One of the greatest challenges in the development of new drugs for the treatment of cancer is that most of the highest value targets for new drugs reside on the inside of cells behind the protection offered by the cell membrane.
The problem arises because the cell membrane acts to keep drugs away from the targets through which they can mediate their effect.
The drugs that are small enough to slip through the cell membrane (“small molecules”) are too small to bind to the high-value targets inside the cell, whereas the large molecule drugs that can bind to the targets can’t cross the cell membrane to reach them.
With a market capitalisation of around $90 million, listed biotech Phylogica (ASX code: PYC) is addressing this delivery challenge by exploiting the cell’s natural process for internalising large molecules (a process known as endocytosis).
The company achieves this objective by using a purpose-designed delivery module to cross the cell wall in a similar manner to a “Trojan horse”.
The delivery module (known as a Functional Penetrating Phylomer or ‘FPP’) carries an active drug payload with it as it crosses the cell membrane. The large molecule drug payload (which would not have been able to independently cross the cell wall) is then free to interact with the high-value cancer targets inside the cell.
The value of reaching intracellular targets with large molecules has long been known. Phylogica will find out whether it has “cracked the code” to this perennial problem late this year/early next when the company’s lead program known as FPP-iMyc (see below) enters a crucial pre-clinical testing phase in animals.
About Phylogica
A spin-off from the not-for profit medical research body Telethon Kids Institute, the Perth-based Phylogica listed a decade ago on its premise of building a “library” of hundreds of billions of peptides (known as Phylomers), which are protein fragments with active molecules that can fight diseases.
Quirkily, the genetic material that gives rise to these Phylomers derives from extreme environments such as volcanoes, geysers and deep-sea events.
Recently, Phylogica has tightened its focus to its FPP-iMyc and related oncology programs, antibiotic-resistant bacteria and genetic diseases.
The joy of FPP-delivered payloads is that they can reach many targets that were previously considered ‘undruggable’, including targets in diseases beyond cancer.
Breaching the cell defences
When it comes to fighting malignant cells, the trouble is that body cell membranes are designed to resist foreign agents. Delivering an active “payload” to the target area is therefore a key challenge in changing the behaviour of these cells from the inside.
Phylogica’s lead program has two components, both of which are owned by the company: the delivery technology or “carrier” (FPP) and the cargo (in this case directed towards a high-value cancer target called “Myc”). This program is most relevant for common cancers receptive to large molecule treatments, including blood, breast, lung, prostate and pancreatic cancers.
The FPP part of the program is a Functional Penetrating Phylomer, a carrier to which the active ingredient (carefully selected from the Phylomer library) is attached.
Rather like a rocket escaping the pull of gravity, the FPP needs to muster all the thrust it can to overcome the endosome (the part of the cell membrane that breaks off and surrounds the FPP-payload as it enters the cell). The FPP can not only cross the cell membrane but can also ‘escape’ from the endosome once it has done so. Having breached the cell’s defences, the FPP has delivered its payload – the iMyc (Myc inhibitor in this case) to its destination where it is free to bind to its target – Myc – the “master regulator” of cell growth.
In normal conditions, Myc is highly desirable. For example, a cut hand resulting in blood loss will turn Myc on, triggering the bone marrow to produce more blood by increasing the rate of cell division. When that is done, Myc is then switched off.
But in the case of multiplying cancer cells, the body “forgets” to turn Myc off and the cells consequently continue to divide uncontrollably to form a cancer. Phylogica’s FPP (the Trojan horse) delivers the company’s iMyc payload inside of the cell to “switch off” the overactive Myc and therefore stop the cancer cells dividing.
While loosely and erroneously classed as an immuno-oncology play in some quarters, the FPP-iMyc mechanism of action is different but complementary.
Using an automotive analogy, immuno-oncology acts as a “brake” on tumour growth, by triggering the body’s immune system into attacking the tumour.
Phylogica’s IP works more like removing the foot from the “accelerator” by going inside the cell and attacking the excessive Myc activity. As a result, the cancer cells are ordered into a programmed death spiral.
Removing the foot from the accelerator (shrinking the tumour size) and hitting the brakes harder (killing any remaining tumour cells) with immuno-oncology agents are two complementary mechanisms of action. This opens up the possibility that a Myc-inhibitor could be used not only on its own, but also in combination with the innovative recent advances made in immuno-oncology.
Crucially, Myc is over expressed (over-active) in most cancers including the common breast, lung, stomach, cervical and colon varieties.
In the words of Dr Jay Bradner, head of the Novartis Institute for Biomedical Research: “If we don’t solve the Myc problem, it will be hard to … definitively cure cancer.’’
