clear that PN-477 has great potential as a best-in-class oral anti-obesity agent that has captured the various desired characteristics that I described on the previous slide.

Before I hand it over to Newman, one final point is that in our continued assessment of the evolving landscape, we also concluded that while an oral once-daily drug would be a highly preferred choice, it would be ideal to develop the same peptide PN-477 in parallel, both as a once weekly subcu administered drug as well as in parallel, both as an overall as well as a once-weekly subcu administered drug to offer maximum optionality to patients, payers and physicians and to maximize the chances of addressing the huge global patient population in an uninterrupted and most cost-effective manner.

With that and without any further delay, I will now turn it over to Newman.

Thanks, Dinesh, and good afternoon, everyone. Here at Protagonist, we're very pleased to formally announce the progression of our GGG agonist PN-477 as a development candidate for the treatment of obesity and the comorbidities associated with obesity.

Over the next few slides, I'm going to lay out how we designed PN-477 and the attributes that it exhibits in our preclinical studies. And just to make the presentation a little simpler, I'm going to call each of the receptors by the 3 letters of its ligand so GLP, GIP and GCG. We used proprietary protagonist capabilities to engineer PN-477, focused on delivering key attributes that I'll show in the next few slides that include potency and the balance of potencies against all 3 receptors, peptide stability that we believe will facilitate oral delivery, preclinical efficacy and models that are likely to predict efficacy in humans, pharmacodynamics, improving glycemic control consistent with improving comorbidities associated with obesity like type 2 diabetes. And finally, pharmacokinetics, it gives us confidence that PN-477 will deliver the desired target weight loss and pharmacodynamic effects with either once-daily oral dosing or with once weekly subcutaneous dosing.

PN-477 is a highly potent triple GLP, GIP, GCG receptor agonist designed to provide the weight loss profile of Retatrutide with the GI tolerability of tirzepatide. We based this design on careful review of the literature and detailed input and advice from key thought leaders in the field of obesity. And I'm going to highlight a few of the key features that we believe are important to achieving this target product profile. And you'll see from this description that the beauty of our technology is that it gives us great control in engineering the relative balance of potencies between the receptors.

So first, compared with reference products, PN-477 is the most potent agonist against all 3 receptors, which we envision will translate into dosing advantages. Second, you can see that we engineered the relative potency balance of GLP to GIP to be skewed towards GIP with a similar SKU as tirzepatide, and that's shown as a 17-fold SKU in green in the table. And the SKU is intended to potentially mitigate GI tolerability issues as has been suggested with the clinical data with tirzepatide.

And then third, we engineered GCG potency to be generally comparable to Retatrutide as a key booster of energy expenditure. And we believe that this potency profile may offer the optimal combination of total body weight loss, improved GI tolerability and improved fat-to-lean mass ratio. This table also shows detailed information on the EC90 concentration or the concentrations achieving 90% of maximum receptor activation. For human receptors on the left, for mouse receptors on the right and benchmarks those potencies versus semaglutide, tirzepatide and Retatrutide.

In later slides, I'll be showing how PN-477 benchmarks versus Retatrutide in the mouse DIO model. That's the diet-induced obesity model in which mice are maintained on a calorie-rich diet-induced obesity. But before I get there, I just want to highlight that these are not mice engineered to express human receptors. So the impressive results that I'm going to show are achieved despite the relatively lower potencies of PN-477 in mice than in humans as shown in this slide.

One of the profound differentiating features of PN-477 is that we've engineered it to be stable in GI matrices shown here, simulated gastric fluid on the left, simulated intestinal fluid on the right. You can see that the remarkable stability of PN-477 clearly distinguishes it from the reference compounds. And it's easy to understand why stability in the GI track would be important for an orally administered drug, and we're seeing this as a key advantage and is very enabling as we progress our oral formulate -- in our oral formulation development.

We observed very nice dose proportional weight loss in DIO mice shown here of up to 50% of body weight. This is the standard preclinical model for assessing weight loss and it has good translation into humans, benchmarking against Retatrutide administered the highest dose reported the literature in that's shown in red. The 3-milligram and 10-milligram per kilogram doses achieved weight loss lower than Retatrutide, while the 30-milligram and 90-milligram per kilogram doses achieved weight loss greater than Retatrutide. Again, these impressive results were achieved despite PN-477's relatively lower potency in mice versus humans.

