Rhythm Biosciences (ASX:RHY): Interview with CEO Glenn Gilbert

We spoke with Rhythm Biosciences’ CEO Glenn Gilbert about the clinical progress of the ColoSTAT blood test for colorectal cancer risk and its commercial prospects post-approval in various jurisdictions around the world.

See full transcript below.

 

Read our most recent article on RHY here

 

Transcript

 

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 is Glenn Gilbert, who’s the CEO of Rhythm Biosciences ASX-RHY, joining me from Melbourne. Glenn, good afternoon.

Glenn: Hi, Stuart. How are you?

Stuart: As soon as we get out of lockdown, I’m gonna feel great.

Glenn: Much the same down here.

Stuart: Absolutely. 15th of September, 2021, for those of you watching in the year 2022. We’re still a few weeks away from ending lockdown. But the best days are ahead of us, Glenn. You’re getting ready to complete recruitment on a pretty serious clinical study that’s gonna get your flagship ColoSTAT product, CE marked in Europe, and then open up other jurisdictions to get approved in, right?

Glen: Absolutely. Recruitment is for our clinical trial which we’re calling “Study Seven”. That’s due to complete in the very near term. That’s been going on for a little while now. Obviously, hampered and suffered by all these lockdowns, but this is going to be a significant milestone for Rhythm. So that will move us past the intensive cost spend, it will get rid of some of the uncertainty around how many patients we’re recruiting this week, this month, and it really allows us to focus on the job at hand. So it’s left foot, right foot, you know, working with our partners, Sonic Clinical Trials, who obviously, as you know, are a part of Sonic Healthcare, our CRO [inaudible 00:01:32] and really formulating that tech file for TGA approval here in Australia. I will jump in and say that to get rid of some of the confusion, CE mark for Europe is completely separate to our Study Seven application here in Australia. So that’s why we’re going to be filing for CE mark by the end of this calendar year.

Stuart: Yeah. So you’ve already got enough data, this is just building out the case that ColoSTAT is the best thing for bowel cancer detection in living memory, right?

Glenn: Correct. Absolutely. And that’s the problem. There’s a significant unmet need. There is no real relevant test for bowel cancer that’s affordable for the mass market. There is, of course, the fecal test, but that just detects blood in the stool that you can, you know, have blood in your stool for a range of reasons that are noncancerous related. Plus, there’s a yuck ick factor that not many people who receive their gift from the government, they don’t necessarily all follow that through.

Stuart: Well, let’s go back in time. So I just turned 50 and for those viewers who are not living in Australia, the federal government in Australia screens the entire population when you turn 50 for any bowel cancer risk. So in the mail comes a test, which is the Fecal Occult test. You take a stool sample, put it into the package supplied, and send it off to the testing laboratory, and they can then detect bowel cancer early. A worthy objective, but Glenn, I can tell you when my test came I put it straight in the bin. Not because I don’t believe in screening for bowel cancer, I just believe there’s a better alternative, and the guy spearheading that is talking to me right now.

Glenn: Correct. And that’s a challenge that we’ve got here in Australia. So The Bowel Cancer Screening Program has been going on for over 10 years now, and unfortunately, the compliance rates are only hovering around the low 40 percents. So there has got to be a better alternative, and we firmly believe that the ColoSTAT, our lead product, is that better alternative. So, you know, further to your description of the fecal test, it does involve sampling your feces over a couple of days, and then filling out paperwork, and sending it in the mail.

But there are limitations, you know, don’t do it if it’s over 35 degrees, don’t make a mistake on your paperwork, and don’t post it on a long weekend, because obviously, the sample can go a bit funny in the mail, and you wouldn’t want to be the person opening it on the other end. So why not have a blood test that integrates into every single testing laboratory? Why not have a blood test that just gets added to a straightforward GP panel? So if you’re going for your liver function, thyroid, full blood, cholesterol, the GP is there ticking a box. Add another test for colorectal cancer, boom, you’re compliant to screening programs and, boom, you might just save your life.

Stuart: Right. Now, and what’s interesting to me is this is homegrown technology. You got this I think from the CSRO. It’s a panel of oncogenes, which if they’re present in the blood are pretty indicative that the patient in question is at risk of serious bowel cancer down the track, right?

