Regenerative therapy company Koligo (ASX:KOL) isn’t exactly in stem cells, but gets through the regulatory hurdles on the same path.

The US company wants to raise $6 million from ASX investors to expand everything about the company, from executive numbers to its sales of Kyslecel, a drug that uses a person’s own pancreatic hormone-producing cells to replace the organ and produce insulin.

The drug has not been put through formal FDA-approved clinical trials, which is how they have been able to get such a cutting edge idea into the market so fast, from idea in 2011 to revenue generating in November 2017.

Cells rule

The rules in the US, where Kogilo is based, around cell therapies allow these products to avoid the onerous multi-stage clinical trial process — although Koligo says they have done some preclinical and clinical trials on Kyslecel.

A “human cell, tissue and cellular- and tissue-based product” isn’t subject to FDA premarket approvals if:

  • it’s minimally manipulated
  • it performs the same basic function in the recipient as in the donor
  • it isn’t highly manufactured, and;
  • it’s only used either in the same person it was taken from or a first- or second-degree relative.

Effectively, so long as you’re using your own cells, or those of a close blood relative, and the donated cells haven’t been heavily manufactured into something else, the product falls under these special rules.

The product is still regulated under current good tissue practice (cGTP) requirements.

In the case of Kyslecel, the treatment is for pancreatitis.

“To manufacture Kyslecel, a surgeon at a qualified hospital removes the patient’s diseased pancreas and ships it to Koligo’s FDA-registered facility in Louisville, Kentucky, USA. Koligo isolates the pancreatic islets and uses them to manufacture Kyslecel for the specific patient,” the company says in its prospectus.

“Koligo then ships Kyslecel back to the surgeon for re-infusion into the patient’s liver, where the islets are intended to engraft and produce insulin needed to regulate blood sugar.”

It’s already made the company $1.6m from 22 patients.

The company speculates in its IPO prospectus that it could be useful for the 16,000 to 39,000 people in the US diagnosed with chronic or acute pancreatitis each year.

Going all biotech

Koligo is moving out of the highly personalised ‘cure-your-own-pancreatitis’ field however and into a more biotechnical one, that will require its products to go through the usual route of clinical trials and FDA approvals.

They want to develop 3D-printed fat-derived regenerating tissues to rebuild or replace damaged or diseased organs.

The 3D printer is still under development however and two treatments, KT-CP-203 and Stylecel-L for chronic pancreatitis and Type 1 diabetes are in pre-clinical stages of development.

The company has provided a timeline for when these might reach human trial stages.

The risk factors

The lack of clinical trials for Kyslecel is something of a risk for Koligo.

In the risk section of the prospectus the company notes that it is “partially reliant” on third party trials and research and is therefore reliant on those being accurate.

Further, Kyslecel is based on a short-term licence to non-patented technology from the University of Louisville Research Foundation.

After November this year, the licence to the intellectual property becomes royalty-free and non-exclusive, meaning anyone can use it.

The company also admits that making Kyslecel “is expensive, time-consuming, difficult to implement, and involves an uncertain outcome” because human tissue is inherently variable.

As such, “the company cannot guarantee that it will be able to produce a safe and effective product for each patient.”

Although the company is generating revenue, it is still loss-making with the full year 2018 loss coming in at $3m.

Koligo expects to list on the ASX on April 5.


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