As Dinesh mentioned, we intend to initiate parallel development of subcutaneous PN-477. And this slide shows that at equally lower doses, weight loss with PN-477 administered subcutaneously is comparable to that time with Retatrutide with PN-477 in the green line, producing approximately 48% weight loss at 14 days while Retatrutide at the same dose, produces 40% weight loss. So combined with the data that I showed you on the previous slide, these results suggest that PN-477 in fact, does offer promise as both an orally and a subcutaneously administered product.

Now in a separate DIO mouse experiment, Slide 12 shows that PN-477 not only leads to comparable weight losses as Retatrutide, but also the quality of weight loss leads to comparable improvements in body composition. In this experiment, mice were dosed with PN-477 Retatrutide at 30 nanomolars per kilogram every 3 days for 3 weeks, and we used Echo MRI to assess changes in body weight composition over this time. And shown in this table, you can see that mice lost approximately 30% of their body weight over these 3 weeks. And in that time, they lost 65% to 70% of their fat mass while losing only 13% to 17% of their lean mass.

So this shows us a preferential loss of fat mass and a significant change in body composition. And specifically, what that means, you can see the lean mass to fat mass ratio was 1.3 to 1.4 at baseline. So that means that they had approximately 30% greater lean versus fat mass at baseline. But by day 22, that ratio increased to 3.3 to 3.9, which approximates the normal fat to lean mass composition in normal mice. So these results suggest that PN-477 like Retatrutide leads to a preferential loss of fat mass.

Again, in a separate DIO mouse experiments. Slide 13 shows that PN-477 improves glycemic control after a glucose challenge. In this experiment, mice were challenged with 1.5 grams of oral glucose after administration of either PN-477 or Retatrutide. And you can see that compared with vehicle glucose elevations are blunted as measured by the glucose AUC over 2 hours and the magnitude of effect was comparable to Retatrutide with both oral or subcu dosing, Retatrutide is shown in the red bar. These results indicate that PN-477 results show -- that PN-477 results in better glycemic control and suggests it has potential as a treatment for type 2 diabetes, which as you know, is a frequent comorbidity of obesity.

So now moving on from mice, we've further extended our findings into higher species that may be more relevant to informing the pharmacokinetics that we will achieve in humans. The left-hand graph on this slide shows that in normal cynomolgus monkeys oral dosing of PN-477 at 6 milligrams daily for 7 days, leads to progressive weight loss of up to 11% and notably, even after dosing cessation, the weight loss in these animals was generally sustained over the next 6 days.

The right-hand graph shows the PK profile in these animals showing trough PK levels of PN-477 each day with references to the human GLP EC50s and 90s. And I'm going to highlight 3 important features of this PK graph first. PN-477 levels increase or accumulate for the first 4 days, and that's consistent with its long half-life in cynos, leading to increasing weight loss.

Second, based on its potency, these trough levels are anticipated to provide good activity with each receptor based on their EC50s and not [ EC5090 ] values. And then third, PN-477 has a long half-life as demonstrated by the drug washout after day 8, and we project that it will have an even longer half-life in humans. So these are all features that strongly suggest that PN-477o will be suited for once daily human dosing.

Regarding the sustained weight loss post dosing, and the accumulating drug levels that we observed in plasma. We also envision potential possibilities with maintenance regimens at lower or less frequent doses in a human setting. So I'm going to now transition to subcu dosing in higher species since we're planning to develop the subcutaneous presentation -- in Slide -- thank you. Slide 15 in the left-hand graph shows that after a single dose of PN-477 subcutaneously, cynos lost 13% of body weight over the subsequent 7 days, and that's shown in the purple line. And this magnitude of weight loss is similar to the 11% we saw with oral dosing that I showed you on the previous slide.

Moreover, it benchmarks favorably versus the 7% weight loss with the comparable dose of Retatrutide and that's shown in the green line. So looking at the PK profiles on the right, also shows that high levels of PN-477 are sustained through 4 days after a single dose. And with the half-life projected to be substantially longer in humans, this PK profile suggests that PN-477sc, in the subcutaneous form, will be suitable for once weekly human dosing.

