KaloBios: The Strategy of an Antibody-Based Company




Episode Loading...




PharmaTelevision requires Javascript enabled and Adobe Flash Player to watch our programmes. If you do not have Flash installed, you can download it for free from the Adobe Flash homepage.

Improve your Internet experience and start watching exciting new video content.

Video title: KaloBios: The Strategy of an Antibody-Based Company
Released on: January 01, 2008. © PharmaVentures Ltd
Share/save this page:
Email
Bookmark
Facebook
Twitter
LinkedIn
Follow us:
RSS
Twitter
  • Summary
  • Transcript
  • Participants
  • Company
In this exclusive interview, Fintan Walton talks to Dave Pritchard, CEO of KaloBios Pharmaceuticals, about this antibody-based company, its platform technology and its research programmes. Dave discusses KaloBios’ financing through funding rounds, and its 2007 licensing deal with Novartis. He talks about KaloBios’ plans to raise more money through further partnering, and how the company has also been recently approached by strategic investors, leading to the possibility of an unusual corporate round of funding. Dave also touches on similarities between KaloBios and his last antibody company, Rinat Neuroscience, which was acquired by Pfizer for US$500 M, and mentions the possibility of KaloBios being similarly acquired.
KaloBios Pharmaceuticals's platform technology and its research programmes
Fintan Walton:
Welcome to PharmaVentures Business Review brought to you by PharmaTelevision the world's first on demand pharmaceutical television channel. We are here in San Francisco recording a series of interviews at the annual JP Morgan Conference. This conference was originally run by the famous Hambrecht and Quist Bank and is one of the oldest events in biotechnology. Today thousands to send from around the US but also from around the world into San Francisco to do financial deals and recently it's also become an important partnering event. I hope you'll enjoy the series of interviews we've done from some of the key companies attending this conference.
Fintan Walton:
Hello and welcome to PharmaVentures Business Review here in San Francisco. On this show I have Dave Pritchard, who is CEO of KaloBios a local company here in Palo Alto, welcome to the show Dave.
Dave Pritchard:
Thanks for inviting me.
Fintan Walton:
Dave, tell us about KaloBios because you are obviously an antibody based company but what's different about KaloBios from all the other antibody based companies?
Dave Pritchard:
So KaloBios has a kind of unique platform technology that we make human antibodies we would argue are the best antibodies for chronic long-term treatment in broad patient populations and in addition we have now two programs in Phase II studies in fact this year will be doing six Phase II's to really expand and understand there what those drugs can do.
Fintan Walton:
Right, so I mean having taking on that in sort of level of product development yourselves means that you must be pretty well financed?
Dave Pritchard:
So we are fairly well financed, we've raised about $50 million over three rounds of funding and in last year we actually did a fairly significant transaction with Novartis [PharmaDeals ID = 27046] where we gave them a non-exclusive license to our Humaneering technology and receive substantial funds for that. So we currently finished the year with about $37 million in the bank and that's enough to last us for at least 18 months or so.
Fintan Walton:
So for a company like KaloBios operating in the antibody space there are other antibody based companies some of those are now being bought by some of the big pharmaceutical companies how do you compete in that environment?
Dave Pritchard:
So for us we focus on not only the technology and improving the technology but the products, I think in the end what pharmaceutical companies really want are products to take to market. So our technology as I said is actually we think first class and we've developed a scientific team now that's shown that it can deliver an IND a year which is actually a pretty aggressive goal but one that we've been able to achieve. So as I mentioned now we've got two programs in the clinic we have another one coming in this year and what we actually hope to declare what we call a development candidate in the next three or four months which will ultimately get to the clinic next year, so we have that track record of pretty much doing one a year.
Similarities between KaloBios and Dave Pritchard's previous antibody company, Rinat
Fintan Walton:
So in your own background you have worked with the company Rinat just prior to joining KaloBios which was sold to Pfizer [PharmaDeals ID = 23901] you've joined KaloBios just over a year ago as the CEO, what was it like to move from a having achieved a divestment to get back into a small organization like KaloBios again?