Pre-clinical success
To date Phylogica’s pre-clinical program on mice has seen about a 50 per cent reduction in tumour volume, after only four intravenous treatments with an unoptimised (prototype) version of both the carrier (FPP) and a trial cargo (called OmoMyc). The next step for the company is to improve the efficiency of both the Trojan horse (FPP) and the “soldiers” (iMyc cargo) before re-testing in animals (a process known as “lead optimisation”).
With more horses getting inside the cell and more effective soldiers being delivered, the hope is that the 50 per cent reduction in tumour volume seen in early testing is substantially improved when the company tests its optimised candidates in animal models late this year or early next year.
Researchers from Cambridge University have shown that if a sufficiently potent inhibitor of Myc can be effectively delivered inside a cell, then mice with between 30 and 100 primary lung tumours can be completely cured of their otherwise untreatable disease. This provides some context as to why this is such a high-value target for a cancer therapy. Drug development is a notoriously risky business but the pay-off for Phylogica if they are successful in re-creating these results will be substantial.
Currently, Phylogica’s FPPs are about 40 times more potent than the previous gold standard in intracellular delivery, a molecule derived from HIV known as TAT (trans activator of transcription). A problem limiting the utility of TAT is that it is particularly inefficient at delivering cargoes at the lower concentrations which are preferred in the clinical setting (to reduce side-effects and costs) – a problem that the efficiency of the Phylomer FPPs seek to overcome.
The company’s proprietary Myc-inhibitors are also equivalent to or better than the current best-in-class Myc inhibitor, OmoMyc, when tested in-vitro. This is even before they have been through the lead optimisation process (which can increase a drug’s potency by up to 100-1,000 times).
The next stage for Phylogica is to determine whether the optimised FPP-iMyc is effective in mice and this is expected to begin late this year. If the company can show that its drug is effective it will then need to demonstrate that the drug that it used to achieve this result is not toxic in larger animals before human testing begins.
Stephanie Unwin, Phylogica chair, says: “The richness of our libraries has enabled us to mitigate a substantial amount of risk with not one but five candidates progressing through to optimisation – providing multiple shots-on-goal.”
Global deals abound
Unwin acknowledges the path to regulatory approval is protracted – and that applies to any drug.
Fortunately for Phylogica, there’s a burgeoning global interest from “big pharma” in pre-clinical cancer plays.
Two years ago, Bristol Myers Squibb acquired a single group of assets for one target area (IDO/TDO inhibitors) from the pre-clinical immunotherapy house Flexus for US$1.25 billion, including an upfront US$800 million payment and US$450 million in milestones.
“Phylogica‘s lead asset (FPP-iMyc) has some similarities to the Flexus assets in terms of breadth and therapeutic complementarity if we are successful in our pre-clinical efficacy and toxicity studies,’’ Unwin says.
Broker Euroz reckons that if the company can prove in vivo efficacy and toxicity, this could be the catalyst for a deal at “multiples of the current share price”.
“We see a partnership with a pharma company for an upfront payment of US$50-150 million plus back-end payments of US$200 to US$400 million as being achievable upon success,’’ Euroz says in a recent report.
Unwin says: “If we can show efficacy of the drug in these models (by reducing the tumour size/curing the animal of disease) then we will have the attention of the global pharma industry”.
Partnered up
Phylogica has already attracted a suite of respected global partners interested in its drug discovery activities.
Last year, existing partner Genentech (a subsidiary of Roche) extended its collaboration on a research program to discover novel antibiotics – an increasingly urgent quest given growing patterns of resistance globally to the current treatments available.
This program will work off Phylogica’s Phylomer drug platform, including its penetrating peptide discovery technology.
Genentech delivered a US$2 million milestone payment to Phylogica last quarter. Under the terms of the initial December 2014 agreement, Phylogica may receive research, development and commercialisation-related milestone payments of up to US$142 million.
Heavy-hitting appointments
Phylogica’s impressive progress is speaking for itself. At least that’s the view of two global big pharma executives who have agreed to join the board as non-executive directors.
Dr Robert Hayes previously was head of biologics at the giant Nasdaq-listed biotech Amgen which is capitalised at approximately US$120 billion. He also spent seven years leading a unit within Janssen’s research and development section, focused on researching small alternative scaffold proteins.
Dr Rick Kendall is currently vice president for research at Kite Pharma (a US$4.5 billion immuno-oncology player) and previously was executive director responsible for oncology discovery research at Amgen. For the past few months he has consulted to Phylogica on the FPP-iMyc program.
Blue-sky potential
Management acknowledges that the company has disappointed in the past, which means the market does not fully appreciate the potential as the FPP-iMyc program enters the crucial pre-clinical stage.
Euroz, however, has seen the upside of the looming technical developments. “Taking the iMyc program into and through preclinical development is a paradigm shift in our view,’’ the broker says.
