Rani Therapeutics - Q4 2023

Transcript

Operator (participant)

Welcome to the Rani Therapeutics Fourth Quarter and Full Year 2023 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ensure that we have ample time to address everyone's questions during the Q&A session, we would ask for a limit of one question and one follow-up. Question per person: to ask a question at the time, please press star, followed by 11 on your touch-tone phone. As a reminder, this call is being recorded today, Wednesday, March 20, 2024. I would now like to turn the conference call over to Kiki Patel at Gilmartin Group. Please go ahead.

Kiki Patel (Head of Investor Relations)

Thank you, operator. Joining us on the call today from Rani Therapeutics are Chief Executive Officer Talat Imran, VP of Clinical Development Arvinder Dhalla, and Chief Financial Officer Svai Sanford. During this conference call, management will make forward-looking statements that are subject to risks, uncertainties, and assumptions, such as, but not limited to, those discussed in the risk factors section of the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K and quarterly reports on Form 10-Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These statements may include, without limitation, statements regarding product development and clinical trials, product potential, market sizes, platform progress, platform potential, certain business strategies, capital resources, financing plans, or operating performance.

Actual results and the timing of events could differ materially from those projected in such forward-looking statements. With that, I turn the call over to Talat Imran, Chief Executive Officer of Rani Therapeutics. Talat?

Talat Imran (CEO)

Thank you. I'm delighted to share the highlights of Rani Therapeutics' strong performance in 2023, during which the company achieved numerous milestones in the development of its pipeline programs and high-capacity oral delivery device. Rani Therapeutics is a clinical-stage biotech company that has developed a platform technology for the oral administration of biologics with bioavailability comparable to a subcutaneous injection. The RaniPill platform is designed to address any therapeutic area where biologics are used. Our current focus is on immunology and endocrinology, with discovery efforts underway in obesity and other therapeutic areas and drug modalities. During today's call, I will start by reviewing the important milestones that Rani has achieved throughout the past year. Then Arvinder will provide her perspective on the recent data we shared last month on RT-111.

We are highly encouraged by this data, and this is now our third successfully completed phase I trial using our RaniPill technology. Then finally, Svai will provide an update on our financial position for the fourth quarter and full year 2023. I will now begin the call by highlighting one of our biggest achievements over the past year, and that is our positive phase I results for RT-111, an orally administered ustekinumab biosimilar. As a reminder, the ustekinumab biosimilar used in our RT-111 program is supplied by Celltrion, a global biopharmaceutical company. Rani and Celltrion entered into a long-term supply agreement at the beginning of 2023. This partnership was expanded to include an adalimumab biosimilar in the middle of 2023. In both cases, Celltrion has the right of first negotiation to acquire commercial rights to each program after the completion of the respective phase I studies.

Last month, we announced positive results of the completed phase I trial for RT-111. We were very excited by those results as RT-111 achieved high bioavailability in humans. In addition, it was well tolerated with no serious adverse events. We believe this is a large potential opportunity as currently ustekinumab is only available as a subcutaneous injection and is marketed in the United States by Janssen as Stelara for the treatment of moderate to severe plaque psoriasis, active psoriatic arthritis, moderate to severe Crohn's disease, and moderate to severe ulcerative colitis, all of which have large unmet medical needs for an oral treatment. As for the potential commercial opportunity, sales for Stelara were approximately $7 billion in the United States and approximately $10.9 billion worldwide in 2023.

Moving on to our additional programs, Rani announced a second deal with Celltrion for an adalimumab biosimilar for the RT-105 program in the middle of last year. This was the first announced partnership for a program involving the RaniPill HC, our high-capacity device that is designed to deliver up to 200 microliters of liquid payload with high bioavailability. Last fall, Rani announced successful oral delivery of Humira via the RaniPill HC in a preclinical study. The preclinical study tracked the serum concentrations of adalimumab following the oral administration of the enteric-coated RaniPill HC capsule containing 11 mg of Humira or adalimumab to four canine models. The RaniPill HC successfully delivered adalimumab in all subjects. Further, we have completed preclinical studies with additional antibody and peptide molecules in the RaniPill HC.

Overall, we are pleased with the progress we have made to date with our high-capacity pill, as we believe this will be at the forefront of our clinical development programs moving forward. Finally, another potential area we believe our RaniPill can make an impact is the obesity market. In December 2023, Rani announced preclinical data demonstrating that the transenteric delivery of an incretin triagonist of GLP-1, GIP, and glucagon elicited rapid weight loss in an animal study. Preclinical data supported the potential for the RaniPill platform to enable oral delivery of multiple obesity treatments. Considering the obesity market is expected to exceed $100 billion by 2030, we are highly enthusiastic about the potential for our RaniPill to make an impact in this therapeutic area.