And then finally, on Slide 16, the left-hand graph shows that normal Beagle dogs lose approximately 10% of their body weight after a single subcu dose of PN-477, that's shown in the purple line, which again benchmarks favorably versus the 5% weight loss achieved by comparable dose of Retatrutide. And as in cynos, the PK profiles on the right showed nicely sustained PN-477 levels through 6 days post dose. And this again, strongly suggests the PN-477sc, the subcutaneous form will be suitable for once weekly human dosing.

We were struck that as we extended our observations from the mouse DIO models into higher species, specifically the dogs and the cynos that we were observing features that suggest a more profound weight loss effect of PN-477 and Retatrutide at equivalent doses. Since each of the targeted receptors in these higher species show greater homology to the human receptor, this may reflect higher potency of PN-477 for dog and cyno receptors. And if true, we're hopeful that this observation could translate into better efficacy in humans.

So in conclusion, the data that I've shared with you today shows that PN-477 has the potential to be a best-in-class triple agonist anti-obesity peptide with convenience of once-daily dosing oral or once weekly subcu dosing. We engineered this novel potent stable GGG agonist with careful attention to the balance and potencies for the 3 receptors in a way that's intended to achieve the optimal combination of total body weight loss, improved GI tolerability and improved fat-to-lean mass ratio.

We've shown that PN-477 benchmarks well versus Retatrutide with either oral or subcutaneous dosing that it does, in fact, lead to preferential loss of fat mass versus lean mass similar to Retatrutide and that it produces glycemic control that may have the potential to treat type 2 diabetes. In higher species, normal dogs and cynos, PN-477 yields PK profiles and weight loss kinetics after oral and subcutaneous dosing that supports once daily or once daily dosing of PN-477o and once weekly injectable dosing of PN-477sc.

And finally, we find the apparently greater weight loss of PN-477 in higher species in DIO mice to be notable. And while the cause of this observation is speculative at this time, it raises the possibility that a similar effect could be seen in humans. So based on these results, we've initiated IND-enabling studies and look forward to initiating clinical trials next year.

Thank you for your attention. I'm going to turn it back to Dinesh now.

Thanks, Newman. So moving to our R&D pipeline. As you can see, 2025 has been a remarkable year so far for Protagonist with an amazing range of accomplishments with both of our lead assets. Both rusfertide partnered with Takeda and icotrokinra, partnered with J&J are progressing towards NDA filing this year and hopefully towards regulatory approval and commercialization next year.

In the discovery camp, we have delivered today on our guidance of nominating a well-differentiated oral anti-obesity agent and have actually expanded the program by deciding to pursue the clinical development of both the oral and injectable options with the intent of providing maximum optionality. While our guidance on the other discovery assets, namely the oral IL-17 peptide antagonist 881 and the oral hepcidin program, they remain unchanged. I would like to caution though that going forward, Protagonist will be inclined to provide less details on discovery assets, and we will probably hold off on new discovery announcements until after the assets are nearing or have already begun clinical studies. This is for a number of reasons, reflecting both the maturity and growth of Protagonist as a company and also reflecting our desire to preserve confidentiality of our highly innovative projects and development candidates going forward.

Getting back to the obesity program. In closing, I would like to congratulate and sincerely thank our extremely talented and dedicated pool of employees, advisers and consultants on yet another highly innovative and well differentiated development candidate namely a potential best-in-class oral GLP-1, GIP and GCG receptor triple agonist peptide PN-477 with the expanded optionality of an injectable for treatment of obesity. And with that, I will now ask the operator to begin our Q&A session. Operator?

[Operator Instructions] And our first question comes from the line of Roger Song with Jefferies.

Great. Congrats for this nomination of DC. So a couple of questions from us. Maybe first is we see the half-life is pretty long in monkey and then you also alluded maybe in human, the half-life will be even longer. So can you just give us some -- your thoughts around that? And then how likely the subcu can be monthly beyond weekly and then oral, how likely it will be longer? And then the second question is related to the bioavailability. We know that oral peptide, the key thing is to be viable as chronic therapy. So how do you think about the bioavailability for 77?

