Peptide based drug discovery technology platform and its specific targetsFintan Walton:
Hello and welcome to PharmaVentures Business Review here live in Brisbane. On this show I have Stewart Washer, who is CEO of Phylogica , welcome to the show Stewart.
Stewart Washer:
Thanks Fintan Walton.
Fintan Walton:
Stewart Washer, you've been on the show before and we've covered Phylogica now over several years and you are no longer a startup company, you are a maturing biotech in Eastern Australian terms?
Fintan Walton:
Listed on the ASX and your company has a specific platform technology, I am gonna call it a platform technology which has product development capabilities?
Stewart Washer:
Absolutely, yes.
Fintan Walton:
Just give me some sort of indication of how, little bit about the technology and how that technology is developing right now Stewart Washer?
Stewart Washer:
Sure, it's very interesting I mean the word platform use to be the keys of death mainly because of the genomics here where people call themselves platform companies because they had no products and had no hope of making products though. We have a drug discovery platform which is a peptide based drug discovery platform which is an interesting one where our founder Dr Paul Watt went and thought he wanted to make the ultimate peptide library, so went and follow genetic tree and choose all these weird bugs in the Archaebacteria and Eubacteria genomes chopped up the genomes and chopped down going depth and that created the Phylomer-libraries we call that peptide library we found it's got very high hit rates and it works very well against disease targets with pretty intractable disease targets. So where you would use an antibody on an extra cell entirely you can use our Phylomer-peptide but the nice thing is that it can go inside the cell as well improving against undraggable targets inside the cell which is obviously opened up a whole world of opportunities for us.
Fintan Walton:
Right, and with that technology which specific targets are you going for, have you identified particular targets in disease areas you want to hit?
Stewart Washer:
Absolutely Fintan, I mean the big problem with having a platform is trying to do everything to land a man on the moon sort of thing with your platform. So we choose inflammation as our primary area to go after and mainly around these cell death pathways the AP1 pathway, that Kinase pathways and things and we've got a range of blockers in this pathway which is implicated in stroke and trauma and burns treatment which we were using it for now and we've got these things in late stage preclinical now ready for partnering and also we are taking our burns project into the clinic next year.
Phylogica's research and development activities in AustraliaFintan Walton:
Right, now company like yours is based in Perth in Western Australia all the research is done still in Perth is that correct all this development technology?
Stewart Washer:
Yes, what we've done is really we've got a core of about 15 scientists in Perth that do, they take a disease target in, screen it against our libraries and take the hits out of that and of course then do other usual you know early stage hit to lead optimization but then we really work with a lot of external groups in terms of our preclinical models animal testing all of that science done with partners outside, well our University of Melbourne on our rheumatoid arthritis project and a group called the McComb Foundation [
PharmaDeals ID = 22861] which is Dr Fiona Wood or Professor Fiona Wood who is in Australia was in lead a couple of years ago and she is a lead clinician and research collaborator on the burns project. So we are really looking for the best people external to work with and we do have a deal in Ireland as well which is really working quite well in the Toll-like Receptor space.
Fintan Walton:
What is the company in Ireland that was in the research group?
Stewart Washer:
That's a company called Opsona Therapeutics [
PharmaDeals ID = 24586], a private company out of Trinity College And I know there quite a few people smart people coming out of it including yourself I believe.
Fintan Walton:
Well many years ago yes, yes. What's important I suppose from Phylogica's point of view is that you know clearly you are doing research and so forth herein Australia but you are doing more outside Australia as well which is important?
Stewart Washer:
Absolutely, I think we really have to collaborate. But we have if you like we are the back box if a disease target comes in one side we can get a lead drug out of the other side and so really we wanted to work with people who have the nice targets, the new disease targets in inflammation and bring them in and do collaborative types of deals with them and also people who can take those hits forward or those lead drugs forward through the preclinical test and into the clinic.
Challenges faced by an Australian preclinical-stage biotech in obtaining fundingFintan Walton:
Right, now the other key thing ofcourse you've already mentioned you are listed on the ASX and so forth funding at the moment in Australia for companies like yourselves we all know that the listing on the biotech sector and for companies listing on ASX it's let's put out this way it's not booming?
Stewart Washer:
Absolutely, we've got a bit of problem Fintan that the mining industry over here is doing so well.