Dave Pritchard:
It was actually easy transition because the companies are so much similar, so Rinat Neuroscience was a company that focused on monoclonal antibodies for neuroscience and it was what's happened is this been a remarkable shift in my opinion going on in the industry and why monoclonal antibodies are so exciting. So studies have shown now that monoclonal antibodies have typically a success rate may be 50% higher in clinical development than small molecules and but we've also learnt how to do over the years is to figure out how to do monoclonal antibodies to make them fully human so you can treat patients long-term, so used to be in the '80's we worked on monoclonal antibodies only for things like oncology life threatening diseases because we had significant mouse portions in the antibodies and they ultimately were rejected. Well now fast forward to where we are today last year $5 billion of monoclonal antibodies were sold in the rheumatoid arthritis area a chronic but not life threatening disease. So we've learnt how to make them human and to make them so people can take them for a life time. So Rinat followed their transition when the company was created in year 2000 monoclonal antibodies were thought to be not such a great idea for neuroscience but by 2005, 2006 it was thought to be a brilliant idea and we went out to partner our program in Alzheimer's disease it was the IND stage, we went out to talk to 10 different companies, we got nine term sheets and normally when you do that exercise if you get two or three you are quite happy and it was the competitive process that drove that into an M&A situation and ultimately Pfizer went out over several other companies who aggressively bid for, Pfizer acquired it for $500 million which I think is still the higher price ever paid for a venture back.
Fintan Walton:
What was the driver for that I mean what was the basis did it turn into an auction in the sense to acquire Rinat Neurosciences?
Dave Pritchard:
It did and the driver was that we had found antibodies to targets that pharmaceutical companies were quite familiar with but had not been able to achieve success over with small molecules, so there are things that antibodies can do that small molecules can't and vice versa, but these were targets that the companies were familiar with, we had proof of principle on our pain drug at the time and the Alzheimer's area is quite active right now as well.
What is the key to success for antibody companies?
Fintan Walton:
Well, but for an antibody based company in general what is the key to success? Is it the specific antibodies that you can actually identify or is it the platform and the technology base that you've got surrounded that antibody engineering complex?
Dave Pritchard:
I think it takes two things, I think one is that to have the technology that makes the great antibodies that people feel confident that over a long period of time they won't be rejected by the patients and that's number one. Then number two is careful very careful target selections that is each of these programs you can invest 10's and millions of dollars and you want to do it at the best opportunities you have and so our strategy frankly has been going after what I call the low hanging fruit we've gone after great targets and really not focused on what the therapeutic area is but going after great targets. So currently we have the two programs in Phase II studies, one is for Pseudomonas which is a Gram-negative bacteria and in our interviews with physicians we find it's the one that physicians are most concerned about and you've probably heard a lot about in the hospital setting these bacteria they become very resistant to existing drugs Pseudomonas is indeed that type of bacteria and our estimates are they kill still over 10,000 people in United States. So the two main sectors we are pursuing there one is the hospital sector ventilated patients and the second is cystic fibrosis patients gets Pseudomonas chronically in their lungs is the damage that Pseudomonas does to the lungs that ultimately kill them, people take tobramycin now inhale for that but it generally works for three to four months and it's not clear that does much for Pseudomonas after that. So that's an exciting opportunity, it's a unique concept we have where we actually attack the killing mechanism of Pseudomonas and in essence render it non-toxic.
What is the possibility of KaloBios being acquired?
Fintan Walton:
Right, now right at the beginning you've said about you've talked about how you've partnered with Novartis but you've held back on partnering effectively until you take these products more to proof of concept, so you are hoping to have some of these obviously appear as proof of concept towards the end of 2008, early 2009 is that correct?
Dave Pritchard:
Yes, we have I mentioned the Pseudomonas program where there is two clinical studies we will have the data late this year and then also on our anti-GM-CSF program we actually have four clinical studies there in areas like severe asthma, rheumatoid arthritis we'll have that data also towards the end of this year. And frankly our feeling is that small companies do the transition well from taking things from research into proof of principle in humans and I think the larger companies that are large biotech and large pharma's do much better is once they have the proof of principle in order it take a product to market getting it approved in the 8 or 10 major countries of the world within a short period of time dealing with the regulatory issues, dealing with the reimbursement issues I think big companies are much better at doing that and so we are looking for a partner to help us with that.