Yes. Roger, those are both excellent points. And our comment on anticipated higher half-life in humans is basically [ coursed ] on the extensive translational data that we have for this category of drugs in general. And you see the sustained sustainability that is out there, especially in the dog and cyno. And -- so that's what it is based on. And you are absolutely right. We didn't spell it out, but now we can respond to your question. And it's like, yes, if you look at the data, both the cynos and dog data, the cynos PO and subcu data carefully, there are hints of being optimistic of transitioning from a once daily oral dose to a once weekly oral dose down the road, especially in the maintenance arm of the therapy.

And similarly, for the subcu, one could envision transitioning from once weekly subcu to once monthly kind of subcu dosing in the maintenance arm of therapy. And that would be such a welcome addition, as you can imagine, it will be very efficient, effective and may even lead towards lower tolerability issues based on less frequent dosing. Now again, these are speculations. They are very logical, but at the end of the day, this is something that we look forward to proving in a human clinical setting.

And your other question was about bioavailability. So like being in the field of discovery and development of oral peptides for more than a decade now. One thing we have learned is like with oral peptides, you don't chase bioavailability. What you chase is how many fold above you are about, let's say, the EC50 numbers for example, in this case. And with each target or each disease indication, it will be a different type of requirement. And as you saw, we have pretty remarkable results with oral dosing, whether it is in DIO, mice or whether it is in cyno. So we feel very confident about the future prospects.

The other component, as you know, this is just reminding everybody that if you look at our oral IL-23 blocker icotrokinra. Recall, that we were -- we protagonists were responsible for discovery, preclinical development and Phase I human PK studies, right? So we have a ton of experience in terms of what kind of PK levels are desired for a successful outcome with an oral peptide agent.

We know that this class of drug requires titration. The current products require titration for maximal tolerability. And when we have a longer half-life, that enables a more straightforward titration because you get to the steady state at 5x the half-life. So if you have a longer half-life, that means you're necessarily going to sneak up on your effective dose by virtue of that, if you take the product once a day. So that's part of why we emphasized the half-life differences.

Our next question comes from the line of Srikripa Devarakonda with Truist Securities.

Congrats on the progress. So one of the questions was you showed with the daily oral dosing in monkeys, you showed sustained weight loss for 6 days, even after treatment cessation. Curious if you were able to see the data beyond 6 days? Are you seeing plateauing? And how do you expect this to translate into patients? And also, where do you see the oral being used versus the subcutaneous? And what would you need to see to make that decision?

Yes. So, Kripa, what I would say is like our intent today was to offer more than adequate preclinical data package to kind of support our optimism of this being like a best-in-class agent. And I think the data package supports that.

As you can imagine, there are so many experiments that 1 could be undertaking in a preclinical setting. And in a way, we are doing all of that. So many things are in progress. So for some of the things, if you are seeing a data cut after a few days or something like that, either the experiment may be ongoing or we may be designing another set of experiments towards that sort of goal. Now in terms of, we are aware, where an oral could be used and where a subcu could be used. I mean, my mindset is like oral is ultimately going to win the day, especially in a chronic setting, the oral sort of comes across as a clear winner.

And with an oral, one could also expect a different set of pharmacokinetic, pharmacodynamic characteristics versus an injectable that good down the road without getting into details, a lead to better performance and better tolerability. So time will tell, we'll find that out in a human setting.

And finally, though, in terms of what could be used when, we will just see. In a way, we wanted to take that question out of the equation. And talking to the KOLs, we were like, okay, this is easy enough for us. Let's just develop both an oral and a subcu and that is -- and that way, it's like one can have their pick and choose whatever is to their liking.

What the KOLs told us was, hey, there's a bunch of agents that are oral. There are a bunch of agents that are subcu and the maximum flexibility for their patient population, what they'd like to get used to is 1 drug substance that they can use in either setting under the appropriate circumstances.

Yes. So the idea is single chemical entity, same chemical entity, both oral and subcu. And something that is very cutting edge, triple agonist with the potential for being best in class. So we try to check as many boxes as we can. And now we will try to run as fast as we can.

And our next question comes from the line of Brian Cheng with JPMorgan.

