Designer Genes: The PYC Therapeutics Story (PYC)

Good morning, Armchair Army,

Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.

Quick question…

What happens when professional US investors enter Australian biotech?

You get the largest capital raise in ASX biotech history.

(At least for an early-stage asset still at phase 1)

Earlier this year, a syndicate of professional life sciences investors based in the US took a giant position in ASX-listed PYC Therapeutics (ASX: PYC)... 

$600M+ into a handful of Phase 1 assets on the ASX? 

I had to read the announcement about four times to work out if it was “real”... 

It seemed too good to be true.

But it was true.

Now PYC has the capital firepower to advance all four of its rare disease portfolio assets using its underlying technology that can turn up gene expression.

In this next edition of my Biotech 165 Challenge, I want to dive deep into PYC and work out…

How in the world did they manage to pull this off?

Following the "smart money" is a valid investment strategy.

It involves tracking the trading activity of large institutional investors, hedge funds, and corporate insiders. 

Because they see the whole board.

They know the deals big pharma is looking to do.

(Often because they're either underwriting them or on the other side.)

They know which assets get bought.

Which assets get sold.

… AND which assets get overlooked.

Deep research capabilities (and networks) that retail investors can only dream of.

These aren't the Aussie small-cap fundies that chase the catalysts.

Or the institutional investors out of Hong Kong that strip the options.

They have big cheques, deep pockets, and a deep understanding of both the science and the likelihood that a company becomes a big pharma acquisition target.

They are the real “smart money”.

Earlier this year, a group of them took a giant position in an ASX-listed biotech company.

… that was still at Phase 1.

Led by RA Capital.

RA Capital has…

US$12.6 billion in assets under management.

(That's bigger than Australia's entire A$15 billion National Reconstruction Fund.)

Minimum ticket size, US$10M. Maximum, US$250M.

A 59% exit rate with 128 exits from 218 private investments.

It’s the kind of investor built on the ethos of Bigger is Better.

(A defining tenet of the American national character).

So when RA Capital led a syndicate of US specialist investors onto the Aussie shores, it resulted in one of (if not THE) biggest capital raises in Australian biotech history:

So how did this little biotech out of Perth pull it off?

This is the story of the next company in my Biotech 165 Challenge, PYC Therapeutics (ASX: PYC).

PYC was listed in March 2005 as Phylogica.

At the time it listed as a peptide story.

(Funny how things are coming full circle with peptides being very much back in the news cycle).

PYC had a giant collection of bacterial-genome-derived protein fragments, and they screened for peptides that would bind and block a specific disease target.

The four years between listing and 2009, the company tried to develop its own drug targets.

But, like most early-stage companies scratching around during the GFC, it ran out of money and had to pivot.

So it moved to a services/partnering model.

Not with the original peptides, but with something new.

A cell-penetrating peptide that got other drugs inside the cell, to targets they couldn't otherwise reach.

The first deal it signed was with Roche…

Then AstraZeneca…

Then Pfizer…

Then Johnson & Johnson (Janssen at the time)...

But after several years, these partnerships started to wind down.

Why?

In that era, peptides (the CPPs) were sold as discovery tools inside their programs. 

Help a big pharma company deliver a molecule better for their own pipeline. 

… An input into someone else's drug. 

BUT, those candidates were only ever "backups of existing internal Pharma programs".

So the "customers" weren't paying for a platform product. They were running experiments that went nowhere.

So in 2017 the company made the hard call.

De-prioritise all of its internal programs, and go all-in on the underlying delivery technology for itself.

Back to the drawing board.

The strategy?

Throw stuff at the wall, and see what sticks.

And what stuck was RNA.

RNA drugs can precisely dial a gene up or down, but they have one unsolved weakness: getting them inside the right cells.

Which is exactly the problem PYC had spent a decade solving for everyone else.

So they married the two: their own cell-penetrating peptide delivery platform, carrying RNA as the cargo.

From this new direction, a new technology emerged.

PYC’s technology in combination with Anti-Sense Oligonucleotides.

Anti-Sense Oligonucleotides = a short synthetic strand that binds a specific piece of RNA.

Instead of silencing a gene, PYC can tell a cell to make more of a protein it isn't making enough of.

Turning the gene up instead of down.

For the last decade, RNA medicine only really knew how to do one thing.

Silence a gene.

Find the gene that's causing trouble, and switch it off.

Genes = inherited traits that act as an instruction manual for your body to produce proteins.

And the industry got very good at it.

Eight silencing drugs were approved between 2018 and 2025.

One company, Alnylam, holds around 80% of all FDA siRNA approvals and did roughly US$1.8 billion in sales in 2024.

There are nearly 800 more silencing drugs in development behind them.

Which suggests that the silencing land-grab is over.

