A biotech all about Alzheimer's

Dr Bill Ketelbey is the CEO of Actinogen Medical. I don’t often do biotech companies mainly because it’s a roulette wheel, you’re either on the red or the black and if you’re on the red you miss out and if you’re on the black you win. It’s kind of a binary outcome mostly for biotech companies and this one is no exception.

They’re in the middle of phase two trials for an Alzheimer’s drug called Xanamem. The reason I want to talk to them is partly because I’m interested in Alzheimer’s but also because if this comes off it’ll be absolutely massive. Alzheimer’s is a huge problem obviously worldwide, everyone wants to do something about it. This drug, Xanamem, which is Actinogen’s compound, has been through the phase 1 trials and it’s shown to be safe in those trials, it’s shown to have worked on mice and now we’ll find out fairly soon whether it actually works on human beings some time towards the middle of next year in fact we’ll find out. If so then everyone is going to make a lot of money in it, there’s no doubt about that.

I thought it was well worth checking out just in case you feel like putting your money, or some of your money, on red on the roulette wheel as it were which is Actinogen Medical. 

 Here's CEO Dr Bill Ketelbey to explain more about it. 

Bill, you’ve got a compound called Xanamem which seems to block cortisol which in turn can cause or at least help with cognitive function.  Can you give us a little bit of background on how it came about, who discovered it and what made anyone think that blocking cortisol helps Alzheimer’s?

Alright, it’s an interesting story.  It began back many decades ago a number of researchers around the world identified high cortisol, persistently high cortisol, as being associated with diabetes and the attempt was made to moderate, improve, treat the diabetes by supressing cortisol production systematically throughout the body.  That has been tried by multiple research sites around the world.  They were able to inhibit the cortisol very successfully, none of them were readily able to treat diabetes but Edinburgh University was doing…

Is that because cortisol acts on insulin?

No, cortisol plays a part but cortisol was thought to be part of the diabetes profile, it was thought if you inhibit the cortisol you may improve, the blood sugar may improve the insulin sensitivity.  In the end they actually showed that it didn’t provide much clinical benefit but Edinburgh University that was also doing the same research identified a cognition improvement when they inhibited cortisol and they thought maybe this is the direction to go.  This was some 15 years ago.

Was this in mice?

No, this was in humans.  What they did was a small pilot study back 15 years ago to test their hypothesis in humans where they used what was then an old drug with a number of side effects called carbenoxolone to see if through inhibiting the cortisol in the brain they were able to actually improve cognition and they were.  It was a small pilot study and on the back of that I guess partly serendipitous discovery they started the whole development process that landed up with Xanamem.  They got to the point some four years ago where they needed more reliable and more substantial funding sources so they elected to out license their drug and Actinogen was in the right place at the right time with the right offer and fortunately we got the asset four years ago and continued the development from then on.

Right.  At that point you then began with phase 1 trials or had some trial, what exactly had been achieved at that point with the compound?

Edinburgh had done a fair number of animal studies, both efficacy and safety studies, and had done one phase 1 study in humans.  We licensed the drug, did a capital raise and finished off all of the animal toxicology studies and a very substantial phase 1 study that generated the necessary data for us to go into phase 2.  Most importantly within that phase 1 study we proved that our drug gets into the brain, that was key, demonstrating that our drug gets into the brain in concentrations adequate to inhibit the enzyme and therefore inhibit cortisol production in the brain.

Was that phase 1 trial that you did, was that a randomised double-blind placebo-controlled study?

It was randomised, double blind, placebo controlled, it was done at a specialist phase 1 unit in West Australia in Perth and generated the data necessary for us to put a regulatory package together to get approval from the FDA, the MHRA in the UK and the TGA in Australia to be able to start our phase 2 trial and that we began in the middle of last year.

That’s called Xanadu which is a name to conjure with, is it not?

Obviously Xanamem in Alzheimer’s disease recognising that in the middle of Xanadu there’s an AD that is the reflective of Alzheimer’s disease so it’s a name that has bearing on what we’re trying to achieve in testing Xanadu in Alzheimer’s disease.

Can you describe to us what the test involves, what are you doing in that phase 2 trial?