Overall, we believe that the progress we have made in 2023 reflects our commitment to our vision of making oral biologics a reality across a wide variety of indications. With that, let me now turn the call over to Arvinder Dhalla to discuss our clinical updates in more detail.

Arvinder Dhalla (VP of Clinical Development)

Thank you, Talat. Good afternoon, everyone. My name is Arvinder Dhalla. I am VP of Clinical Development at Rani Therapeutics. I'm delighted to provide a high-level overview of the exciting data from our phase I study with RT-111 showing, for the first time, oral delivery of a monoclonal antibody via the RaniPill. This was a single-center open-label phase I study of RT-111 conducted in Australia. The study evaluated the safety, tolerability, and pharmacokinetics of RT-111 in healthy volunteers. The study enrolled 20 participants, each in RT-111 0.5 mg and 0.75 mg dose groups, and 15 participants in a Stelara 0.5 mg subcutaneous injection group. In the study, RT-111 delivered ustekinumab biosimilar in a dose-proportional manner. The AUCs for the two 0.5 mg groups were quite comparable, resulting in a bioavailability of 84% via Rani route of administration compared to the sub-Q group.

In addition, oral RT-111 demonstrated a higher Cmax and a shorter Tmax compared to ustekinumab delivered by subcutaneous injection. Moving on to safety and tolerability, RT-111 was well tolerated by all participants in the two RT-111 groups, and no serious adverse events were observed in the study. There was no meaningful difference in the incidence of anti-drug antibodies via the Rani route of delivery compared to Stelara subcutaneous injection. Additionally, no participants reported difficulty swallowing the RaniPill, and capsule remnants passed from all participants. Overall, we are very pleased with the data that our RaniPill delivered ustekinumab biosimilar antibody in healthy volunteers without any serious adverse events and with high bioavailability. With RT-111, we aim to have a product that is highly differentiated as compared to other oral and injectable options currently being commercialized or in development.

While Stelara was disruptive when launched, its PASI-75 scores early in the treatment are not as high as more recent entrants. This is something we intend to address with a differentiated loading dose regimen for RT-111. The reason loading dose is critical is that new psoriasis patients typically start therapy in the middle of a serious flare-up, which justifies the use of a biologic. Ultimately, though, most patients will transition to maintenance dosing, and after review, we believe there is a potential to improve on Stelara here as well. We plan to explore a dosing regimen that begins with a 30-day daily loading dose, followed by just three pills at the beginning of each month for maintenance. Furthermore, currently approved oral therapies like Otezla and Sotyktu have shown lower PASI-75 scores as compared to the more recent injectable biologics.

Newer oral therapies have the potential to improve outcomes. However, those require or are being studied for daily or twice-daily dosing. Therefore, we believe that RT-111 has the potential to provide patients with the efficacy of a monoclonal antibody with a dosing schedule that has not been achieved by other oral therapies. Now I would like to pass the call over to Svai Sanford, our Chief Financial Officer, to review our financials. Thank you.

Svai Sanford (CFO)

Thank you, Arvinder. In addition to our financial results summarized in the press release that was issued earlier today, I will briefly share some key financial highlights on this call. You can also find additional information in our Form 10-K for the year ended December 31, 2023. Now turning to our balance sheet: cash, cash equivalents, and marketable securities as of December 31, 2023 total $48.5 million compared to $98.5 million as of December 31, 2022. We expect the current cash, cash equivalents, and marketable securities to be sufficient to fund our operations into 2025. We recognize the need to raise additional capital to support our operations for 2025 and beyond. We plan to raise additional capital through equity offerings, debt financing, and potential non-dilutive licensing fees from pharma partners.

For our operating results for the fourth quarter and year ended December 31, 2023, research and development expenses for the fourth quarter and full year 2023 were $7.6 million and $39.6 million, respectively, compared to $10.4 million and $36.6 million for the same periods in 2022, respectively. We have sufficiently managed our operating costs, and even with the challenge of limited capital during 2023, we successfully completed the phase I clinical study for RT-111 and significantly advanced development of the RaniPill HC, which is expected to be ready for clinical studies in the second half of this year. General and administrative expenses for the fourth quarter and full year 2023 were $5.8 million and $26.5 million, respectively, compared to $7.1 million and $26.8 million for the same periods in 2022, respectively.