If you're Big Pharma, you want the next thing.

NOT the next gene-silencer

… but the opposite.

Turning a gene up.

Because a number of genetic diseases aren't caused by a gene doing too much.

They're caused by a gene not doing enough.

In 2019, PYC made an early bet.

Turning the gene up instead of down.

PYC found themselves fishing in the pond with no one else around.

A genuinely differentiated technology that treats the root cause of a number of underserved diseases.

So… what did they do with this technology?

The use of funds under the capital raise tells you which indications the US investors think are the most important:

Let’s go through them all, starting with the biggest fish.

What is it: The most common genetic kidney disease. A faulty PKD1 gene means the kidney can't make enough polycystin-1 protein, so cysts grow until the kidneys fail.

How does it work: PYC-003 is a peptide-delivered ASO that turns that protein back up.

Allocation from the raise: $350M

Market Size: PYC's estimate: >US$10 billion pa (potentially more)

Unmet Need: >10 million patients worldwide and no therapy that treats the cause; the standard of care, Tolvaptan, only slows decline and is hard to tolerate.

Stage: The company just got the tick of approval to move forward with dose escalation in its Phase 1b.

This one is the marlin. The trophy catch.

What is it: A rare neurodevelopmental disorder from a broken SHANK3 gene, causing intellectual disability, autism and language deficits. 

(You might be familiar with this one through Neuren Pharmaceuticals, which is also running a clinical trial for PMS)

Market Size: Large and expanding; prevalence estimates have moved from ~1 in 15,000 toward ~1 in 7,300 as genetic testing spreads.

How much allocated: $160M

Unmet Need: No approved treatments. Animal data suggests deficits may be reversible even in adults, widening the treatable population.

Stage: Earliest of the four. Pre-clinical done, IND-enabling GLP tox underway, natural-history study in H2 2026, first patient in the interventional trial targeted H1 2027.

This one is the yellowfin tuna. A genuine prize in its own right, just not the marlin.

What is it: An inherited blinding eye disease from insufficient PRPF31 expression in the retina, with onset in childhood.

Market Size: >US$1 billion pa

Amount allocated: $90m

Unmet Need: No available therapies; VP-001 is the first drug candidate ever to enter clinical trials for RP11, and holds FDA fast-track and orphan-drug and rare pediatric disease status.

Stage: Most clinically mature efficacy-wise. Phase 1/2, dosing patients, already showing improvements in low-luminance visual acuity vs natural history. Registrational Phase 2/3 being set up, primary completion guided to early ~2030.

This one is the mackerel. Smaller but the most reliable bite.

What is it: Another inherited blinding disease from a faulty OPA1 gene that starves the optic nerve's cells of protein.

Market Size: ~US$2 billion pa (affects ~1 in 35,000)

Unmet Need: No approved therapy. FDA orphan-drug status granted.

Amount allocated: $70m

Stage: Phase 1a done (SUNDEW - safe, early vision gains), Phase 1b multiple ascending dose study now fully recruited. Dosing intervals were recently extended due to positive non-human primate data.

Finally, the snapper. Just a good honest catch.

So PYC is fishing in the pond with no one else around them.

But Armchair, it's still so early!

$600+ million for four Phase 1 assets…. What are we missing?

I had a long think about this, and speaking to the company directly, I came up with a framework for what actually attracted the big US money.

Let's break it down…

This was the first thing that got investors excited.

The market size of the marlin, ADP Kidney Disease:

Total Addressable Market in the US for PKD1 is US$42 billion per year.

THEN, the next question is what could PYC feasibly service?

That is how these investors could arrive at a gross-to-net figure of ~US$20 billion pa (which tracks with what the market has said - north of US$10 billion opportunity)

Tolvaptan is the only approved drug…

But it is notoriously difficult to tolerate, and the best that it can do is “a few more years of kidney function” before transplant/dialysis.

Not a great solution.

Big pharma is looking in this space:

… well, at least Novartis is looking.

For the other programs, the large market and orphan designations are fish still worth chasing.

It’s just that the kidney disease is the marlin.

In each program, there's a clear unmet need. 

Often no approved therapy at all.

… And several carry orphan-drug status.

Meaning you don't have to worry about finding customers.

If it works, it sells.

(and gets all the benefits of premium pricing afforded to orphan drugs)

These are models that use actual human tissue to test whether the product works.

PYC talks a lot about this in its capital-raising presentation, stating that these models are indicative of what will happen in humans.

There are some studies to show that ADP Kidney Disease is actually reversible in animal models (see here).

While there's no guarantee.

The sophisticated life-sciences investors looked at these models and said… yep, that gives me enough confidence that the human results will be similar.

(The science is a bit over my head, but it's “follow the smart money” on this one)

Turning genes up instead of down is genuinely novel.

