Biocurious: Drug developers are hedging their bets on long and winding approval journey

• Biotechs are adopting ‘plan B’ strategies by purchasing complementary drug programs
• Antivirals house Biotron hopes to shake up the moribund anaesthetic drug sector
• Other companies with interesting diversions include Island Pharmaceuticals, Neuroscientific and Paradigm Biopharmaceuticals

For biotechs embarking on the long and winding road of drug development, there’s the perennial challenge of keeping investors engaged while news flow is meagre.

Remaining “laser focused” on a single program risks boring investors while not much seems to be happening. On the flipside, proclaiming to have “multiple shots of goal” across several trials risks confusing the punters.

Increasingly, companies are taking the middle ground by acquiring programs that offer prudent diversification, or a faster or cheaper route to market.

Reflecting the trend, antiviral drug developer Biotron (ASX:BIT) this month acquired a private company working on a next-generation general anaesthetic.

Despite its critical role in surgery, the art of numbing the body and mind has remained remarkably unchanged for decades.

The deal involves the $2 million scrip purchase of Sedarex and its drug candidate Sedrx.

Biotron also is raising $2.5m via a two-tranche placement and $1.5m in a one-for-three rights offer.

‘A really nice asset’

Biotron CEO Michelle Miller stresses the Sedrx program doesn’t usurp the company’s efforts in developing drugs for HIV-1 and hepatitis B.

“This is not a back door listing or a reverse merger,” she says.

“We have bought a really nice asset that will expand our pipeline for shareholders.

“Even though we are into antivirals our expertise is clinical development and it doesn’t matter what [the new program] is.”

She says anti-infective drugs are “big expensive and challenging” to develop, requiring large trial numbers and long timelines.

“Antiviral trials are expensive and go on forever.”

A pandemic-era hero stock, Biotron tried to develop a Covid drug but was thwarted by patient recruitment limitations and – eventually – dwindling interest.

Kissing frogs reveals a prince

Before settling on Sedarex, Biotron trawled through dozens of “interesting” proposals, especially in the unlisted sector.

“But a lot of them were too early stage and non-investable. Or if they were truly great, they would have been too expensive”.

Sedarex hit the sweet spot of being a “largely derisked asset” with good existing data and a large addressable market.

The obvious question is if the prospects are so good, why was the asset available at the right price?

“It’s really hard to raise funds in that scenario as a public unlisted company,” Miller says.

“It was better for them to have it in a listed structure.”

Numbingly interesting

Sedrx contains the active ingredient alfaxalone, which was used in an anaesthetic called Althesin.

Althesin once had a 50% share of the UK day care market.

Althesin’s then owner voluntarily withdrew the drug after anaphylaxis issues emerged.

But Sedarex discovered the problem was in the formulation rather than the ingredient itself and rectified this problem.

(In effect, this improved formulation is Sedarex’s ‘secret sauce’).

Sedarex claims Sedrx is better than the current leading anaesthetics propofol and sevoflurane, “across a range of indicators”.

While the anesthesia standard of care remains little changed, that doesn’t mean it is optimal.

Miller says there’s increasing awareness of post-anesthetic neurocognitive issues, especially with the elderly.

The ageing population means more people are presenting with hip and knee issues.

“Patients think they will be in and out in a day but come out with post-operative confusion, which can be a real problem.”

Under previous owners, Sedrx was subject to a pilot phase II trial.

Given the short-term nature of anesthesia, any further trial would yield results in a short time frame.

Island expands

Speaking of anti-infectives, In July Island Pharmaceuticals (ASX:ILA) acquired a program called Galidesivir, from the Nasdaq-listed Biocryst Pharmaceuticals Inc.

Galidesivir is a broad acting antiviral, but initial work has focused on the nasty viral disease Marburg (a filovirus, along with the dreaded Ebola).

Island hopes to further a trial in line with the FDA’s ‘animal rule’, which allows for non-human studies for diseases that are too hideous to be exposed to people even in strict clinical settings.

FDA approval could in turn confer Island with an FDA Priority Review Voucher – handy bits of paper usually sold to other drug makers for up to US$150 million.

The company hopes for an FDA response to animal rule applicability by November 12.

Meanwhile, Island is forging ahead with its original asset ISLA-101, to treat and/or prevent Dengue fever and other mosquito-borne viruses.

Branching out into stem cells

In another example of diversifying via secondary programs, NeuroScientific Biopharmaceuticals (ASX:NSB) in June completed the circa $4 million, scrip-based purchase of a stem cell portfolio called Stemsmart.

The vendor was the public unlisted, Perth-based Isopogen WA Ltd.

To date, Neuroscientific has developed peptide-based drugs for neuroscientific conditions.

Neuroscientific’s initial stem-cell focus is on the common auto-immune condition Crohn’s disease.

That makes sense, given Isopogen underwent a phase II trial for that condition that deemed the therapy to be “potent, efficacious and safe”.

Neuroscientific was inspired by stem-cell pure play Mesoblast (ASX:MSB), which last year won breakthrough FDA approval for its stem cell treatment for paediatric graft-versus-host disease.

Paradigm shift

In late June Paradigm Biopharmaceuticals (ASX:PAR) said it would acquire an early-stage oral candidate for minor to mild osteoarthritis (OA).

This was by way of purchasing the private Proteobioactives Pty Ltd for up to $16.5 million.

The program potentially extends usage of Paradigm’s Zilosul (pentosan polysulphate sodium, or PPS), which it is repurposing as an injected knee OA treatment.

This deal gives Paradigm exclusive global rights to develop and commercialise a combo of PPS and Proteobioactives’ Coxib.

The program initially targets mild knee OA and the veterinary market (dogs and horses).

The back-ended deal involves an upfront $500,000 in cash and a $1 million milestone payment on completion of a phase II trial.

Paradigm pays a further $5 million on “successful completion” of a phase III trial, $5 million on FDA approval and $5 million remitted on sale of an FDA registered product.

Can Biotron beat the haters?

Meanwhile, Biotron is seeking a partner for its lead program BIT-225, for HIV-1.

But it’s a tricky space, with no clear regulatory pathway. The prevailing anti-vaccination sentiment in the US doesn’t help, either.

In early preclinical stage, the company’s separate hepatitis B candidate “looks pretty interesting”. Miller says there’s still a huge unmet need – especially in Asia – with other drugs failing to eliminate the virus.

“We’re optimistic it still has legs.”

In conjunction with the Sedarex purchase, Biotron has undertaken a $1 million placement to fund the new program. But the company also plans a $1.5 million rights raising to fund the hep B work into phase I.

Miller fears the Sedarex deal and fund-raising won’t quell the objections of a noisy rump of retail investors who have been “vocal in their unhappiness” about the company’s glacial progress.

“The haters are going to hate,” she says.

We’re more sanguine: if Sedrx can go even some way to being a viable anesthesia candidate in a US$3.2 billion a year market, any bad blood will be shaken off pretty swiftly.

 At Stockhead, we tell it as it is. While Island is a Stockhead advertiser, the company did not sponsor this story