Good afternoon and welcome to Protagonist Therapeutics Fourth Quarter and Full Year 2020 Earnings Conference Call and Audio Webcast. With that, I would like to hand the conference over to our first speaker, Don Kalkofen, Chief Financial Officer. Thank you, and please go ahead.

Thank you for joining us today. As a reminder, certain matters discussed in today’s conference call and the answers provided to questions asked may include forward-looking statements that are subject to risks and uncertainties related to the future events and/or financial performance of the company. Actual results may differ materially from those indicated by these forward-looking statements due to various important factors, including those discussed in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2020, on file with the SEC. A question-and-answer session will follow the formal presentation. And just as a reminder, the call is being recorded.

Thank you, Tom. Good afternoon, everyone, and thank you all for joining our conference call to discuss Protagonist Therapeutics’ financial results and corporate highlights for the fourth quarter and full year 2020. Don and I are joined on today’s call by Samuel Saks, our Chief Medical Officer; David Liu, our Chief Scientific Officer; and Suneel Gupta, our Chief Development Officer. 2020 was an exceptional and transformative year for Protagonist during which we expanded our clinical pipeline and we now have five different new chemical entities or NCEs that are being advanced in six different clinical studies. All of these studies are expected to be completed over the next 2 years. As many of you know, each of our clinical assets has been developed through our proprietary technology platform. We are currently developing novel therapeutic options across three distinct disease categories: one, various blood disorders influenced by excessive red blood cell production that is accessing erythrocytosis or excessive iron overload conditions; two, inflammatory bowel disease, or IBD, such as Crohn’s disease and ulcerative colitis; and three, various inflammatory and autoimmune diseases that have already been clinically validated by the interleukin-23 or IL-23 pathway. I would like to start today’s call by reviewing rusfertide, previously known as PTG-300. As a reminder, rusfertide is a peptide mimetic of the natural hormone hepcidin, which is a key regulator of iron homeostasis, as it controls the absorption, storage, and distribution of iron in the body. Rusfertide was developed to have superior drug-like properties, including its potency, half-life, solubility, stability, and ease of synthesis compared to the natural hormone. Our most advanced clinical program with this candidate is in patients with polycythemia vera, also known as PV, a rare and progressive blood disorder affecting about 160,000 patients in the United States alone. In May of 2020, we presented a very small, but robust dataset for 7 patients from our ongoing Phase 2 PV trial, which proved to be a turning point for Protagonist. In December last year, in an oral presentation at the ASH Conference, we shared the data for 18 patients from the same study, and we were pleased to see the continuation of the robust clinical responses observed earlier in May. To quickly recap the data, rusfertide appears to be safe, well-tolerated, and very effective in managing hematocrit control below 45% across the 18 adult patients evaluated. This tight hematocrit control also led to a dramatic decrease in the need for therapeutic phlebotomy, the most common treatment modality for this condition. Furthermore, we also observed a reversal of iron deficiency in these patients. Iron deficiency is a typical undesired outcome of therapeutic phlebotomy in these patients. While phlebotomy is the current mainstay of PV treatment, many patients are unable to maintain hematocrit levels below 45% as per the NCCN guidelines, which is unfortunately true even for those patients receiving frequent phlebotomies and cytoreductive agents.

Thank you, Dinesh. Once again, thank you all for joining us this afternoon. Today, we issued our earnings release for the year-end 2020 and are filing our 10-K, where you could find further details on our most recent financials. On the call today, I would like to review some of the key financial highlights for 2020. Starting with our revenue, we reported license and collaboration revenue for the full year of 2020 of $28.6 million, compared to $0.2 million for the full year of 2019. As you may recall, last year, the company’s 2019 revenue was offset by a one-time cumulative adjustment related to the application of revenue recognition principles, following the amendment of the Janssen Biotech agreement in May of 2019. This had reduced the 2019 revenue recognition by $9.4 million. The 2020 revenue increase over the prior year was also related to recognition of revenue from providing preclinical and clinical development activities under the collaboration agreement with Janssen for both new assets, PN-235 and PN-232, as well as an update to the forecast of the remaining services to be delivered under the collaboration. License and collaboration revenue for the fourth quarter of 2020 was $5.7 million, compared to $2.7 million for the same period of 2019.