PYC is fishing in a pond with not many others.

But the mechanism of action, where PYC turns a gene back on, actually makes it more likely to succeed.

This is because the genetics already tell you the answer to why the disease is happening… 

When the human genetics IS the cause, and it’s that clear, the drug has a far better shot in the clinic.

Alnylam, the biggest name in RNA medicine, puts genetically validated targets at more than six times the industry-average success rate:

Sometimes the game is just rigged.

You don't get a 59% exit rate by guessing.

These investors have picked over all the companies big pharma is circling, and they know exactly what the buyers want.

PYC happened to land squarely in that camp.

There is an old saying…

"Follow the smart money."

That's the bet here.

I'm not pretending I can independently look at any of these models and see in two years whether this kidney trial has a better chance of success than the next one…

But I know who can.

RA Capital, Perceptive, MPM, Rock Springs, RTW. 

The most sophisticated life-sciences investors around…

And they just wrote a giant cheque into PYC.

A little Perth biotech turning genes up while the rest of the world was still turning them down.

Will it work?

There are no guarantees.

But this is very much a “follow the smart money” trade.

A big thank you to the CEO, Rohan Hockings, for sharing the PYC story with me.

See you all tomorrow,

The Armchair Analyst

But first…

Vitrafy Life Sciences (ASX: VFY) partners with Hoxworth Blood Centre to extend its cryopreservation solutions in the US. (VFY)

🪑  Good partner, Hoxworth is a giant US-based blood bank with 7 sites and servicing 31 hospitals.

Artrya Limited (ASX: AYA) launches its AI medical imaging platform within Northeast Georgia Health System. (AYA)

Dimerix (ASX: DXB) secures a US patent extension for its newly acquired DMX-652, extending coverage to 2043. (DXB)

Nexsen Limited (ASX: NXN) launches a new R&D facility in Hong Kong and two new pipeline products targeting traumatic brain injury and neonatal sepsis. (NXN)

🪑 Looks like NXN’s platform and commercial strategies are starting to take place, with Hong Kong being the launch pad.

Careteq (ASX: CTQ) confirms the ASX will not force the company to delist on August 6th as was anticipated after the divestment of its core asset. (CTQ)

🪑 Good news for CTQ shareholders, and it allows it more time to find a new asset. SPP extended too.

Tissue Repair Limited (ASX: TRP) applies for delisting from the ASX. (TRP)

🪑 Life as a public company can be tough, particularly for those that operate more like a private business.

(Not talking to the market, not telling the story)

It goes back to my old saying: The Institutional Investors underpin your value, but it's the Retail Investors that set the price. So treat them well.

CLINUVEL Pharmaceuticals (ASX: CUV) announces a strategic reorganisation, relocating its headquarters to the U.S. and reducing its workforce by 10-20%. (CUV)

🪑 Bye-bye Miss Australian Pie.

TALi Digital (ASX: TD1) partners with You Can Do It! Education Australia for a $0.5M project to support teacher wellbeing across Victoria. (TD1)

Radium Capital, one of Australia’s largest providers of R&D financing, has stopped lending. (AFR)

🪑  Big news this one.

If you’re a small biotech company looking for an R&D advance, I’ve got a friend who will hook you up with very attractive terms and will move quickly (quicker than anyone else).

Reach out to Mike at Rockford here (just mention that the Armchair Analyst sent you)

Alcidion Group (ASX: ALC) reports operating cash inflows of $7.7M for the quarter. FY revenues ($51.6M) and EBITDA ($5M) guidance maintained. (ALC)

🪑  This quarter rounds out a record year for Alcidion. 

The larger-than-usual cash inflows are likely due to the upfront payment for the UK hospital deal completed earlier in the year.

PolyNovo (ASX: PNV) reports a 16.1% FY26 revenue of $150M, with U.S. sales up 15.6%. (PNV)

🪑  Need to wait for the EBITDA and NPAT, which are “still being finalised”, to make a full judgement call on whether this was a strong year. 

Early signs promising.

That said, the cynic in me says that this announcement is to bury the profitability numbers.

Adheris Health Limited (ASX: AHE) reports lower profit and revenue (down 44.6% on pcp) due to lower pharma budget renewals. Still operating cash flow breakeven. (AHE)

🪑  … and the stock is up 17% on open. What?

Repligen is set to acquire BioLife Solutions for US$1.5B for its proprietary cryopreservation product for the cell therapy market. (BioSpace)

🪑 It’s an interesting bet on the cell therapy market and how cryopreservation of material is a key link in the supply chain.

While they have different roles, ASX-listed Cryosite’s (ASX: CTE ) biggest driver of growth has been its ultra-frozen storage of material for cell therapies.