Stewart Washer:
They've sucked the speculative dollar out of the whole sector, but even now our share market is booming I mean if you were a Uranium start up having funding will never be an issue. When we are talking quite you know complex drug discovery and particularly early stage with the new type of drug discovery platform I guess you can imagine taking that to an investor base can be a quite a complex task and what we lack is the biotech analyst we don't have a lot left. There is probably about four or five very good biotech analysts left in Australia.
Fintan Walton:
So what does a company like Phylogica do in that environment or what can you do?
Stewart Washer:
What we really have to do is it's a balance between obviously getting on with the job but we have to provide a bit of a public face at all times as well so we have to simply and our messages down so that average person on the street who can invest in our companies understands in sort of gets a little passion about what we are doing. And of course what we have to do is be very realistic in our time frame as well and that is a balance because when we talk drug discovery as you know that's what the long time frames and we are talking in big numbers. So we have to really be quite honest about that up front so that we don't get the wrong type of investor that's looking for a double the share price next week sort of thing.
Phylogica's strategy on gaining complimentary technologiesFintan Walton:
Going back to the Phylogica technology, the platform technology that stands on its own essentially within your own company, often companies like yours try and look for complimentary technologies to reinforce that position, what's your strategy around that is that part of your strategy going forward?
Stewart Washer:
Yes absolutely Fintan Walton, what we are looking at is really two key areas for complementary technology through acquisition or partnership and that's and of course the disease target themselves someone has a very interesting class of disease target in inflammation we are very interested because of course we can build the Phylomer blockers to validate those disease targets which increases the value of that disease target but then take them forward as a drug as well, the other big area is delivery. I think delivery is gonna be a key thing at the moment we are going after acute indications, acute systemic delivery or topical delivery is easy because we don't have to modify our Phylomer-peptides that for chronic indications like RA and other diseases the cancers and that I mean we have to look for novel delivery that really gets you half life to the right stage gets them to the side of the disease and things like that.
Fintan Walton:
So another behavior of your technology is that some of the molecules you've been able to generate actually not just target cells but can enter cells as well you mentioned that?
Stewart Washer:
Absolutely, yes well that's the nice thing there.
Fintan Walton:
So are they potential drug-delivery-system themselves or how specific is that?
Stewart Washer:
What we were using there is quite a simple technology because these things are so small 15 to 30 amino acids almost about half of our peptides we are taking forward as drugs and we just put the Tat, that Tat is part of the old HIV virus of course that take things inside the cell so we put that little Tat I think it's 10 amino acids or so on the end and that delivers inside the cell and we have freedom to operate over that which is nice but you know we don't have any proprietary ownership over that.
Fintan Walton:
But one of the key things around your technology is the fact that it is peptide or so forth so delivery is going to be an essential component to yours and the way when I look at your technology I see it is the sort of next generation antibody platform you know you are based probably where antibodies were back in the late '80's early '90's where you are still going through the proof of concept from that perspective?
Stewart Washer:
Absolutely Fintan Walton, I mean the interesting thing is it's not that long ago when there was a major people saying that antibodies will never be drugs.
Stewart Washer:
And a lot of those people now are very rich because of antibodies drugs, so it's a little bit ironic. now similar sets of people are saying the domain antibodies have a good chance of working but they never made drugs and of course the camel antibodies and the shark and different things, but beyond that is the scaffolds and there is a quite a few scaffold companies out there with one singe shape if you like protein shape and they put you know variable regions in those shapes to make an alternative to antibodies even I've seen that our library the Phylomer-library as we've got all of the scaffolds in there, so when we screen against a disease target we get hits which all different types of scaffold binding in all over the target.
Phylogica's strategy on acquisitions and partnershipsFintan Walton:
Sure, so one of the key things here that we are seeing now is you know we've just recently had Haptogen [
PharmaDeals ID = 28589] for an example acquired by Wyeth these are effectively platform companies, pharmaceutical companies are coming around and looking now at companies why is that? You are in this space what's the reason from your perspective?