The G&A expenses for the full year 2023 decreased by $0.3 million compared to the prior year due to our cost containment measures, and it includes non-cash expenses of approximately $12.9 million for the full year 2023 compared to $9.8 million in 2022, which is primarily stock-based compensation. Net loss for the fourth quarter and full year 2023 was $14.1 million and $67.9 million, respectively, compared to $17.3 million and $63.3 million for the same periods in 2022, respectively. The net loss includes non-cash stock-based compensation expense of $4.5 million for the fourth quarter and $19.0 million for the full year 2023, compared to $4.5 million and $15.8 million for the same periods in 2022, respectively. That concludes the financial section, and I will turn the call back over to Talat for closing comments. Talat?

Talat Imran (CEO)

Thank you, Svai. Overall, I am exceptionally pleased by the results of our RT-111 study that Arvinder reviewed earlier. To our knowledge, this is the first clinical evidence of oral delivery of a monoclonal antibody with such high bioavailability. We believe these results provide validation that our platform can transform injectable large molecules into convenient oral pills. In addition, we are proud to announce that we have now dosed the RaniPill over 230 times in human subjects in three clinical studies without observing any serious adverse events related to the platform. The RaniPill platform has the potential to combine the efficacy, specificity, and long half-life of a monoclonal antibody with the convenience and dosing flexibility of a pill. The combination of the two could create products that we believe are, as of now, impossible to replicate with any other oral formulation.

Rani intends to identify additional opportunities where there is a potential to create better products in terms of efficacy, safety, and/or dosing schedule as compared to the originator. In closing, we are proud to have built a world-class leadership team at Rani, and I would like to thank everyone at the company for their efforts this past year and so far in 2024. I'd also like to thank all of our stakeholders for your continued support of Rani and for helping us move closer to our vision of making oral biologics a reality. With that, I will now open the call up for questions. Operator?

Operator (participant)

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster, and we do ask that you limit yourself to one question and one follow-up. One moment for our first question. Our first question comes from Olivia Brayer from Cantor Fitzgerald. Your line is now open.

Olivia Brayer (Senior Biotech Analyst)

Hey, good afternoon, guys. Thank you for the question. Where are you guys with respect to negotiating the terms of the development path forward with Celltrion, and how are you thinking about cost sharing with a partner versus moving forward with the RT-111 program alone? And then I got a quick follow-up on obesity. Thanks.

Talat Imran (CEO)

Yeah, great questions. Hi, Olivia. So in terms of the negotiations that are ongoing, there's not much I can say about that. We're in the middle of it. And if we were to go this alone versus doing it with a partner like Celltrion, I think in the case of a partnership, we would expect the costs to be borne by the partner going forward. And if we were to do this by ourselves, I think, which we would be excited to do given the color that Arvinder provided, we would look to bring in additional capital to support the program through a phase II repeat dose study to show the higher PASI score in the first 12 weeks. I apologize. Was there a follow-up question to that?

Olivia Brayer (Senior Biotech Analyst)

Yeah, quick follow-up question, and then I've got a question on obesity. But can you comment on whether or not they've officially opted in? Because I think that window has passed, right? That was at the end of February, if I'm not mistaken.

Talat Imran (CEO)

That's correct. I cannot comment on that, unfortunately.

Olivia Brayer (Senior Biotech Analyst)

Okay. And then on obesity, how big of a strategic priority is that program at this point? And just considering some of the recent developments in that space, where do you think your pill could realistically fit into that commercial market?

Talat Imran (CEO)

Yeah, absolutely. So it is one of the highest priorities for us as a company, and we've been working on this for years now, looking at potential opportunities. I think I've said publicly what we would like to do is create, like we're doing with RT-111, a dosing schedule that would be very difficult to replicate with any other oral technology while getting the same kind of discontinuation rates and safety efficacy profile of the injectables. And so to that end, we're looking at maybe one generation ahead technologies that are showing even better tolerability than the first generation strictly GLP, GIP, incretin drugs, and looking at dosing schedules that could be once a month or once every couple of weeks. So that's the plan and the strategy around it, and it is a top priority for us.

I think what's exciting about Rani's technology is that it's, from our perspective, future-proof, whether it's muscle preservation drugs or combinations thereof. This is an oral autoinjector, swallowable autoinjector, so it doesn't really matter. I think we've demonstrated this now over 15 drugs preclinically and three phase Is. It doesn't really matter what you put in a RaniPill. We should be able to deliver it with bioavailability that's similar to an injection.