Thank you, Don. We are very pleased with our progress to date, and we look forward to continuing our strong momentum as we move through 2021. We thank our shareholders for their support and confidence in our work. We thank the investigators who advance our clinical studies and the patients who participate in these studies. Finally, I want to personally thank the Protagonist team. I mean, despite the challenges that 2020 imposed on the world at large, our employees not only stayed the course, but excelled in several functions. Their unwavering focus and dedication is what has made the progress possible that we are describing today. Collectively, as a team, we look forward to even more exciting progress in the months and years ahead.

Thank you. Your first question comes from the line of Yasmeen Rahimi with Piper Sandler.

Hi, team. This is Rachel on for Yasmeen. Thanks very much for taking our questions. So, our first question is can you help us understand how the regulatory pathway could differ between development in low-risk versus high-risk PV patients who fail on current treatment options? In other words, can you help understand what part of the Phase 3 design is set in stone and which factors remain to be discussed? Thank you.

Well, that’s a very important question and distinction, and I would have our CMO, Sam, take a crack at it.

Yes. I would just say that we can’t obviously at this point articulate definitive guidance on the FDA design. But I can tell you that our Phase 2 study is open to patients, whether they are on cytoreductive therapy or not. The common theme is patients who require too many phlebotomies. While patients are divided into high and low-risk categories, patients are divided into those who are receiving cytoreductive agents like hydroxyurea, interferon, and those that aren’t. The commonality between all the patients is that they are receiving frequent phlebotomy. I will also ask Suneel Gupta if he wants to say anything else about the clinical design.

I think you have covered all the important aspects. I think there is nothing more to add.

Yes. I think the short answer is from the Phase 2 study, it seems the drug is very effective in both populations. So, obviously, we want to have as broad a utility as possible. Our theme is basically this is a drug of choice where the current therapy is ineffective.

Thank you. That’s very helpful. And as a follow-up, based on your discussions with the FDA, do you believe that the FDA and the EMA view the regulatory pathway in PV through the same lens? Thank you.

Well, the unknowns are the unknowns. And I think we sound like a broken record here, but I think it’s still the most meaningful statement. The dialogue is ongoing. And when we have clarity, we will share it with everybody; the whole world, and we believe that should happen in the first half of this year.

Of course, the only historical comparison one could make, and we can’t talk specifically about our own discussions, but the only historical comparison one could make would be to Jakafi, which was registered in both the EU and the U.S. And shortly, you may have a comparison of oral peg-interferon, which is available in Europe and is on file in the U.S., not that those are directly relevant to us, but those are the historical comparisons.

Great. Thanks. That’s very helpful. And as our last question, can you tell us what other indications beyond PV and HH for which rusfertide will have mechanism for? Thank you.

Yes. We have been thinking about two general areas, not to get specific here, but just generally, and they are kind of self-evident if you think about it, based on the results with PV. One is diseases that are treated with phlebotomy, and the other is diseases where one of the hallmarks of the disease is erythrocytosis. So obviously, in PV, those patients have erythrocytosis of a particular type and they need phlebotomy. We are thinking about both of those as avenues for further development and other indications, and there are multiple diseases in each of those categories.

Yes. So, the triangulation of phlebotomy as a therapy, iron overload, and excessive erythrocytosis is key.

Thanks very much for taking our questions.

Sure. Thanks.

Your next question comes from the line of Chris Howerton with Jefferies.

Great. Thanks so much for taking the questions, and obviously, congratulations on all the progress across the board. So, maybe as a first question, just as a follow-up to some of that questioning with respect to PV and the regulatory path, if we could focus on the primary endpoint here. What are the key features that you need to come to alignment on with the FDA regarding the primary endpoint? Is it the specific endpoint that you want to go after? Is it the duration on therapy and follow-up? What are the categories that one needs to satisfy to get a registrational study completed?

Yes. So, I will make a general statement and then Sam will chime in. But the current data we have from the ongoing Phase 2 study leads us to believe that they have amazing hematocrit control. This observation has a drastic reduction in the phlebotomy requirement, which has been the cornerstone of this disease indication. So we are good with whatever the final outcome would be. But Sam?