Newman, just going back to your comments earlier about the more common weight loss you have seen in dogs and cynos versus mouse model. On that point, have you done work to see if there is more prominent observations in terms of lean mass versus fat mass ratio in dogs and cynos compared to mouse. And I have a follow-up.

No, we don't have any data in cynos or dogs on lean and fat mass loss. So our data there is limited to the mouse model. That's where we have good capabilities as well, just to be able to assess...

And I would add that, just to clarify, the cyno and Dog, these are normal non-obese species. So when you keep that in mind, you might find our observations even more remarkable.

Yes, that's a good point.

And we think that the greater activity is may be explained by the receptor potencies we showed you in the presentation.

Both the absolute and relative potencies because we have gone out of our way to engineer the appropriate relative potencies of GLP versus GIP and GLP versus GCG. And I think as Newman mentioned, the technology will allow us. And this is very proprietary to us, right? Our technology platform will allow us to engineer any kind of relative potencies we want to. So once again, this is something an exhaustive consultation with the KOLs and all that. This is the optimal balance we were striving for. And we are kind of seeing the glimpse of superiority in higher species.

And as we think about the next year clinical trial design, are both formulations heading into the clinics at the same time? And do you have a sense of the doses and also the dose range that you'll be targeting?

Yes. So a lot of that is pretty clear in our heads. But it's fair to say that at a practical level, we might see the subcu weekly clinical studies starting a little ahead of the oral.

And our next question comes from the line of Julian Harrison with BTIG.

Congrats on all the progress. I noticed Retatrutide has been associated with some treatment emerging cardiac arrhythmia. So I'm curious if you've had a chance to reflect on that. And then if cleaner safety is part of the proposition here, how is 477 designed to achieve that? And how soon will you be able to confirm adequate cleaner safety in the clinic?

Sure. So I will give a general answer, maybe Newman, you can -- or [ Kirk ] can talk to the specifics, he is on the call. But the way we look at it is like the GCG receptor is affiliated with energy expenditure and 1 needs to make sure that 1 doesn't go overboard with that component. And as you can see from the relative potencies that's probably our least potent component. So just kind of a touch of the increased energy expenditure component, which I think could be helpful. But maybe, [ Kirk ], you might want to weigh in?

Yes. I mean just looking at the blood pressure changes relative to Dulaglutide in the type 2 study that was done with Retatrutide. The blood pressures were reduced. Heart rate did go up about 3 to 4 beat per minute with the drug and with Retatrutide, with Dula was about 1.7% increase, and those were not statistically different. The arrhythmias that we reported as adverse events in that study ranged in the Retatrutide groups from about 4% to 8%, Dula was about 7% and placebo was about 9%. So really didn't see much of a signal so far in those trials for any adverse event of hitting the glucagon receptor.

To your point, certainly, we will be tracking that in the clinical trials. And to [ Kirk's ] point, we see the increase in heart rate as being sort of the -- that's the signal that we're looking for.

So if I'm understanding you correctly, the heart rate increase portends potential risk of arrhythmias.

No, I wouldn't say that. I would say that -- yes, sorry.

Sorry, [ Kirk ], you were saying something?

Yes. The heart rate increase that's seen in the 2 Phase II studies with Retatrutide is in the range that's seen with the GLP-1 agonist and the GLP, GIP agonist tirzepatide. And those agents have cardiovascular outcome studies. The GLP-1 agonist, at least have cardiovascular outcome studies, where they actually reduce risk and have not been shown to be associated with any clinically relevant arrhythmia. So the expectation here, again, looking at the Phase II data for Retatrutide just regarding the pulse rate increase is pretty similar to what you see with the GLP-1 and those have proven cardiovascular safety reduction or risk reduction rather, pardon me.

And our next question comes from the line of Tara Bancroft with TD Cowen.

It's great to see such an exciting new asset. So I know it's early to be thinking about the market for these, but we can't help ourselves. And I want to expand on Kripa's earlier question anyway, which is at a higher level in the market, how do you see these fitting into the treatment landscape? Like if it's so potent for all these targets, maybe is it -- do you envision it more as an initial therapy before maintenance? Or are you confident that could be titrated for longer use? Or would it be competing most with tirzepatide, Retatrutide or all of them together, do you think?