Olivia Brayer (Senior Biotech Analyst)

Okay, great. Thank you, guys. Appreciate it.

Talat Imran (CEO)

Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Edward Nash from Canaccord Genuity. Your line is now open.

Olivia Brayer (Senior Biotech Analyst)

Hi, good afternoon, guys, and thanks for taking my question. Now that 102 is going to be entering phase II this year, could you maybe just talk a little bit about the size of that trial and design?

Talat Imran (CEO)

Absolutely. I'll turn that over to, oh, sorry, Ed. Was there another question?

Olivia Brayer (Senior Biotech Analyst)

Oh, no, that's it.

Talat Imran (CEO)

Okay, great. Arvinder, maybe you can jump in and provide the color on RT-102.

Arvinder Dhalla (VP of Clinical Development)

Yeah, sure, Talat. So we're planning to enroll about 25 subjects per arm, and we plan to have two groups in the study, one for RT-102 and one we'll be using for Forteo as a comparator. And the study is of eight weeks of duration, and we're just going to look at the biomarkers as they correlate quite well with the BMD.

Olivia Brayer (Senior Biotech Analyst)

Okay. And would that be the only phase II that you would need to do before moving into a bigger trial?

Arvinder Dhalla (VP of Clinical Development)

No, we would need to do a bigger trial. This is just sort of a dose-finding proof of concept type of study that we wanted to do before we do a bigger study.

Olivia Brayer (Senior Biotech Analyst)

Got it. Okay, perfect. Thank you.

Talat Imran (CEO)

Thanks, Ed.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Julian Harrison from BTIG. Your line is now open.

Olivia Brayer (Senior Biotech Analyst)

Hi, thank you for taking my questions. On the obesity front, I'm wondering if you could talk more about how PK advantages enabled by RaniPill could maybe translate to potential benefits on efficacy, tolerability, or both in the context of incretin-based therapies. And then maybe beyond incretin-based therapies, I'm curious if you've given any thought to some of the emerging classes in obesity, such as amylin analogs, activin receptor ligand traps, CB1 inhibitors as an example.

Talat Imran (CEO)

Absolutely. Hi, Julian. So in terms of PK safety, efficacy, and I would also add COGS in there if I can. In terms of efficacy, the drugs work really well. So I don't think changing the benchmark unless you change the incretins you put into the pill or into the injectable are going to make a material difference based on the modality. But safety and tolerability, there is a potential there. I think it was Eli Lilly with their Mounjaro data. They put out a time-based course of when the AEs popped up in patients, and it was right when they were getting a new dose. So at the beginning of a new cycle, it seemed like there was a spike in AEs that showed up.

So with the RaniPill, if you move to daily dosing in the induction phase, similar to what we're thinking about doing in the early goings of RT-111 for a patient, you can smooth those curves out so that the peaks and troughs go away, and you have a more linear progression in the escalation of the dose. And while we don't have the data yet, we'll have to run a study with one of those drugs to find out. We feel like, based on the literature, that there's a potential to improve the tolerability of an incretin-based therapy. But that brings us to kind of your second question, which is you look at amylin-based therapies, GLP-1, GLP-2s. There are other things that are on the horizon or maybe right here, right now, showing much better tolerability.

That's top of mind for us when we think about selecting a partner and a program to bring onto the RaniPill. There's tremendous interest in the obesity space to use the RaniPill by a number of potential partners. The thing for us is to find something that works today and will be competitive tomorrow when we're in trials and obviously when we get to commercial. And then finally, I think, and it maybe dovetails with what I just said, we are absolutely looking at the next generation. We're going to take a portfolio approach to obesity. I don't think there's going to be one drug that can address the entire $100 billion category.

I think you'll see over time, and all of you as analysts will do this, you'll start to bifurcate this into subcategories of patients maybe with lower weight loss requirements, but maybe they have other adverse events. There's the people who will self-pay, and then there's the morbidly obese where you're competing maybe with a Roux-en-Y or a gastric sleeve. And then finally, finally, I should say, I mentioned COGS. I think that what some companies are doing to make oral therapies, while they generate great data, they have to increase the dose by 200x compared to an injectable, and there's a COGS issue with that. COGS in production, and it's just a waste of drug when there's so many patients that want to get onto these therapies. So I'm skeptical of those in the near term.

Maybe the production issues will be solved over the next four or five years, but I have a feeling that as much as we can produce as an industry of these obesity drugs, there'll be patients who want to take them. So I think there's a really good fit in this market for a RaniPill that can take an injectable dose and get injectable efficacy with dosing schedules, as I said, that you can't do with a small molecule approach with an oral.

