Eoneren/E+ via Getty Images
generalize
PureTech Health (NASDAQ:PRTC) was established in 2005. Co-founders include MIT professor Robert Langer and current CEO Daphne Zohar. PureTech develops therapies and founded Vedanta Biosciences, Karuna Therapeutics (KRTX) and harbor therapy. They retain equity interests in these entities. Additionally, PureTech has a wholly owned pipeline. This article will introduce the development history and product introduction of Karuna’s KarXT and PureTech’s leading asset LYT-100. KarXT is a beautifully designed, much-needed differentiated drug that ultimately proves to be a high-value asset. BMY announced in December that it would acquire Karuna Therapeutics for $14 billion. LYT-100 is the lead asset in PureTech’s wholly-owned pipeline and a beautifully designed, differentiated medicine for situations where there is a real need for a better medicine. LYT-100 provides PureTech Health with an opportunity to repeat what works by developing another drug Optimized allocations that benefit both patients and investors.
Karuna’s KarXT
One aspect of PureTech’s approach to developing new therapeutics involves identifying areas of unmet medical need, where therapies with proven efficacy exist but whose negative impacts impede use or compliance. A key advantage of this approach is that this reduces investor risk as the mechanism has proven activity in the target indicator.
Existing standard medications for the psychiatric treatment of schizophrenia have well-known and very significant side effects, including weight gain, sedation, dry mouth, and involuntary movements. These side effects may interfere with a patient’s ability to continue taking the medication. In fact, up to half of people with schizophrenia have difficulty adhering to medication. Furthermore, a large proportion of patients do not respond adequately to treatment. Karuna Therapeutic’s KarXT was invented by PureTech to overcome troubling side effects while delivering desired benefits.
It is believed that some side effects occur due to stimulation of muscarinic receptors in peripheral tissues. KarXT combines a drug that stimulates muscarinic receptors (xanomeline) with a muscarinic antagonist (trospium) to reduce side effects. Xanomeline is licensed by Eli Lilly and Company (LLY), which tested it in a small study but chose to halt development due to poor tolerability. Karuna tested it in combination with a potent muscarinic antagonist (trospium chloride) in a phase 2 study to assess whether it could improve the condition.
Karuna then conducted a phase 3 trial that met its primary endpoint. Importantly, KarXT was well tolerated, and common side effects that could lead to discontinuation were not widely observed. The FDA has accepted the NDA for KarXT for the treatment of schizophrenia and has set a PDUFA date of September 2024.
BMY seems to have recognized KarXT’s optimization profile. Karuna was acquired by BMY for $14B, valuing the company’s assets at $12.7B (net of cash on hand). PureTech’s initial investment of $18.5 million has generated over $800 million in earnings for PureTech to date, and they retain an equity stake in KRXT worth approximately $295 million in addition to royalties and milestones. The development of this asset has performed well from concept to clinical validation, with investors receiving strong exit returns.
LYT-100
The lead asset in PureTech’s wholly-owned pipeline is LYT-100, for the treatment of idiopathic pulmonary fibrosis (IPF). IPF is an interstitial lung disease that causes fibrosis of the lungs. As the disease progresses, scarring of the lungs can lead to decreased lung function and less oxygen in the blood. Difficulty breathing and coughing are symptoms, and some patients require a lung transplant. Without treatment, survival is approximately 3-5 years.
The disease is currently incurable and progressive, but there are standard treatments that can slow the decline in lung function. Pirfenidone and nintedanib are antifibrotic drugs used to treat IPF and were approved in the United States and the European Union from 2012 to 2014.Use of antifibrotic drugs extends median survival to 6 to 8 That will take years, said Dr. Steven Nathan, a pulmonologist and professor of medicine at the University of Virginia.
For taking pirfenidone, side effects can be serious. According to the PI, patients reported nausea (36%), rash (30%), abdominal pain (24%), upper respiratory tract infection (27%), and diarrhea and fatigue (26%). 75% of diagnosed IPF patients are not taking standard treatment medications. Like the drugs used to treat schizophrenia, pirfenidone’s efficacy is well-established, but its side effects can be quite troublesome.
PureTech’s approach is to develop a deuterated molecule, deupirfenidone. Deuterated drugs are small molecules in which normal hydrogen is replaced by a heavier hydrogen isotope called deuterium. This small change may improve side effects because the therapeutic dose required may be lower than that of “non-deuterated” molecules.
In fact, early data suggests that this tweak may have resulted in a better-tolerated IPF drug. A Phase 2 study showed that LYT-100 reduced gastrointestinal-related adverse events by approximately 50% compared with pirfenidone. Better tolerability is one way LYT-100 improves the standard of care.