Yes. I mean -- so it's a great question, and Tara, you're right. It's too early to -- well, never too early to ask a question, but a bit too early to speculate on all that. But keep in mind the magnitude of weight loss is directly proportional to the dose. So there is no harm in starting with a lower dose and then inching upwards as necessary. And in fact, that's kind of a step-up dose titration is almost mandatory with the obesity drug.

So I think our biggest appeal is that this is a single entity that is both oral as well as subcu and we look for like what should we strive for so that we will compete and stand out in the future, not in the present. And it was with that mindset that we chased what seemed like to be almost impossible about a year ago. And as you see, we have achieved remarkable relative potencies, both absolute and relative potencies against the 3 targets. And the results, I think, have manifested themselves in the DIO studies and also in the higher animals, higher species like dog and cynos.

So I think we are at a very good place. And then once again, getting back to your commercial thing, the fact that we have both oral and subcu even widens the choices that makes the entry easier for early initiation, early adoption transition, all of that.

I would remind you that we did all the preclinical and Phase I work for icotrokinra -- ico, let's put it that way. And so we have a great team on the pharmacokinetic side, and we're going to design our early Phase I and early Phase II studies to give us maximum information to the points you're saying about how to use each unique product with regard to its pharmacokinetic and pharmacodynamic profile.

And our next question comes from the line of Douglas Tsao with H.C. Wainright.

And I guess, Dinesh, when we think about the subcu and oral programs, do you think it's possible that over time, we could see the 2 products with slightly different profiles, and therefore, maybe 1 is more appropriate for 1 patient group than another? Or is it really your intent to really have the 2 products have very -- as close to profile as possible to really just sort of give patients an optionality in terms of sort of how they administer the drug.

Doug, it's a great question, and we'll find the real answers in a human setting because from a scientific perspective, you can imagine that with an injectable, you are kind of "starting out" with maybe a higher kind of concentration and PK characteristics in the beginning, whereas with an oral. And you saw we pointed out on the observation of drug accumulation with oral dosing. So it's almost then starting out in the opposite category, if you will, right? You start out with lower drug levels and then inch up higher. But once again, we'll find out the real answer in a clinical setting and at a practical level, we have covered all bases.

You nailed it, though, Doug, in terms of the brackets, of the boundaries and either side of the boundary, it's a good idea to have the subcu. On the one hand, it's just another choice for patients who want a different format of taking their drug and some prefer subcu than oral. On the other hand, there are important differences in safety and efficacy that relate to how and when they should be used and that's what our Phase I study and the Phase II studies will be designed to figure out.

But I wouldn't be surprised. I think your hunch is correct, I wouldn't be surprised if the difference between oral and subcu extends beyond just the difference of administration. And then at a practical level, like I said, for Protagonist as a company. And even for patients, it's irrelevant because we have both choices.

Our next question comes from the line of Geoff Meacham from Citibank.

Thanks for the question and for all the detail. I had a couple of quick ones. The first is can you talk about what you've done preclinically on looking at things like GI or liver or other toxicities and maybe how that compares to some of the assets that you've tested? And the second thing is, when you think about receptor engagement for 477 within the 3 modalities, I guess, 2 questions. One is, have you compared to other orals in development? And then, b, is there a minimum on any of those modalities that you need to hit that you think the threshold that -- to see differentiated weight loss?

So I'll give short answers and then [ Kirk ] and Newman will elaborate. In terms of comparing other orals. So the small molecule orals that are out there. They do not have any appreciable potency against the mouse receptor. So that is a handicap right there, and that's why we didn't pursue that. In terms of the GI effects and things of that nature, we haven't conducted specific studies, but it's fair to share that in dog or cyno, Newman, we didn't see any kind of GI -- observable GI effects, right?

Yes. So we didn't see any -- in the cyno and dog studies we did -- we didn't see any GI tolerability issues. We obviously are going to do standard tox package. So we'll certainly learn if there are any tox issues as we do our IND-enabling studies. I am going to -- you asked about GLP-1 agonist comparisons. And I didn't show you the data, but we also included semaglutide as a control at doses that are relevant for weight losses of semaglutide. We did use that as a GLP-1 agonist. And we didn't show it to you because we thought that well -- Retatrutide is clearly the higher bar and we saw that in our experiments and but yes...