Xanadu is evaluating our drug, Xanamem, in mild Alzheimer’s disease.  It’s again double blind, placebo controlled and randomised trial, absolutely gold standard quality research and is actually being run in three geographies, Australia, the UK and the USA under regulatory – obviously very tough regulatory review and approval.  The reason we chose those three geographies to run the trial was to ensure that we removed as many confounders as possible like language or cultural or differences in health systems to ensure we got as uniform a patient population as possible.  We needed to run it across those three geographies because we needed between 20 and 25 research sites to get the necessary number of patients in an adequate time.  The trials have been properly statistically developed and powered.  We need 154 patients and actually as of today we have 149 patients so actually we only need 25 more patients to complete the trial and that’s complete enrolment.  On current projections we fully expect to put the last patient on before the end of the year.  If that’s the case then results from our trial will be available in the second quarter of next year between April and June next year.

Any sneak previews at this point?

We’d love to know, wouldn’t we?  We did an interim analysis of the first 50 patients on the trial back in May and that was done on both efficacy and safety data.  It was important that we maintained the blinding of the trial, maintained the integrity of the trial.  We had to be sure that no patients, investigators, research staff or us for that matter, the company, became aware of who was on what treatment.  The interim analysis was done by an independent body called the Data Safety Monitoring Board who had an independent charter and their brief was to unblind the data, analyse it and comment back to us with what their findings were.  Their conclusion, their recommendation, was to continue the trial without modification.  That’s probably the best that we could hope for because what it indicated was that all the assumptions that we had made around design of the trial, statistical powering of the trial, outcome assumptions, that generally they appeared to be correct and that the trial in its current form was progressing as expected. 

We were very pleased with that outcome.  It doesn’t indicate obviously whether the drug works or not, it does give a reasonable indication that safety is not a problem but we will know whether our drug works and whether the trial has proved that our drug works we will know that at the end, only at the end.

At the end of phase 3 you mean?

No, at the end of phase 2.

At the end of phase 2.  If at the end of phase 2, which is hopefully second quarter next year.

12 months away, yes.

That’s right, so what happens then at the end of the phase 2 trials for you?

If our drug shows an effect it will obviously be a very substantial finding and outcome for patients, for carers, for the Alzheimer’s community, importantly for investors as well because inevitably it would signal to big pharma that we have an asset that absolutely is worth investing in and taking forward as rapidly as possible to launch and to invest in, and obviously to get it to market and to launch it as rapidly as possible.  Our projections are that if our drug works as well as current therapy – now, the current therapy provides limited benefit, if our drug works only as well as current best therapy our projections are that we have an asset that’d generate over $5 billion US in annual revenue.  It’s a very substantial asset and that’s not curing the disease that is just simply managing and perhaps hopefully slowing down the disease.

Do you think it could actually do more than that?

Well, time will tell.  Our animal models have indicated, and this is an animal model of Alzheimer’s disease where the animals were given, again in a blind and randomised fashion, were given a cortisol inhibitor that inhibited cortisol in the brain, so exactly what our drug does.  The animal models would indicate that the inhibition of cortisol essentially stops the progression of the disease.  The benefit with ongoing treatment continued out to the end of the animal’s life.  If we can replicate that in humans that would be an extraordinary achievement.  Even if we partially slowed down the disease rather than just stopped its progression that would equally be a major achievement because the current therapies on the market while they provide a benefit it is only for about six months.  After that the disease progresses and overwhelms the benefit that can be provided with current best therapy.

Yes, of course that’s right.  Obviously, this would be a breakthrough drug if it works.

Absolutely, and I know the term breakthrough gets bandied about a bit but absolutely this would be a breakthrough, without a doubt, in the treatment and management of Alzheimer’s disease.

Are there other things that inhibiting cortisol would benefit apart from slowing down or possibly stopping Alzheimer’s, are there other things that your drug can be used for?

Sure, that’s a very interesting question because the reality is cortisol, or persistently raised cortisol, is associated with decreased cognition in patients with high cortisol.  Now, elderly patients with high cortisol and cognition problems include diabetics, Parkinson’s patients, depression, patients with depression, schizophrenics, potentially epilepsy.  There are a number of conditions that potentially have cognitive impairment caused by raised cortisol and these are not Alzheimer’s patients we’re talking about here.

We should probably explain what cortisol is, I think we know it usually as hydrocortisone, don’t we?