Additionally, higher doses of pirfenidone may increase efficacy. The 824 mg TID dosing regimen allowed for 43% higher drug exposure than the standard of care dose administered to patients. Therefore, trials currently underway at PureTech will also test whether 824 mg TID results in enhanced efficacy.
The primary endpoint of the current Phase 2B study is the slope of FVC decline over the six-month treatment period with LYT-100 compared with placebo. Patients were divided into 4 groups:
1. Placebo
2. Pirfenidone 801 mg TID (standard of care)
3. LYT-100 550 mg TID (dose shown to reduce gastrointestinal adverse events by 50%)
4. LYT-100 824 mg TID (higher dose may bring better efficacy)
Results will be announced in the fourth quarter of 2024.
competitive landscape
Amgen’s AMG 670 (purchased from Horizon and formerly known as HZN 825) is being evaluated in a Phase 2 clinical trial, with data readout in the second half of 2024.
Boehringer Ingelheim’s BI 1015550 is a PDE4 inhibitor with anti-fibrotic and anti-inflammatory effects. Results from a 12-week study showed it could prevent a decline in lung function. It was tested with nintedanib or pfenidone treatment as background therapy. Synergistic effects may occur when used in combination.
BMS-986278 display effect In a phase 2 trial of IPF. The trial allows the use of background antifibrotics, so BMS-986278 can be considered an add-on therapy to standard of care medications such as pirfenidone.
Gilead and Galapagos halt development of Ziritaxestat to treat IPF. Development of Fibrogen’s Pamrevlumab was halted after it failed to meet the primary endpoint of a Phase 3 study.
It is currently estimated that there are approximately 100-150,000 IPF patients in the United States and an additional 100,000 patients in the European Union. Sales of these two standard-of-care drugs will be approximately $4 billion in 2022.
risk
Despite well-founded clinical assumptions, any clinical trial has the potential to produce adverse results. In particular, a slight reduction in gastrointestinal symptoms rather than a 50% reduction is a potentially adverse outcome. Additionally, the deuterated molecule may be less effective than pirfenidone when tested over longer time frames.
Pirfenidone becomes generally available in 2022. If LFT-100 is approved, in order to justify formulary inclusion and brand pricing, insurers may be required to conduct step editing and generic trials before covering LFT-100. PureTech may need to collect long-term data to show reductions in hospitalization, lung transplantation and/or survival benefit. Other drugs in development by Amgen, BI, BMY or other companies may prove to have superior properties and become the treatment of choice.
More broadly, PureTech is a multi-project company. Some companies appear to be more promising, while other companies and investors rely on management to allocate capital appropriately. The downside risk to any biotech stock is a complete loss of capital.
financial
PureTech reports $320 million in cash on hand to fund operations through 2027. Operating expenses for the first six months were US$79.3 million. The company has not raised capital in the past six years.The year-end report stated, “The entities we have established are an important source of value for us and we have created more than US$800 million Starting in 2020, we will advance our product pipeline and growth through non-dilutive earnings. Following the closing of the Karuna deal, PureTech announced a proposed $100 million Return on capital. PureTech has a market cap of about $700 million, roughly equal to its cash on hand ($320 million) and its stake in Karuna ($294 million). The company may also be entitled to future royalties and milestones from KarXT. The current valuation does not attribute significant value to its wholly-owned pipeline or stakes in early-stage companies such as Vedanta, Vor Biopharma, and Seaport Therapeutics.
in conclusion
Charlie Monger said: “When something is going well, we have enough judgment to continue to do it. I would say that we are demonstrating what is called the basic algorithm of life-what works repeatedly.” KarXT is clearly good for patients And it works very well for investors. PureTech has the potential to repeat this success with its wholly owned asset, LYT-100.
The key factors that led to past success are already there. Both drugs are tweaked versions of drugs whose mechanisms are known to be effective. In both cases, the modifications are intended to improve side effects and/or efficacy. Both indications, IPF and schizophrenia, are serious illnesses for which doctors are more than willing to offer better drugs. Finally, both drugs are being developed for indications with significant commercial opportunities.
Ultimately, companies that can improve outcomes for patients with dire diagnoses are often great investment opportunities. If LYT-100 performs well in the clinic, PureTech may have a chance to repeat a playbook that worked. In the fourth quarter of 2024, investors will be able to better evaluate whether LYT-100 has the optimal profile that patients, physicians, and investors are hoping for.