Stewart Washer:
It's a very interesting move, I mean the preclinical stage platform company is being bought you know obviously we don't know the number on the Haptogen deal. But Avidia for example that was bought by Amgen [
PharmaDeals ID = 25415] 380 million US and they had a Phase I compound but then the rest was preclinical and the Avimer platform which was a peptide based drug discovery platform. Now it's interesting they are paying those sort of amounts I don't think it's for the single product or even that early stage pipeline, it's the combination of that and in fact that if those products work the platform is extremely valuable like CAT you have a way then and you have ownership over a whole new way of producing drugs.
Fintan Walton:
Yes so from your own strategy point of view clearly you want to continue to develop your own technologies it also would be attempting for yourselves to look for acquisitions potentially?
Stewart Washer:
I mean it's interesting because we've looked in our own space that our competitors but we've decided not to go down in the acquisition path of any other competitors because these are rather scaffolds and other ways they are doing what we do to pharma's. So we are really looking for more technology that's complimentary to what we've got.
Fintan Walton:
So that is complimentary issue?
Stewart Washer:
That, yes delivery and anything that really takes a peptides and approves of what that seems like a drug and I mean we know the inherent problems with peptides their short half life you know so anything that can be stopped at being flushed out by the kidneys or graded by the proteases is obviously valuable technology now.
Fintan Walton:
But I suppose you can get access to that through licenses as well you don't have to go out there and acquire company too early?
Stewart Washer:
Absolutely I mean really what we generally do is go in license approving technology for these pegylation some that will be using HSA binding we can make that in-house human serum albumin binders to increase the half life as well but there is other technologies out there and people come to us of course preaching them which are not yet proven and so their value is quite low. So if we do a license with them we are obviously improving their value considerably as well, so there may be some corporate activity that we may ride on the back of our good work in that area as well.
Future plans on Collaborations,Alternative fundings and mergersFintan Walton:
Yes, I suppose in the end you got to get that balance right, because clearly you don't want to over load your technology either with too many innovations?
Stewart Washer:
Absolutely, we are being quite simplistic about this, I mean to us the Phylomer technology is the new way we want to use everything old around that improving if we can really get our first products to market. But we are thinking about next generation Phylomer drugs and our first one will be a topical treatment for burns healing and that's very simple that you know its acute it's stave it's easy, yes a non-modified Phylomer-peptide that we are using there, even delivery is not an issue there because our partners that are looking at in licensing's after our clinical trial obviously have their own creams and different bandages and things but our next generation things when we start going after those chronic diseases will need these more complex technologies to be associated with. Licensees is the easy preferred one but in the right cases we will look at M&A type of transactions to going on.
Fintan Walton:
Yes, I suppose you know going back to the issues that you've got from funding here in Australia does that also provide a driver for you to be more active outside Australia to seek alternative sources of funding, alternative targets potentially to collaborate with?
Stewart Washer:
Yes, absolutely Fintan and I think the big thing is if we do a deal and it's a cash in deal with an external party that people have heard off that really helps our share value. You know so obviously that's our preferred thing. Right through to the other end actually if go in making acquisition generally the market hikes the acquirer you know and will punish you unless it's a very well sold out acquisition. So we'd be very cautious on that side and go more for you know collaborations with proven parties, collaborations with biotech who have interesting technologies.
Fintan Walton:
I suppose abroad there are companies, smaller companies that are private who may seek to be acquired because your liquidity potential on the ASX?
Stewart Washer:
Yes, it's an interesting one we've actually, it's funny to say that Fintan. We have actually been approached kind of recently by few companies who actually see ourselves a way of listing if you like as well. But we haven't seen really the complementarily there to actually do those deals in the past but we are looking at different companies all the time who are driven of course by that liquidity and ability to raise money and all of these things which is hard in the private world.
Fintan Walton:
So you could be a target yourselves for a reverse merger?
Stewart Washer:
Sure, well there is people obviously who'll see thePhylomer technology as very valuable yet to be proven in man but really preclinically there is a lot of companies willing to taking out for quite large valuations. At the moment our market cap is only tiny we are about 30, $40 million Australian our market cap and so you can see there is opportunities and people are looking at that side as well.
Fintan Walton:
Okay, sounds good. So I really appreciate you coming along on to the show Stewart and get the further developments of Phylogica and we wish you well for the future as well.
Stewart Washer:
Thanks very much, glad to see you again.
Fintan Walton:
Thank you.