Yes. I mean, this is a chronic disease. We believe that we’ll need data over a reasonable period of time. As Dinesh said, the hallmark is keeping the hematocrit below 45. That’s what’s in every guideline and medical textbook. Therefore, keeping it below 45 over a significant period will be an important aspect of the primary endpoint. How it’s defined, how it’s analyzed, and what else could be in there, we’re not ready to say that. But it’s clear to us that the backbone of the primary endpoint will involve keeping the Hematocrit below 45.

Okay, alright. That’s very clear. Thank you. And maybe as a second question, if we can possibly shift our focus to PN-943 or the IBD, there has been recognition and focus on early-stage receptor occupancy data. One of the questions that I’ve received numerous times from investors is, how does this mechanism work from a systemic versus a local or gut-restricted activity? It seems like there is some confusion out there. So it might be helpful if you could compare and contrast local delivery in a gut-restricted manner versus systemic and kind of what you see in terms of the relevance of receptor occupancy data? Thank you.

Thanks, Chris. That’s a very important question. It is also one of the most common questions we are receiving in recent days. I’ll give some general answer to it, and then our CFO, David Liu, will chime in with some more details. The way we look at alpha-4-beta-7 integrin is that it’s a validated target; it’s one of the safest and most IBD-specific targets, as established by Takeda. Now there are two types of approaches: one is where the drug is delivered through systemic exposure with injectable antibody drugs and orally bioavailable small molecule drugs. The other approach, which Protagonist has undertaken, and in fact, Protagonist is the only company in that space, is the gut-restricted approach. The main action is not in the blood compartment but rather tackling the target in the GI tissue compartment. While we have a unique presence here, the question is whether that is a risky proposition. In our opinion, the answer is no, because our previous first-generation drug PTG-100 established clinical proof-of-concept in a Phase 2a study in moderate-to-severe ulcerative colitis patients, showing clinical remission rates of 16%, similar to that observed in a Phase 2a study by Takeda, while we also found 44% histologic remission from colonic biopsy samples. Our second-generation drug—943, is at least threefold more potent, as demonstrated by all in vitro, in vivo preclinical, and Phase 1 receptor occupancy measurements that we have conducted so far between these two drugs.

Yes. Thank you, Dinesh. I think everything that Dinesh mentioned regarding the benefits of our approach in the clinic was presaged by all of the work that we did preclinically. So looking at trafficking, looking at pharmacodynamic responses associated with trafficking, with disease outcomes and histological outcomes in preclinical models of colitis, all predicted what we eventually observed in the clinic. Regarding the pharmacodynamic responses shown predominantly by receptor occupancy in the blood, we believe that this serves as a surrogate of what is initially high target engagement on local immune cells residing in the gut. As those cells are trafficked back out, they can’t reenter due to the tight binding of 943 to the surface of those cells on the integrins. Additionally, we think that high local target engagement engenders a positive effect on cells trying to proliferate and be activated through alpha-4-beta-7 engagement as a co-stimulatory factor, blocking that mechanism via our studies.

What I would add, Chris, is that we have established, based on our clinical proof-of-concept data, the efficacious dose in the ulcerative colitis study, which translates to 74% blood receptor occupancy in a Phase 1 study in healthy humans. That is our guideline for the gut-restricted integrin blocker approach. In Phase 1 of 943, we know that we can easily surpass that 74% number at three times lower doses than the previous drug. In contrast, for systemic drugs, a 100% receptor occupancy goalpost is the norm, but we know—without going into details—that the minimum dose required to achieve that 100% RO is significantly lower than the actual efficacy doses used for systemic drugs.

Great. Okay. Well, thank you very much for that color. I appreciate the perspective and thanks.

Your next question comes from the line of Joseph Schwartz with SVB Leerink.

This is Kelly on for Joe. Maybe one about indications outside of IBD for your oral IL-23 antagonist. How are you approaching or thinking about the bioavailability differences that might be needed for more systemic indications versus those that are more gut-restricted? Are there any attributes of your new agents, PN-235 or 232 that you designed or selected for that might lend themselves to a more gut-restricted or more systemic profile? Thanks.