Olivia Brayer (Senior Biotech Analyst)

Very helpful. Thank you.

Talat Imran (CEO)

Yeah, absolutely. Thank you for the questions.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from John Vandermosen from Zacks. Your line is now open.

John Vandermosten (Senior Biotechnology Research Analyst)

All right, thank you. And hello, Talat. Good afternoon. Starting out with a question on just assuming that Celltrion signs a deal with you and funds RT-111, how will your focus shift for the rest of your pipeline if that happens?

Talat Imran (CEO)

It's a good question. I mean, we've been talking about obesity assets, so it's hard to describe something that we don't have in the pipeline right now, but I think we are putting a lot of focus on making a selection there, and that would be a place to invest capital. And then there's RT-105. Humira remains a very popular drug amongst clinicians and patients. And despite the biosimilars coming into the market, there's just not a lot of differentiation there. So bringing a TNF-alpha oral in perhaps a once-a-week pill is something that we're thinking about in that space would be a really exciting product, I think.

John Vandermosten (Senior Biotechnology Research Analyst)

Yes. And as we think about RaniPill and kind of getting to later stages, manufacturing stages, I know you guys were working on some automated processes for manufacturing. How's that coming along, and will you be using that for a clinical-stage product?

Talat Imran (CEO)

Yeah, great question. We do need to automate, and we've made incredible strides over the last year. We have a fully dedicated in-house automation team that's taking every step of the manufacturing process for the RaniPill and turning it into something that doesn't require an operator, that's fully automated. And then ultimately, we'll string all of those pieces of equipment together to make a fully automated end-to-end line. As I said, we've made good progress. We're shooting for a demonstration or pilot line that can deliver in the low thousands of pills per day. And the goal is to have this ready for our phase III studies. We don't need it for the phase Is and phase IIs.

We have the capacity already to support those studies, but we would like to have that in place and then, of course, be able to work with a CMO partner that does mass-scale production and scale that up so that we can make 50 or 100,000 pills per day per line, which is what we'll need to do in order to commercialize any of these products.

John Vandermosten (Senior Biotechnology Research Analyst)

Okay. One more, if I may. I was doing some research on biosimilars and was just looking at the rate of new biosimilars that are out there. I think there were about nine approved in the last 12 months. What do you think about the environment for more biosimilars to come? It started off pretty slowly about a decade ago, especially in the U.S. What are your thoughts about this and kind of the maybe legislative environment for accelerated growth of biosimilars?

Talat Imran (CEO)

Right. I think that there's a couple of points here. The first is that everyone from Congress to patients, clinicians, payers should want biosimilars because exclusivity from patents is good because it allows for innovation, but you don't want to keep prices for an old drug high artificially forever. So we need biosimilars, but we also need to, I think, as not just our industry, but the healthcare industry writ large, need to look at rebates, how things are paid for. And I think the Amgen example of the two prices they gave for their Humira biosimilar and which one had uptake says a lot about how the PBM and payer market works or doesn't work, if I can say that. I think that there's going to be more biosimilars coming in, but the only thing they can compete on is price. And you also see AbbVie making Humira unbranded.

That could play well with patients and clinicians. It's really hard to say. What I love about Rani is that we're not going to be playing even though we may use a biosimilar as our drug substance in our final drug product, we're not a biosimilars company. We're making novel products out of making biobetters, if you will, or novel products out of a biosimilar. So dosing schedules are different. We're shooting for, with RT-111 as an example, getting better near-term efficacy, faster PASI scores, and then potentially even elevating in the maintenance phase, as Arvinder referenced, the efficacy. We think there's some potential there. So we're really looking for those opportunities, not just doing a one-for-one replacement where it's just a pill, though that is profound, we think, in and of itself. So I think as it relates to Rani, that's kind of how we look at this.

Whether there's more, whether there's fewer, it doesn't really impact our strategy.

John Vandermosten (Senior Biotechnology Research Analyst)

Okay, great. Thanks, Talat. Appreciate it.

Talat Imran (CEO)

Thanks, John.

Operator (participant)

Thank you. If you would like to ask a question, that is star one one. Again, if you would like to ask a question, that is star one one. One moment for questions. I am showing no further questions. I would now like to turn the call back over to Talat for closing remarks.

Talat Imran (CEO)

Thank you, Justin. This concludes our fourth quarter and full year 2023 financial results and corporate update conference call. Thank you again, everyone, for joining us this afternoon.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.