ARANA THERAPEUTICS LIMITED
AAH - 6th Annual Australian Biotechnology Summit 2008, Corporate Overview - Dr John Chiplin, CEO
Wed, 6 Aug 2008 03:45PM
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ARANA THERAPEUTICS LIMITED (AAH)
ASX code: AAH
Website: http://www.arana.com
Industry: Pharmaceuticals, Biotechnology & Life Sciences
Principal Activities:
An international biopharmaceutical company formed through the merger of Peptech and EvoGenix in August 2007. The company uses superior technology to develop next generation drugs that will improve the lives of patients with inflammatory diseases and cancer.
Address:
37 Epping Road, Level 2
MACQUARIE PARK
NSW
Phone: (02) 8061 9900
Fax: (02) 8061 9999
Executives & Directors
Mr Robin Beaumont , Chairman
Dr John Chiplin , Managing Director, CEO
Dr George Jessup , Director
Dr Lincoln Chee , Non Exec. Director
Mr Chris Harris , Independent Director, Non Exec. Director
Mr Niall Henderson , CFO
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Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
ARANA THERAPEUTICS LIMITED (AAH) Events
Australia/NSW
ARANA THERAPEUTICS LIMITED (AAH)
| Arana Announces Key Anti-Inflammatory Drug Milestone | Thu, 28 Aug 2008 |
| Arana news - August 2008 | Mon, 18 Aug 2008 |
| Results of Meeting | Wed, 13 Aug 2008 |
| Arana Therapeutics Expands Clinical Research Team | Mon, 28 Jul 2008 |
| Notice of General Meeting/Proxy Form | Mon, 14 Jul 2008 |
| Change in substantial holding | Wed, 25 Jun 2008 |
| Half year shareholder report | Wed, 25 Jun 2008 |
| Arana Therapeutics completes second project with CSL | Thu, 5 Jun 2008 |
| Arana and Greenovation enter into a collaboration agreement | Tue, 3 Jun 2008 |
| Change of Director`s Interest Notice | Fri, 23 May 2008 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
PRESENTATION BY DR. JOHN CHIPLIN, CHIEF EXECUTIVE OFFICER, ARANA THERAPEUTICS LIMITED (AAH)
“Corporate Overview”
http://www.brr.com.au/event/48834
WEDNESDAY, AUGUST 6, 2008, 3:45 PM.
AAH Good morning everybody and I would like to thank the organizers for the invitation. We think Arana is a very special story. I would like to start. I am
10 going to be spending a lot of this presentation talking about protein engineering and antibody engineering, but before I get into that, I would like to introduce the Arana story from a perspective of corporate engineering. Two years ago, in the last two years, if you will, the original Peptech effectively divested of three assets and effectively acquired or merged three assets to
15 create Arana Therapeutics. So there has been a lot of corporate slicing and dicing that was going on to create Arana but I think Arana right now is a very focused story. When I generally give, I start presentations like this I would like to often give the elevator pitch first just so we can have a thirty to one minute second snapshot of really what Arana is and there are really three legs to the
20 Arana stool. The first is the number 5. We are working on 5 lead compounds. There are 5 back-up compounds, but it is a good number. It is not 100 like GSK and it is not 1 like a lot of companies, but it is 5. It is a nice balance of risk. Second thing is the number 185 that is the number of million dollars on our balance sheet currently earning 8% per annum that almost pays for the
25 R&D budget. I like to tell investors, you have 185 million reasons to buy Arana should you choose to do so. Third reason is antibodies. We are in this very special space of antibodies, particularly, new generation antibodies and we are firm believers that you do not need to understand what an antibody is to know that it can be a substantial investment opportunity and I will come
30 back to that later. So with that as a very brief introduction, I would like to take you through the basic thesis behind Arana and what we think it will bring special to the protein and antibody engineering space.