That’s an excellent question, Kelly, and I really appreciate it. As you know, we are a peptic technology platform company, and we like to pioneer advancements in the field of peptidic science. Initially, we went on the journey of discovering peptides as potent as antibodies. The next step was creating peptides that are orally stable and gut-restricted. The ultimate goal in the field of peptides would be to create orally available peptides. Therefore, for the IL-23 program and our future undertakings, we will not shy away from targets or approaches requiring some sort of systemic oral bioavailability. That’s how I would frame it.

Great. Excellent. Thanks for taking our questions.

Your next question comes from the line of Anupam Rama with JPMorgan.

Hey, guys. Thanks so much for taking the question. Just two quick ones for me. First is more of a clarification question on PTG-300 Phase 2. At the conference and then in your press release today, you talked about updates at medical conferences in 2021. So, is this a EHA and ASH strategy, or is it more of an ASH-only type of strategy post-enrollment completion midyear? That’s our first question. Second one is one of the questions we’ve been getting a little bit on PTG-300 is in PV – based on the profile that’s emerging post-ASH, where does this drug fit in the treatment paradigm based on your market research? Thanks so much.

Sure. Let me – I’m sure Sam will want to elaborate. But very quickly, no, we aren’t going to just wait until the end of the year to present things at the ASH conference. There are significant conferences in mid-year and throughout the year. So it is our full intention to present updates at medical conferences throughout the year.

Yes. Remember, the first part of the study is an open-label Phase 2 study. Since it’s open-label, we have no problem with reporting on it and being transparent over time. The second part, which is randomized and blinded, would require the last person completing the study before we could update that.

With respect to where we see this being used, as we kind of said earlier, we’re not trying to replace any particular therapy. We think that people who have too many phlebotomies should demonstrate two things: one is too much time spent above 45, which is guideline-recommended for preventing events. Therefore, spending time above 45 is not good for patients. The people who require multiple phlebotomies are those with the highest degree of iron deficiency because the more phlebotomies performed, the more iron is removed from the body. We believe that is where we would expect to see improvement with our drug. The way I would phrase it is that essentially, this is a drug of choice when the current therapy is ineffective. Our Symphony data server shows that the majority of patients will fall in this category. Looking at our current Phase 2 study, the data we presented at ASH included 18 patients: 8 were on phlebotomy alone, 7 were on hydroxyurea, and we also have 3 patients who are on interferon. Remember, the qualification for entering our study is that in spite of those treatments, they require frequent phlebotomies, at least 3 or more phlebotomies in a 6-month period. This translates to more than 6 phlebotomies annually, showing that the current treatments are ineffective. Too many frequent phlebotomies are not good for the patients ultimately, and this is where we would like to see the performance of our drug.

Yes. We presented our Symphony data at ASH; it’s in a poster and was presented by one of the key opinion leaders. The punchline is that many patients are not receiving treatment according to the treatment guidelines.

Understood. Thank you so much for taking my questions.

Absolutely.

Your next question comes from the line of Douglas Tsao with H.C. Wainwright. And you are live.

Hey, guys. I am having a little trouble with my line. So, just in terms of the new IL-23 that has been nominated by Janssen for development. Just curious, at what point should we start to get a sense of what indications you are thinking about? And obviously, I would presume the horizons might be a little broader than just in IBD, just given how – as you alluded to earlier, right? It might not just be gut-restricted. Obviously, Stelara has pretty wide use.

Yes. Doug, that’s an excellent question. As you can imagine, over here, this is a partnership with Janssen, so we have to be mindful of the statements we make. But I’d like to phrase it this way: Our collaboration with Janssen is not on IBD. Our collaboration with Janssen is on IL-23 receptor antagonism. Wherever the intervention of the IL-23 pathway leads to medical utility in a particular disease indication, that is where we are theoretically going with multiple optionalities. The idea is to add a few promising candidates in the development bucket; we currently have at least three. The strategic and clinical options will become more clear down the road as we gather more data from the current Phase 1 and Phase 2 studies we are conducting with these candidates.

And Dinesh, you just sort of went on. So I guess it sounds like what we learn from the Phase 1 in terms of bioavailability, PK profile, etc., will help determine which of those indications, especially outside of IBD, the candidate might be best suited for?

Yes, it will be hard to disagree with your logic. Thank you again, everybody, for joining us this afternoon. This formally concludes our fourth quarter 2020 and full year 2020 conference call and webcast. Thank you.

This concludes today’s conference call, and you may now disconnect.