Cynata Therapeutics (ASX:CYP): Interview with CEO Dr. Ross Macdonald

Cynata Therapeutics

We talked with Cynata Therapeutics CEO Dr. Ross Macdonald about the multiple clinical-stage opportunities the Cymerus technology has created, including its potential use in COVID-19 where a trial is now underway.

 

Read our most recent article on CYP here

 

Transcription

 

Stuart: Hello, and welcome to “Stocks Down Under.” My name is Stuart Roberts, and I’m one of the founders of our publication. And with me today, joining me from Melbourne, is Dr. Ross Macdonald, who’s the CEO of Cynata Therapeutics, ASX CYP. Ross, good morning.

Dr. Macdonald: Morning, Stuart.

Stuart: It’s Friday, the 8th of October, 2021. Ross, it’s been an interesting few years for you, with your foundation Cymerus technology. For a while there, you were probably the most advanced stem cell company in the world, not necessarily in terms of market cap, but in terms of the potential power of your technology to create therapeutic stem cells at very low cost. Now, recently, you’ve been collaborating with Fujifilm, in one particular indication, graft-versus-host disease. Their IP and a whole lot of data has now come back to you with considerable value-add, right?

Dr. Macdonald: Yep. That’s right. And just to clarify, we do remain the leading company worldwide in the development of iPSC-derived cell therapies. We have a phase 3 underway, and the other companies that are pursuing a similar manufacturing strategy, albeit for different types of cell therapies, are still only in phase 1. So, it’s a great place for us to be, because of the enthusiasm around iPSCs as a manufacturing strategy. And, you know, we are the leader, still, in the world.

But yes, as far as Fujifilm was concerned, yep, we’ve now completed a new agreement with Fuji that gives us the rights back to our leading product in graft-versus-host disease.

Stuart: Right. So, if we could summarize in a nutshell, what have we learned through the period of the Fujifilm collaboration?

Dr. Macdonald: Well, a lot, insofar as the engagement that we’ve had through Fujifilm with the Japanese regulatory agency, all of which has been very positive. But obviously, the impediments that were a consequence of the lockdown in Japan, and pandemic-related restrictions in Japan, you know, mostly since March of last year, of 2020, have really impinged on our plans, our joint plans to get that product moving in a clinical trial in Japan.

Stuart: Right. It’s not the last time I’ve heard the complaint, that this COVID pandemic is standing in the way in a lot of good clinical work. Now, swings and roundabouts, mind you, we now have a chance to actually test out your stem cells in COVID, given that there’s still a lot of cases in the jurisdiction you’re trying this out in.

Dr. Macdonald: Yeah, exactly. And that trial started last year. Shortly after the pandemic hit our shores, we very, very quickly were able to get a trial underway, which was built on a very firm foundation, on a very convincing preclinical model of the condition that these patients suffer from when they get severe complications, and that’s respiratory distress. So, we quickly got a trial underway at around about the same time as Fortress Australia caused the decline in patient numbers, and so we pivoted again, I hate that term, but we pivoted to a broader recruitment criteria, enrolling patients who had respiratory distress from any cause, so not just COVID-19. And then, of course, we’ve done full circle now, and in the past four or five months, of course, New South Wales and Victoria, particularly Sydney and Melbourne, have ended up with very large patient numbers, so, relatively, so of course we’re seeing mostly COVID patients now in this trial.

Stuart: Right. Now, what we’ve learned through this pandemic is the infection with COVID-19, what puts the patients in serious mortal danger, is that rush of immune system cells into the lungs, that then can make it difficult to breathe. There’s now a large body of knowledge showing that stem cells of the kind you’re able to produce can blunt the more severe immune response that the patients are going through. What do we know from the preclinical work you’ve done, as to the potential utility of this, now that it’s in the clinic?

Dr. Macdonald: Well, as I said, we completed, in early 2020, a study in respiratory distress in a large animal model, as a sheep, whose interesting lung physiology is very similar to humans, and respiratory distress arises from many different causes, and it is a significant unmet medical need, long before COVID came along. But obviously, it’s become front page news with the major complication that affects patients with…who are infected with SARS-CoV-2, the virus that causes COVID-19.

So, we had a, as I explained, a good foundation to move forward into a clinical study, and there were two factors that were behind the global interest in using MSCs in COVID-19 patients. The first was some very interesting data that came out of a small clinical study, started, conducted in China, very early on, which showed a significant benefit of MSCs in patients who had respiratory complications arising from their infection. And then the second was the well-known characteristic of MSCs, which is to modulate the immune system. And it’s very clear now that what’s occurring in these patients with respiratory complications is an overreaction of their immune system. And of course, we need our immune system to defeat invading organisms, viruses included. And a functional immune system is absolutely necessary to clear viral infections and so on.