So the highlights, we have a lead drug candidate ART621 that has just
35 entered a Phase II Psoriasis trial in Melbourne and Sydney. I will talk a little bit about that trial as we go through it. As I mentioned, we have 5 lead products and 2 major franchises, oncology and inflammation, where antibodies have proved successful. We have a protein engineering platform that we have significantly expanded the capabilities in that platform since the
40 merger and I will cover that. We have a dominating patent position received in TNF, tumor necrosis factor and that gives us ongoing revenue streams. We received small royalties of Humira by Abbott and Remicade by Johnson & Johnson. As I mentioned, we have some pretty decent cash reserves at the company, a very active business development function and a good group of
45 experienced management and advisors at the company.
As I mentioned, a strong balance sheet at the company as a result of the Domantis divestment mainly and the revenue streams. We also have good future cash flows. The patent estate that we have on TNF expires in about Q1 of 2011 but we have good cash flows from then, also the technology licensing revenue. We have done some good deals with upfronts, milestones and royalties. In the future you will see product licensing revenue as we change the model from being what it is today to a product licensing royalty. We have
5 some good co-development income to cover the deals that we have done under that heading. As I mentioned, good interest in came as well with the company but that has not made us lazy. We have applied for about and received about $7 million in grants over the last year. All the above is non dilutive and we are not burning through with that much either. Cash guidance
10 which we have just raised by the end of the fiscal year also will be about $170 to $180 million so we think it a very compelling financial story. We are small as well. I would like to describe to investors that we are about 70 people. We do not intend to double in size overnight. It is a royalty model. We have no sales force and we have no manufacturing so everything effectively is
15 contracted out.
As I mentioned, the antibody space has seen an incredible area of acquisitions over the last three years as the pharmaceutical companies basically placed their bets to try and get into this area and it ranges in the
20 triple digit millions to the big ones like $15 million for AstraZeneca and Medimmune and it is still a very active area. Just last week, Roche acquired a Canadian company, Arius for about US$200 million so, again, we see a no cessation of M&A activity in the antibody space by the world-wide pharmaceutical industry. Our business strategy, this is the main point, so that
25 if you will, we target large and growing markets in oncology and inflammation where monoclonal antibodies have proven successful. We focus on novel differentiated products with genuine “second generation” potential and world-wide freedom to operate with minimal royalty stacks. Now I know that is a little bit wordy but the reason why, is every word is carefully chosen. The
30 basis of the business model is to really focus on assets, if you will, that can generate substantial returns. The royalty stack problem in the antibody field can absolutely kill you so one of the reasons for the mergers with EvoGenix was to basically get a platform together that we did not have to pay 2% to Genentech, 3% to the MRC and so on so we can actually retain the rights.
35 We utilized these sophisticated series of technologies to feed the pipeline with novel products. I will talk a little bit about that. We talked about our partner in “sweet spot” being at Phase II and I will explain why that we feel like it is our “sweet spot” at the company and the business models are underpinned, as I said, by a strong balance sheet.
40
So what are we doing in the TNF field? Okay, this is a field that we understand pretty well because of the royalties we receive, but I have to go back to a time that pre-dates me to the company in about the year 2000 where a very bright academic from Cambridge in England, Sir Greg Winter,
45 had a vision and his vision was to combine some of the benefits of antibodies where these large, lumbering but very specific molecules with some of the benefits of small molecules. Greg had founded Cambridge Antibody Technologies and with our experience in this field so we came up with a company called Domantis and Domantis's claim to fame was to marry the specificity of these large molecules that had quite large molecular weights to much smaller molecules and our lead compound was about half the size of a full antibody. So this is a next generation antibody that we collaborated with Domantis on. As I mentioned, we just started a Phase II trial in Psoriasis but
5 by the time we get there this market would have grown to about US$20 billion in 2012.