And the oral small molecule GLP-1. They don't have activity against rodents.

That's correct. That's correct.

Also remember that small molecules in general have much less potency. And so are much more common to have off-target effects. In our case, we're informed about 2 kinds of effects. One, the pharmacodynamic effects, the known pharmacodynamic effects, we were informed on that by the development of the existing product either on the market or in development. But in terms of off-target effects, our experience teaches us the peptides have a very limited chance of off-target effects because of their high degree of potency.

And our next question comes from the line of Jon Wolleben with Citizens.

Congrats on what looks to be an exciting molecule. Hoping if you could comment a little bit about manufacturing costs? You commented a bit about bioavailability in the context of efficacy, but how do we think about the logistics and feasibility of manufacturing the 2 different subcu and oral options?

Yes. And again, Jon, I mean, obviously, as you know, it's the same API. So the API manufacturing basically is a common component. And in a way, we have in terms of our experience, our network with the contract manufacturers, all that -- those kind of things, we have almost had a head start. We are ahead by almost a decade compared to most of the companies. So we feel very comfortable with the -- not just the COGS component, but also the scalability component in the scheme of things. And yes.

Okay. And then when you talk about the optimal combo of weight loss, tolerability and lean mass preservation, we're seeing the field kind of shift, I think, over time because the Retatrutide data was so standing weight loss wise, but now kind of an appreciation that a lot of these co-morbid benefits are seen at lower weight losses, we may not need 25%-plus weight loss. And tolerability remains a big issue for many molecules. So how do you think about the actual -- what is the combination that you think is going to be optimal for most patients.

Yes. So the beauty over here is like if you create a triple agonist, you certainly are covering both -- all kind of patients, right, the full spectrum. Because at the end of the day, the effect is correlated directly to the dose. We showed you a beautiful dose proportional data where we are reducing weight anywhere from 11% all the way to 50%. So it's just a matter of choosing the right dose for the right patient.

And our next question comes from the line of Yun Zhong with Wedbush Securities.

Sorry if I missed it, but could you remind me if the oral and also the subcu, they have the same binding profile or different binding profile? In terms of receptor and potency, please?

It's the same chemical entity.

The potency assays that we did were -- they are in vitro assays.

Yes. The reason why I asked was -- I assume probably for oral and to subcu the ideal binding profile might be -- may be different. But I think then will you be able to share data across 2 different formulations so that may be in terms of time line and capital use, there could be a little more efficiency when you develop both formulations going forward?

Yes. So I think as I mentioned in response to a prior question, we will be slightly ahead with the initiation of the subcu formulation in comparison to the oral, but there is not a significant difference between the 2 time lines, I would say.

I see. And on the subcu, I think on several slides, you actually showed data which seems to be better than Lilly's assays. And although you are benchmarking to the data, it looks like using the word comparable. But is it realistic or reasonable to expect that your subcu formulation might show better efficacy than Lilly's assay, please?

I mean, we are quite optimistic about that observation because that's an observation that we have made in higher species like cynos and dog where there is much closer homology to the human targets right? So yes, so that's an observation, we cannot ignore, but we also cannot ignore the fact that these are preclinical studies. So the real finding will be in a clinical setting. But I think it's those observations in higher species compared with our deliberate engineering of the optimal relative and absolute potencies when you add all that up, there is reason to be optimistic about, let's say, better performance by our drug candidate compared to Retatrutide. But the real telling will be for the clinical studies.

And our next question comes from the line of Evan Seigerman with the BMO Capital Markets.

So at ADA, Lilly indicated they have an undisclosed oral triple GGG agonist in development? And just more broadly, given the rapidly evolving competitive landscape, how will you as a company accelerate the development of 477 in a really capital-efficient manner. I want to really get to the core of how you do this in a way that's efficient, yet allows you to remain competitive given how much is going on in the space.