Glenn: Yeah, correct. So we’re detecting protein biomarkers that vary in concentration in the presence of bowel cancer. Again, we’re going specific for bowel cancer, not just a generic you might have cancer test. And you’re right, CSRO spent 13 years developing and researching it, and Rhythm for the last circa four years. And we’ve turned it into a fantastic product that’s outperforming all prior testing, and, of course, the fecal test by over 30%.

Stuart: Right. So you’re being the standard of care. Patient compliance notionally with this test would go through the roof. And you’re now six studies into proving the viability of this. Talk to us about the utility of Study Seven. Obviously, you didn’t need that for European regulatory purposes but why the need to conduct the current study?

Glenn: It’s for the TGA compliance reasons due to the classification of the device. So devices are classified a whole range of different…based on their risk profile, and we just need the one that needs a trial. So it’s no harm done and it’s par for the course. It’s a well-trodden and well-understood regulatory pathway.

Stuart: Sure. And then obviously, next comes CE mark which opens up not just the European market but there are other markets outside of Europe that comply with the CE mark protocol. So for instance, I think of certain markets in Southeast Asia like Singapore or Hong Kong, for example.

Glenn: Correct. And it does make the path a little bit easier to other markets throughout the Middle East and even Canada to a certain degree.

Stuart: Sure. Now, the all-important U.S market, you haven’t really talked much about when you’re gonna get ready to launch in that market. What’s the thinking there?

Glenn: So we’re making inroads on the U.S market. We’ve established an entity over there, which is part one. That gives us great optionality moving forward within the U.S. The two main paths that we’re going to explore are a clear lab pathway, which involves a lab-developed test that does not need FDA approval. And then, of course, in parallel, we’ll be exploring the FDA pathway as we go along. Obviously, we’ve done quite a bit of work in the background and the all-important thing is to select the appropriate partners for that. So clear lab test is a lab-developed test that laboratory over there would independently validate, as we’ve done here at Rhythm, and they can start getting in sales and revenue.

Stuart: Right. Now, the beautiful part about this test is bowel cancer is probably the second or third most common cancer in the industrialized world. Seems to afflict both sexes more or less equally, although slightly in favor of men. Early detection, as with many cancers, leads to radically different patient outcomes which you can assess, right?

Glenn: Absolutely. So we’re detecting at all stages of cancer and bowel cancer out of all the cancers is key and critical to catch earlier. If you catch it stage one, stage two, you’ve got a greater than 90% chance of survival.

Stuart: Right. Unfortunately, we’re not gonna be able to do away with the usual stuff that people have to do in terms of surgical removal of polyps and so forth, right? That’s really not something you’re gonna be able to do but the outcomes for the patient once those polyps are removed are a whole lot better, right?

Glenn: Completely. And that’s just from the benefit of the patient. That’s not even touching on the economic benefit that people and the healthcare system will be able to enjoy. There’s obviously a place for colonoscopy and if you have a positive result on our test, you would go for colonoscopy as a confirmatory test. Not everyone can afford a colonoscopy, and a lot of the health insurers would prefer to have an intermediate test before they pay for colonoscopy as well.

Stuart: Right. It’s a pretty sad state of affairs when a healthcare system can’t afford something almost as routine, as I would call it, as colonoscopy, don’t you think?

Glenn: Correct. And that’s the way the U.S works. And it’s predominantly driven by their preventive screening programs and their health insurers. And that’s why they do have, from a data point of view, a higher screening compliance rate to bowel cancer because it’s offered free to them.

Stuart: Right. What’s the commercialization strategy? Will you make the reagents and sell them, as you were talking about with the U.S market? Will you look for a partner that will license the test from you and pay royalties back to you?

Glenn: Yes, in short. As you know, and as our existing shareholders and potential shareholders would have noted from our ASX releases, we’ve really taken care of the back end of the business and ColoSTAT, particularly. So we’ve got the IP protection globally, that’s fantastic. We’ve also got the manufacturers that can manufacture at a global scale. That’s all compliant. We’ve got the ISO certification and the quality systems in place. And now it comes to commercialization. So we see us taking a partnership model in most jurisdictions, particularly the Asian jurisdictions. We’ll be looking to partner U.S, Europe, similar.