Fintan Walton:
Okay, now clearly with a lot of antibody companies been acquired by pharmaceutical companies and you happen to be involved in one of those acquisitions that actually turned out to happen, is KaloBios gonna be acquired in the next 18 months is that likely to happen or would you prefer to remain as an independent company partnering with multiple pharmaceutical companies?
Dave Pritchard:
I think what will happen is we will go out and first of all have to get the data and see what the data looks like that's all of this is so data driven and then we will go out and try to find a partner and weigh our options so at that time as we saw at Rinat we might end up in a M&A situation but we think our platform is very viable to standalone IPO kind of candidate and in particular that what I find is for the Pseudomonas product because of its success of Cubist pharmaceuticals in CUBICIN that there are number of public investors who really like that model or we might choose to retain the rights to that product in the United States have our own small sales force, our estimates are that would sell over $500 million in the US and that's a very attractive IPO candidate, so we can go either way.
KaloBios's future funding and partnership strategies
Fintan Walton:
Okay, and finally looking at 2008 and going out towards that potential opportunity to partner are you looking for additional funding independent of that or do you see your funding needs coming after you've partnered?
Dave Pritchard:
It's a great question. So our original plan frankly was to not raise any more money until we partner but recently we've been approached by a number of what I would call strategic investors, large pharmaceutical companies in particular who because of this space, because of their interest in KaloBios have suggested that they invest money in the company, so we may choose to do a an unusual corporate round of having corporate investors invest in the company we would do that opportunistically.
Fintan Walton:
And would they have then preference over potential partnering programs as part of that deal?
Dave Pritchard:
They probably wouldn't have preference but they would have access and to be candid with you if the data is good that becomes a problem because for a small company to handle as we have to do with Rinat nine different negotiations, it's really hard and that we ended up excluding a number of companies in that process just because of the volume they couldn't handle the volume.
Fintan Walton:
So you'd prefer to have just a deal within a small number of pharmaceutical companies ultimately in your partnering as part of your partnering strategy?
Dave Pritchard:
I would prefer to deal with less than 10, so you know again it's data driven but some of these firms particularly people who are not the top 10 pharmaceutical companies find in order to get access this might be an avenue for them to get to know as well us to get understand the management team and to feel comfortable with us. Because partnering is a marriage, I am sure you've heard that in your other interviews.
Fintan Walton:
Yes, absolutely yes.
Dave Pritchard:
It's a marriage and you want to make sure you make the right decision.
Fintan Walton:
Sure. Well Dave, thanks a lot for coming on the show and we'll look forward to seeing what happens to KaloBios over the next 12 to 18 months. Thank you indeed.
Dave Pritchard:
Great. Thanking for having me.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaTelevision. After completing his doctoral research on the genetics of cell proliferation at the University of Michigan (US) and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Dave Pritchard
CEO
Dave Pritchard was appointed as President and CEO of KaloBios in October 2006. He joined KaloBios with more than 25 years of experience in general management, business development and financial management within the biopharmaceutical industry. Most recently he held the position of CBO at Rinat Neuroscience, where he managed the negotiations on the acquisition of Rinat by Pfizer in 2006, for a reported US$500 M. Before that that he was CFO at Matrix Pharmaceutical, and managed the sale of the company to Chiron (now Novartis) in 2002.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialization.
KaloBios Pharmaceuticals
KaloBios is a privately held biopharmaceutical company that uses its proprietary technologies to develop human antibody therapeutics. It currently has two programmes entering Phase I/II studies; KB-001 is an anti-infective for Pseudomonas aeruginosa infections to be tested in patients with cystic fibrosis and ventilator-associated pneumonia (VAP), and KB002 is an anti-inflammatory entering studies for rheumatoid arthritis and asthma. The company's technology, termed 'Humaneering', offers advantages over other methods of antibody development in terms of speed, cost, versatility and nearness to human germline sequence. KaloBios focuses on developing antibodies from the Humaneering stage to the early clinical stage, at which time it plans to partner them.