Right. So -- and that is why the -- right from the get-go, we are striving for a huge and significant differentiation. So we didn't settle, let's say, for mono-agonist oral peptide. Although that is something we could have easily done if we wanted to. And as you can see from the data, whatever is out there in the public domain in a visible manner, we are at par with it or even superior to it. So that's basically as good as you can get. The other thing is like -- as you know, we have all different assets. Rusfertide is a rare disease drug. It will cater to a small patient population of polycythemia vera patients. Our icotrokinra drug partnered with J&J is in the I&I space. It will cater to a slightly larger population. But in obesity, I mean you're talking about orders of magnitude, more number of patients, right? So the opportunity that exists over here is of such a massive scale and couple that with the strong differentiation we are offering and the optionality of oral and subcu, I think, all those features added together help us differentiate ourselves even though we may be a little bit late to the party. And then finally, the kind of path has been traveled before. So we should be able to expedite the studies and kind of benefit from the early observations, which will make it clear, not just for us, but for others as well, right? I mean, obesity is such a huge opportunity -- and there are several pharma companies that could very well get interested in this program as well.

And our next question comes from the line of Richard Law with Goldman Sachs.

This is [ Patrick ] on for Richard. I guess when it comes to thinking about the partnership prospects for this molecule? I know you guys have talked about in the past, right? You're really focused on retaining control up and through Phase II proof of concept. But I think for obesity, we've really seen a lot of pharma companies like to get their toes into some of those earlier-stage assets. So is this an asset that you guys would be potentially open to partnering sooner than Phase II proof of concept? Or just how are you thinking about that opportunity?

Yes. So I think clearly, as a company, we have to keep all options open and entertain all options available at any given time. And -- but just to be clear, and as you said, we have the financial and human resources to move the asset on our own up to Phase II clinical proof of concept. And then at the Phase III initiation, which is after a few years, that will be another junction to weigh all our options then and make the optimal decision at this stage. And historically speaking, I mean, as you know, we have partnerships with Takeda and J&J. So we are pharma partnership friendly, so to speak. But the idea would be like to have the mindset of doing the right deal with the right kind of terms at the right time. And of course, a pharma partner, as you know, it's not just about a pharma company bringing financial resources. They bring amazing capabilities with their experience, expertise, ability to scale. I mean, look at the magnitude at which J&J is evaluating icotrokinra in all different clinical studies. So we appreciate the worth of partnerships. But there is a right time and place for everything.

Our next question comes from the line of Kaveri Pohlman with Clear Street.

Congrats on all the progress. So with 2 formulations, the comments you made previously were that you might -- if there is any opportunity, you might be able to develop them for different settings or different indications I just want to understand how much of that are you considering in your current cash position and cash runway? And do you think if you plan to pursue basically these could be treated as 2 different assets now? And could you clarify how much cash is allocated to the current operational plan versus 477 related activities? And my second question is regarding manufacturing basically. Are you considering external partnerships or outsourcing for manufacturing going forward?

So Kaveri, I think, you are absolutely right. It's 1 single peptidic entity, but these are 2 clinical development programs. That is pretty clear. And in terms of manufacturing, once again, we have deep-rooted expertise and experience internally. We have an amazing network and relationships with CROs. But this is something that will be strengthened and expanded upon over the coming years, no doubt about it. And in terms of -- but the bottom line is like we feel very confident about managing the manufacturing in a very cost-effective manner and as well as at a scale that will be required to fulfill the demand. Now in terms of the cash guidance and clarity, I will turn it over to our CFO, Asif.

Kaveri, thank you for the question. As a reminder, our public guidance is -- the cash run way is through at least the end of 2028 and that's based on what we reported at the end of Q1, approximately $700 million of cash in the bank. And while we've not -- to your specific question, we've not guided to how much of that is allocated to each of the assets and we're comfortably reiterating that cash run rate guidance based on the candidates that we've just disclosed to you today.

Thank you. And with that, there are no further questions at this time. I would like to turn the call back over to Dr. Patel for closing remarks.

So thank you, everyone, for joining us on the call today. We look forward to providing further updates at the appropriate time and be assured, we will continue our strive for novel differentiated assets through our expertise in the field of peptides. And we will be moving forward in a manner so that we can create maximum value for our shareholders.

Thank you. Ladies and gentlemen, this does conclude today's presentation. Thank you once again for your participation. You may now disconnect your lines.