Right now, there are three incumbents on this market. By the time we get there, we think we will be about the sixth market but we feel the product will
10 be sufficiently differentiated to certainly target and claim some decent market share in our market and I will come on to that a little bit later. We are tracking very well on the Psoriasis trial, we are nearly finished, reenrolment should finish by about the 20th of August and we will be rolling out the results after that and we are using the information from the Psoriasis trial to plan a much
15 larger Rheumatoid Arthritis trial that should kick off sometime toward the end of Q4 this year or Q1 next year. I said we target inflammation and oncology.
Inflammation is a very complex cascade of events, if you will, and effectively, with our true products in the pipeline, we are targeting C5a. I will come on to
20 that a little bit later and then TNF. Those are our two major targets. We also have an early stage program targeting IL-12/23 and we will be talking about that in the next few months. So this is where ART621 fits in, the anti-TNF, and this is basically the two assets in the pipeline, if you will. ART621 targeting RA and Psoriasis and another one, PMX, which came to us a result
25 of an acquisition of a company that spun out of the University of Queensland and I will talk a little bit about that as we go through this. TNF inhibitors, there are basically three on the market right now, Remicade from Johnson & Johnson, Enbrel from Amgen and Humira from Abbott. Current market has grown to about $13 billion where it is right now. It is still growing in double
30 digits. It has been a highly effective growth. These have changed people’s lives certainly suffering from advanced rheumatoid arthritis. As I mentioned in our pre-clinical and animal studies, ART621 is highly active. It is smaller than other anti-TNFs. Often it is referred to colloquially as the Heineken antibody and what does that mean? There was an advert for beer on TV by Heineken
35 a few years ago and they made a claim that this is the beer that reaches the parts other beers cannot reach and certainly we have some data from our antibody studies that have been a much smaller entity. We can certainly see a greater degree of penetration in joints and tissues with this antibody. Also, another advantage with its small size is it is very much easier to produce as
40 well. So part of the ongoing success we hope of 621 is to realize Greg Winter’s vision back in 2000 to combine the benefits of antibodies with smaller molecules. This shows it in just a model, basically a standard arthritic model with mice expressed in human TNF and you can see that it fares up pretty well compared to Enbrel from Amgen. Enbrel currently is the largest
45 selling biologic in the world with sales of over US$5 billion per annum and growing still very well.
In the Phase I study that we did in St. Vincent’s Hospital here in Sydney, we did a dose escalation study in health volunteers. It was undertaken by Rick Day, the principal investigator. It was very well tolerated and we had no serious adverse events or drop-outs so the data from this encouraged us to start the Phase II trial in Psoriasis. This is some pharmacokinetic data of some of the results we are getting with 621 in serum levels. This was three
5 patients. The point I am making with this chart is it is flat. There are no big peaks or troughs in it. We have a very competitive half-life, at least as good as Humira from Abbott with this drug and some of the scientists described it as antibody-like pharmacokinetics without the baggage. We really have slimmed the molecule down and taken a lot of the points out of it we think are
10 causing immunogenicity in some patients.
So the future clinical development, as I said, we are coming into the end of the Phase IIa placebo control trial in Psoriasis. We picked Psoriasis for a number of reasons. One, we felt we could get rapid proof of concept data
15 earlier in Psoriasis than in Rheumatoid Arthritis so the Psoriasis trial beginning to end is twelve weeks. It is relatively short. The other reason why we picked Psoriasis, it is a very visual disease so we have got cameras set up in all those hospitals. We are taking pictures of all the patients and we will be monitoring the results as they come out. As I said, we intend to file the
20 IND. We have already got the pre-IND number from the FDA in Rheumatoid Arthritis later this year. The Phase II Rheumatoid Arthritis trials will start later this year and there will be pilot studies in other indications. So what is the partnering strategy? I said earlier that our "sweet spot" was Phase II so what we are effectively, the marketing package which we are talking to some
25 companies right now is targeted on three points.