But unfortunately, in these patients, and for what reason is still a little unclear, these patients have an overreaction, or an exuberant response of their immune system to the invading virus, that ultimately causes more damage than the virus itself. And that immune response particularly affects the lungs, but other tissues as well, and that’s now becoming manifested in this long COVID syndrome that’s starting to be described in patients who have recovered.

But the inflammatory response in the lung essentially disrupts that very fine membrane that separates the bloodstream from the air cavities in the lung, and allows gas exchange, carbon dioxide out, and oxygen in. And when you’ve got that infiltration and thickening of that very fine membrane, then suddenly, the patient’s breathing no longer is effective, and so that’s why these patients end up with breathing difficulties, and ultimately, as it advances, they have to get put on a respirator, or a ventilator.

So, what MSCs appear to do in addressing this issue is to modulate that immune system, and that is achieved through a number of very, very well-known pathways of intervention that MSCs have on various cellular and humoral responses in the immune system. And so, you know, there’s a… This is why single-target drugs that have been trialed in COVID and other things, and why other approaches in addressing this condition are generally not terribly effective, because it is multifactorial. There’s a whole lot of stuff in this so-called cytokine soup that’s occurring in the lungs of these patients that can’t be addressed by targeting one single aspect of the pathology. MSCs, on the other hand, living drug, interact with that environment, that milieu, and respond accordingly.

So, I often use an analogy that MSCs behave like the conductor of an orchestra. So, the MSC itself is actually not playing any instruments. But without that conductor, what you’ve got is that cacophony of noise, as all of the instruments are just playing their own thing. So, the conductor takes the stand, and says, “Okay, you lot over there, the trombones, the fiddles, you shut up, you, the cellos, you do your bit, and then suddenly, you’ve got a harmonic sound. And that’s what we’re trying to restore in the overreaction of the immune system in these patients.

Stuart: Right. So, and the beautiful part of this is COVID may or may not be with us in the years ahead. But acute respiratory distress syndrome is characteristic of a range of lung disorders, and obviously, yeah, initially you were recruiting outside of COVID, but there’s a vast market just for regular ARDS, that you can treat with this condition, you know, post-COVID, right?

Dr. Macdonald: Exactly. And that won’t go away. And I also, I think it’s now pretty clear that the COVID won’t go away either, especially when, you know, we see, you know, a reluctance of somewhere between 5% and 20% of populations in the first world resisting vaccinations. So, COVID’s gonna be around for a long time yet, but as you point out, ARDS will also, respiratory distress, that is, will also be around for a long time as well, irrespective of what happens with COVID.

Stuart: Right. Now, about a year ago, you had a big step forward in a completely different indication. It was some University of Sydney-based collaboration in osteoarthritis, effectively jumping into a phase 3, which made you a very advanced opportunity. Talk to us about the opportunity in osteoarthritis.

Dr. Macdonald: Yeah, well, that was an outstanding outcome, to be frank, to suddenly be, you know, catapulted into a phase 3 clinical trial, and, you know, we’re in that rarefied atmosphere of Aussie biotechs, of which there are few in number that are actually at that stage of product development, and, I hasten to add, in an indication like osteoarthritis, which is, you know, in excess of $11 billion USD in market value.

Osteoarthritis is characterized by progressive degeneration of the joint, and at the moment, there is no treatment for that. There’s only analgesics that mask the pain and mobility issues that arise. Eventually, it just gets worse and worse, and ultimately the patient faces some form of surgery, usually joint replacement. So, an intervention which can alter the outcome of this disease, either halting its progression, so, allowing the patients a few more good years of activity, and sport, and doing things that they enjoy, which will result in recovery of the joint, would be a fantastic outcome. So, a great market opportunity for us, a very exciting clinical study, which is, as you point out, a phase 3, well-powered, well-statistically designed, 440-patient, randomized controlled placebo trial. So, the gold standard of clinical study, and which has approvable endpoints. And getting into that study really was a, you know, a great opportunity for Cynata, which came about as some researchers at the University of Sydney, who have long been looking at the role of MSCs in treating osteoarthritis, approached us, and inquired whether we might be interested in participating with them in this trial.

And of course, we didn’t need to be asked twice, so we jumped on board, and eventually, the study got underway late last year. It’s funded by NHMRC, the peak medical research funding body here in Australia, so fabulous leverage for our shareholders, who don’t have to pay for the trial. And clearly, we’re paying for supply of the product, but the costs associated with this trial would be very significant if we were trying to support ourselves. So, you know, basically, the shareholders are getting a fabulous deal here, a very well-powered, well-controlled clinical study, which, if successful, will not only transform Cynata, of course, but also transform the treatment of osteoarthritis.