Yeah.  Cortisol is a hormone that we all have and we all need, we all need it to survive.  It varies up and down during the day depending on whether you’re waking up in the morning or you’re going to sleep at night or you’re in a stressful situation.  It’s the stress hormone that helps the body respond to a stressful situation.  We’re not talking about just mental stress we’re talking about physical stress, so obviously mental stress we all know but physical stress might be a heart attack or breaking a leg or something like that.  The body needs a way of mobilising glucose and responding to the stress and cortisol is the hormone that does that.  Everything is fine if the cortisol goes up and down during the day but for some people, and I’ve mentioned them in diabetics, Parkinson’s patients, schizophrenics and Alzheimer’s patients and normal aging, as people age normally, what tends to happen is the cortisol level tends to rise slowly over time so that elderly people often have a raised cortisol.  What’s been shown in many studies is that persistently raised cortisol is toxic to the brain, it is associated with decreased memory and with the development and the worsening of Alzheimer’s disease.

Our hypothesis, the principle behind our drug, is that our drug supresses the cortisol production by inhibiting a very specific enzyme in the brain and this enzyme is most concentrated in the areas of the brain that are most affected by Alzheimer’s disease, the hippocampus frontal cortex of the brain.  Our drug inhibits the enzyme and by inhibiting the enzyme decreases the cortisol, brings the cortisol level down to a more normal level and more normal physiological level.  As we have shown in both human and animal studies by doing that you improve cognition.  What we’re after in our Xanadu trial is demonstrating if we use our drug in mild Alzheimer’s patients we equally can improve the cognition and the clinical Alzheimer’s picture, hopefully we can even stop its progression.  That’s what we’re hoping to find out from our Xanadu trial that is very nearly complete now.

If it’s associated with stress, cortisol, could your drug also treat PTSD and anxiety?

Absolutely, PTSD is one of the potential indications that we have on our list to examine.  PTSD is a bit more complicated, in fact is a lot more complicated, than many of the other conditions that I’ve mentioned and so quite a bit more animal research needs to be done to understand what role cortisol plays in PTSD and how inhibiting excess cortisol production in PTSD might benefit the disease.  We’re a bit further back in our PTSD research but the diabetes and Parkinson’s disease, etcetera, those opportunities are much more advanced and potentially we could undertake phase 2 trials in those indications very soon.

What’s your cash position situation, how much have you got now in the bank?

Actually, we’re in a very strong cash position.  We just completed a capital raise a month or two ago, we raised $16.5 million and that was on top of a capital raise we did about a year ago where we raised $5.5 million.  The capital position is in great shape.  This most recent capital raise the $16.5 million was corner-stoned by Technology Value Fund, a specialist biotech institutional investor out of San Francisco.  At the same time Platinum Asset Management and Australian Ethical, two local institutional investors, came onto the register as well.  Right now three of the four largest shareholders are BVF, Platinum and Aussie Ethical alongside Edinburgh University who have still got skin in the game.  That has been a huge asset to us because we have access to the whole legacy development program and all of the intellectual capability at Edinburgh to help us in the development of our drug.

What price was the capital raising this year, 5 cents?

The 16.5 was at 5 cents, yes, and actually it was at a slight premium to the VWOP, so at a 13.5% premium to the VWOP.  As I said BVF corner-stoned the investment and now have actually just shy of 20% of our business so a very significant commitment from their side.

Given your cash burn will that get you to the end of the phase 2 trials?

Yes, absolutely.  It will get us to the end of the phase 2 trials and allow us to initiate, and this is actually what’s happened just in the last few weeks.  We began to initiate a number of other key studies that we wanted to undertake to round out our dataset so that at the end of Xanadu in the second quarter of next year we will have a very substantial dataset that we will be able to take forward into phase 3 development whether we do the development or whether we do it in conjunction with a big pharma partner, either way what it does is ensure that we have the necessary data to move forward into phase 3. 

But you’re most likely to do it in partnership with big pharma, aren’t you?

I would think so.  Clearly if we show as we expect to, if we show a positive signal from our drug, big pharma will be all over us to partner with us because we will have extraordinarily important valuable assets that they’ll be very keen on having a stake in.

Yes.  Great to talk to you, Bill, thank you very much.

Alan, appreciate it, thank you very much indeed.

That was Bill Ketelbey who is the CEO of Actinogen Medical.