One is to demonstrate that the drug is well tolerated, i.e. that it is safe; second is to prove that it is effective and at least effective as some of the other products on the market and then how is it a little bit different? In other
30 words, what does the small size confer? Smaller is just a feature so what are the benefits? So we think there are three potential benefits of the therapy. One is lower immunogenicity. This is difficult to prove but we think we have got some data around that right now. Being half the size, the molecules got what they call less immunogenic determinants, about half the number so we
35 think there could be some clues around lower immunogenicity. The other is its ability, as I mentioned earlier, to penetrate joints and tissues which I have some interesting volume of distribution data with the antibody which we are sharing with some of our partners and one which we have got the most data on is it is a high yielding antibody. We are getting record expression levels in
40 our systems right now unoptimized and this feature of smaller antibodies. They just generally tend to express better than full-size antibodies. One of our competitors, (inaudible) (0:12:34) it is based in Europe make similar claims and we think that could actually lower cost of goods to the production of antibodies, So, in short, safe, effective and different and that is the marketing
45 package we are using with some of our marketing partners right now.
Okay, so that really wraps up 621. Everything is looking touched, we are good with that and a lot of data flow and information coming out over the next few months as we wrap up the Psoriasis trial and kick off the Rheumatoid Arthritis trial.
So let us talk a little bit about our second asset and information, PMX53. It is
5 actually not an antibody, it is a cyclic hexapeptide. We licensed it two years ago from the University of Queensland. It is a very potent C5a receptor antagonist. We are actually re-profiling it right now for mainly age related macular degeneration and we are starting the Phase I trial probably early next year with a new formulation. AMD is one of the largest causes of blindness in
10 folks over 60. We have some very interesting pre-clinical data in laser-induced models that indicate that PMX53 could be a very potent inhibitor and could help in the disease AMD. We are also looking at possible delivery modes that are different to what is being used right now. Lucentis and Avastin from Genentech are the most popular products for AMD. They are given by
15 injections in the back of the eye. These are very unpopular therapies with patients so we feel formulating PMX53 by a different route could be very efficacious for AMD patients.
So that is the two information assets, ART621 and PMX53 so I am now going
20 to turn my attention to our cancer franchise. These are some early stage assets but there has been some very compelling data out this week that Amgen released which I will come on to and again with inflammation, a very complex biochemical cascade of processes and this just shows where our assets fit into those processes, if you will. In terms of tumour, there are
25 various ways to attack tumours and I will come on to the different ways we do this, if you will. We have three main assets in the franchise. One is ART010 which targets RANK and RANK ligand. The indication we are looking at is bone metastasis and then we have two earlier stage antibodies that are targeting novel targets, if you will, targeting colorectal cancer and other forms
30 of cancer.
Okay, let us talk about ART010 for bone loss. This is a fusion protein and it is a variant of the naturally occurring protein OPG with a 1 amino acid stage. It is still a pre-clinical stage. We are targeting more than a billion dollar market
35 for adjunct treatment to reduce bone erosion fragility and pain. The target is validated by Amgen’s denosumab. If you follow the Amgen story, the stock was up about, I think, 20% to 25% this week because of some very encouraging data of denosumab for both osteoporosis and bone metastasis. ART010, as far as we know, is the nearest compound in the world to Amgen’s
40 denosumab and it is a very locked up area so we believe we could have a second compound in this franchise without a third being obvious right now. So what we said publicly prior to Amgen’s results is what good news for denosumab is good news for ART010. So we have got some great results both in basically mice and pre-clinical results indicating it really does strongly
45 inhibit bone erosion and so we are following this up. We are basically scaling the antibody up with production right now and we will be ready to go into the clinic. Best case is late ‘09, more probable is early 2010 but a very attractive growing market at Amgen is busy validating right now.
So that is the third compound in the franchise. The fourth is ART104 for solid tumours. Again, the major one being colorectal cancer, some very big markets, it is a novel mode of action. We have some very strong, compelling data here used with standard of care in colorectal cancer and a very
5 promising antibody that we recently signed a co-development deal with KHK. I will come on to that a little bit later.