Stuart: Certainly. Now, how does this translate internationally? Because I’m pretty sure Cynata has never opened an IND before in its corporate life, for FDA approval.

Dr. Macdonald: Well, that’s one of the… Yeah, you’re right. We have engaged with the FDA, a few years ago, and we had a very, very good guidance meeting with them, which outlined exactly what they would like to see in the form of a data package surrounding an IND. As it turned out, we had a faster pathway to the clinic going through the UK and Australia, which, you know, again, we were very anxious to get clinical runs on the board for our shareholders, so, naturally enough, we pursued the GvHD trial in the UK and Australia at the time. But we haven’t turned our back at all on the U.S. Indeed, we completely realize that that’s the number one market for drug products, of course, that goes without saying, but also a huge value driver for the company. So, getting the rights back to GvHD has allowed us now to quickly implement a plan to get…to execute on our regulatory strategy in the U.S. this year, and get a trial underway, probably early next year, in GvHD. So, we will address and meet that requirement, and I think that’ll be a major catalyst for the company and for our shareholders.

Stuart: Yeah. So, I’ve been telling people, you’re looking for a biotech company with phase 3 potential, but priced at phase 1/2, go looking for Cynata. If we’re having this conversation a year from now, October 2022, what do you hope to have achieved by then, to begin to fulfill some of that phase 3 potential we’re talking about?

Dr. Macdonald: Well, we will have completed the MEND trial. That’s the trial in respiratory distress, and that will have read out a year from now, and probably well before then. We will have got the trial in diabetic foot ulcers underway. Again, another large, unmet medical need. We’ll be well down the track in completing enrollment in our osteoarthritis trial. That’s with the University of Sydney. And we’ll have a graft-versus-host disease trial underway under a U.S. IND.

Stuart: And so, that’s quite an achievement…

Dr. Macdonald: And possibly another corporate partnership, too. I, you know, obviously in parallel to our operational activities, we also have a vigorous partner engagement. Now, I can…it’s almost impossible to give investors guidance on when the next deal’s going to happen, but I can assure your listeners that we have a very active business-to-business engagement.

Stuart: And of course, by January 2, 2022, we may be in a position to go travel to meetings like J.P. Morgan in San Francisco to actually talk to some of your potential collaborators directly.

Dr. Macdonald: Yeah well, no, as you well know, the St. Francis, where the JPM meeting is held, is a… If ever there was gonna be a hot spot for incubating viral infections, it’s gotta be the corridors of that hotel during J.P. Morgan week.

Stuart: Right. Right. So, finally, it’s 2021. So, the regenerative medicine revolution’s about a decade old, in terms of the… We’ve been moving gradually towards a really big payday for a lot of the players in regenerative medicine. Where do you see the field having gotten to now, and where can it go in the next five years?

Dr. Macdonald: Well, look, I think there’s been, you know, some real achievements. Obviously, you know, in the CAR-T field, you know, the breakthroughs of the CAR-T products for bloodborne cancers, leukemias, and so on, have been, you know, well-described in the media, so that’s a great outcome. I think a further approval recently of another MSC product in Japan, the TiGenix/Takeda product for Crohn’s fistula, was a great outcome. So, now we’re seeing MSC-based therapy, so that’s the same product, of course, as we’re making, approved in Europe and Japan. The U.S., of course, remains a big hurdle. And the disappointments around another MSC product, late last year and early this year, I think set back expectations a little bit, and disappointed many investors, of course.

But as we are at pains to point out, the challenges that were associated with that non-approval in the U.S. are met by our technology. It’s exactly the sort of thing that we’ve been saying all along, that the strategies of conventional manufacturing approaches to producing MSC therapeutics always going to be an issue for regulators, especially the FDA, and their commentary around that particular instance was very, very revealing. And it underscored Cynata’s own platform, which doesn’t have those problems. We start off with exactly the same starting material every time, so we can assure regulators that we have a highly consistent product.

Now, consistency still has to be demonstrated. There’s no question about that. But when you’re starting with the same material every time, it’s a whole lot easier to make a consistent finished product than when you’re starting with material that’s derived from different donors every day of the week.

Stuart: Right. So, I mean, that’s one of things I’ve liked about Cynata. It’s been consistent from the start, in terms of we know that the manufacturing is fairly dependable. You’ve had the best part of five to eight years working with your collaborators at the University of Wisconsin, Madison, and elsewhere. And obviously, it’s been hard to put a foot wrong clinically in the meantime. So, Ross Macdonald and Cynata at your colleagues, give yourself a pay rise.

Dr. Macdonald: Not just yet.

Stuart: Thank you for talking with “Stocks Down Under” today, and keep up the good work.

Dr. Macdonald: Right. Thanks, Stuart. Good to chat.