Stuart: Right. Now, coming back to Study Seven, I’m really impressed. I’ve been hearing from a lot of companies about how COVID has seriously impacted their ability to recruit patients. I mean, look a lot of people aren’t even going to the doctor unless they can absolutely avoid it for anything that’s not COVID, and yet, you’ve still been able to progress a study in the middle of this pandemic. What’s the secret of your success?

Glenn: Elite management, of course. Well, we were impacted, obviously, and it has taken longer than any one of us would have liked. Early days, we had all our sites concentrated in Victoria and that was. the first lockdown.

Stuart: Yeah. That was not helpful, yes.

Glenn: It was less than ideal. And so we purposely embarked on a strategy to geographically diversify, and that paid off. We also went to appoint trial sites that weren’t necessarily public hospitals. So those that had a bit more of a commercial bent as well because it means more to them and that’s paid off as well. So we’re in a terrific position now, where, you know, the completion of that recruitment phase of the trial is all but done, and then we can move on with our partners like Sonic, for example.

Stuart: Yeah. Now, obviously, bowel cancer affects most ethnic groups fairly equally but some more than others. So Anglo-Saxon populations, as far as I can tell, are a little more susceptible to bowel cancer than most. Was there any thinking in your studies like working with particular groups evaluating the effectiveness of the testing in those settings?

Glenn: There was. Obviously, this trial is limited to Australia, and we do have quite a diverse and multicultural society. The key endpoint, which is the most important, is the performance using colonoscopy as the gold standard. So first and foremost, that is what we need to do, and we want the performance to obviously be far better than the fecal test. And as you stated, compliance will be through the roof anyway, regardless. There will be the need at times to do bridging studies for particular jurisdictions like China, for example. And again, due to the higher volume of people, we wouldn’t expect the trials to take too long, just to give us a bit more data in those areas.

Stuart: Right. Well, Glenn Gilbert, you’ve executed pretty professionally on this whole ColoSTAT story since you got involved. What comes after ColoSTAT? Obviously, the IP is probably applicable to other cancers in other settings. What have you got in the pipeline?

Glenn: This is the exciting thing that we’ve intentionally made sure we didn’t distract ourselves. So, you know, you talk to a lot of people and everyone, early-stage, where we’re not, but early-stage biotechs you need multiple shots on goal and can cause a bit of a higher cash burn, of course, and you’re almost allowing yourself to fail. So we backed ourselves in with the technology, both with the CSRO and the Rhythm team here to be able to produce what we’ve done. And now is the time strategically to look at other cancers. So we know that our key lead biomarker is highly expressed in a range of cancers, all the usual suspects, and those that are in the top three cancer killers. And so we’ll be looking at progressing an R&D program to find biomarkers for those cancers much in the same vein as ColoSTAT, low-cost, mass-market screening.

Stuart: And one final question comes to mind as well in terms of correct pricing of the test once you ultimately commercialize, have you done some pharma economics work about what the appropriate pricing is?

Glenn: We’ll be doing more moving forward. We’ve got a rough basis for that, obviously, as we’re sitting here. The channel also is different. So for example, the United Health or Bupa Medibank, they might be more inclined to pay a higher price because they’re looking at a cost versus colonoscopy, which is several thousand dollars. So they might be willing to pay a higher price. Obviously, government screening programs is where we’re targeting. We feel like we could fit seamlessly into those programs. The infrastructure is already there. The best screening program costs a lot more than people think. So we’ve done a bit of work in the background, and we feel it’s, you know, it’s $50 to $200 per patient. So what you kindly threw in the bin cost $200. So…

Stuart: Yeah. As a taxpayer, I’m shocked at my behavior I gotta tell you. Right. Well, Glenn, it’s been a great, great journey. Obviously, the best is yet to come. We’re talking TGA approval, CE mark, ultimately FDA, and globalization, and then building up the pipeline with new cancers. It’s been a great story. You can read about it in the article we published in Stocks Down Under. There’s some really good issuer-sponsored equity research that our cousins at Pitt Street Research have published. And obviously, Glenn, you talk to investors fairly regularly, you’re quite accessible to them, right?

Glenn: Absolutely. Email, phone number, happy to take calls.

Stuart: So, please reach out to Glenn and learn more. Glenn Gilbert, Rhythm Biosciences, keep up the good work.

Glenn: Thanks very much, Stuart.