Then finally, ART150 for lung cancer. It is a new ganglioside antibody for the treatment of possibly lung cancer and melanoma. Again, its status is pre-
10 clinical, and again, we are working it up to get it into the clinic probably sometime in 2010. Again, this shows you some, again results of targeting the mean tumour size and as you can see where the tumour grows rapidly when the animals are treated and as soon as we add our antibody, the tumour stops growing and even if we stop adding the antibody, this tumour still stops
15 growing. So there are some very compelling pre-clinical studies with both of these antibodies. Still a lot of work to do as we scale and manufacture with some very interesting assets in the emerging pipeline. That really covers what we have got in the pipeline, two inflammation assets, three in oncology.
20 Let us talk a little bit about our engineering technologies and since the merger with EvoGenix, we have really added to these quite a bit, if you will. Our strategy here is not to use any one particular technology. We like the tools in the toolbox approach and we feel we have a number of tools that we put together that basically can lead to either reducing the immunogenicity of an
25 antibody or increasing the potency or making the antibody penetrate tissues better or basically modifying the antibody so that it enhances target cell-killing. These are basically some of the data behind these descriptions so this just shows you the assets that we have, the targets, what technology we use to improve the antibody and what the potential improvement is. So at Arana
30 we take a very circumspect view of the current market, what antibodies are targeting what and what is coming next. So we do feel we have generated a very strong platform for looking at what is next in new generation antibodies.
These are some of the business development deals we penned over the last
35 two years. This is a combination of the Peptech deals and the EvoGenix deals and a few we have added at Arana since the merger so there is a number of platform marketing deals that we have done with companies, large companies such as CSL and GSK, smaller companies such as AVEO and Vegenics. We have the patent estate from Centocor and Abbott that I
40 mentioned. Then we penned two new deals over the last two months. One was with KHK, Kyowa Hakko, this is probably the largest antibody company in Japan and we are now co-developing ART104 and we are also using some of their technology to optimize this antibody. Then we signed another deal just last month with a German company called Greenovation. Basically, the
45 basis of this technology is very similar. Antibodies have a kind of sugar ring at the back and what the folks at KHK worked out is if you reduce the amount of sugars, you massively increase the potency of those antibodies. Just before we signed the KHK deal, they did a deal with Amgen, licensing one their antibodies to Amgen. Amgen paid them $100 million upfront for that antibody with $500 million in potential milestones which just shows you if you get the right application of the technology, these licensing deals can be extremely lucrative.
5 So let us have a look at our milestones going forward. When we put the merger together at the beginning this year, this is what we sketched out. We wanted to initiate the Phase II Psoriasis study and that is just pretty much closing up, right now. We had a co-development deal in the works. We are going to close up so that came to fruition too. The work that we have done
10 with both CSL and GSK has gone very well and so we completed that last quarter as well. We signed up a collaboration agreement giving us access to Greenovation’s (inaudible) (00:20:53) technology on five different targets. We also got a pre-IND number from the FDA on ART621. We have an intense activity of the company right now as we transition from the end of the Phase II
15 Psoriasis to the beginning of the Rheumatoid Arthritis trial so a lot of activity over the next few months as we begin that transition to the Rheumatoid Arthritis trial. So we think to date we are tracking just as we expected to be and expect a lot of news flow from Arana or over the next couple of quarters going forward as well. So I always like to finish the presentation by positioning
20 Arana as a unique company, if you will, and with an investment in Arana we believe you not only have the classic upside of biotech if one of our drugs work and get to market and produce the royalties that we would expect if it were successful but we also have a strong balance sheet and cash flows at the company that limits risk and we really believe that Arana is in a truly great
25 position within the peer group. Alright, well, thank you very much for your attention.
INTERVIEW CONCLUDED
Contact brr@brr.com.au for more information
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