Developing a new class of HIV drug: Biotron

Dr Michelle Miller is the CEO of Biotron which has an HIV drug. It hit the jackpot in September with a phase two trial result that took the share price from 2 cents to 30 cents. It’s back down to around 13.5 cents now but still basically 6 times what it was.

They’re now moving to look for partners to commercialise the drug which actually cures HIV to some extent, not entirely but it certainly goes further than the existing anti-retroviral drugs that just suppress it; it actually eradicates it from the body. 

It’s a bit of a breakthrough and there was some excitement, as I said, at the end of September and I thought it’d be worth catching up. 

I don’t often do biotechs but I thought this one was worth doing because of the action in its stock which was really something back in late September.  

Here is Dr Michelle Miller, the CEO of Biotron.

Dr Miller, obviously you had one of those jackpot moments in September when the share price went from 2 cents to 30 cents in quick order when you published the results of the phase two trials which were successful.  Perhaps you’d better explain to us what the result was, what did you find in the trial.

Okay, just for a bit of background Biotron is focussed on developing a new class of HIV drug, current anti-retroviral drugs work very efficiently and very well to take care of the major part of the virus present in individuals with HIV but as you know, and your listeners will know, that people are never actually clear of the virus.  When they stop taking anti-retroviral drugs the virus rebounds back up.  While anti-retroviral keep it under control they don’t actually eradicate the source, the reservoirs that still exist in patients.

Our approach has been to target one of the key reservoirs that’s found in a particular cell type called a macrophage present in all the different tissues in the body.  What we’ve set out to do is to develop a drug that will eradicate HIV in those particular reservoir cells.  The trial that we did is really the culmination of many years of research where we’ve done a lot of pre-clinical work in the lab, we’ve done human safety studies and have previously done another trial in HIV positive individuals as a mono-therapy just for primarily the safety indications and for a particular efficacy purpose.

This trial was set up to demonstrate can we show a benefit over and above current anti-retroviral drugs.  This trial was done in patients who were treatment [naïve] who have never actually seen anti-retroviral drugs before and as they start their standard anti-retroviral treatment our drug called the wonderful name of BIT225, because it was a 225^th drug that we had made in our compound development programme. 

It was added into the first 12 weeks of treatment or placebo and what we’re looking to see is can we impact over and above anti-retroviral by looking at two different things.  One, looking at impact on virus levels and the second is looking at the immune system because the immune system is very important obviously in people.  Sometimes you can’t look directly into cells to see what’s going on, how the body’s immune system responds to something gives you an indication of what’s going on.

By setting that as the thing what we have found in the phase two trial, which was in Thailand at very good clinical trial sites that we just don’t have that many HIV patients who are not on treatment in Australia.  We found that we could impact with really profound immunological changes in the patients who were receiving BIT225 over 12 weeks.  I should actually say at this outset that the information we put out into the public domain with our announcement on the 28^th of September was primarily the headline of the data.

The nitty gritty hardcore science of all of that will be released at a presentation at a core scientific conference either later this year or early next year.  Certainly, if we were to put that hardcore data out to the public domain first up it would mean we couldn’t have presented it to the scientific community which is what you need to do and I think it’s also fair to say that as most of our shareholders reading it would be saying what does this mean.  What that means is headline information we have put out to date, which is that we see an immune response so the cells in the body are reacting to it in a particular way and that’s indicating that what we think we’re doing is what’s actually happening.

The virus is present in these reservoirs in the body, it’s being targeted and flushed out and what we had anticipated doing is actually really happening in the patients.  Why this is exciting is because this has really been the first time that an immune response like this has been shown and there’s the possibility of eradicating the virus that’s present in these reservoirs, it has never actually really been shown before.  This is a really exciting step for the company, for our programme and also of course more importantly it’s for people who are infected with HIV.

Can I just take you back to what you just said about the way the information is being released.  Obviously the information itself is important but are you saying that you couldn’t have presented to the scientific community in the conference, or whatever it is you’re doing, if you had released that stuff to the market first?  Are they demanding that they get a scoop on it?

Yeah, most of the major scientific conferences you can’t just rock up and present your work, you have to submit an abstract which gets peer reviewed and then you get offered a spot to present your data at one of these conferences.  Now, that whole process is highly confidential and in fact all of the data, all of your information, is embargoed until the time of your presentation.  If you have previously presented in any forum or put that information out into the public domain then you’re not able to present it.

Have you had to hold back any market sensitive information?

No, the information that we’ve put out is the summary points of the data, the nitty gritty of what is that type of cells and involve the name of those cells which is really neither here nor there to somebody without a science background, those specific details are not put out yet and they will be released as soon as we do the presentation, then all of that presentation, all of that information, will be available for public consumption but meanwhile the information that was put out, the summary data from that is a true reflection but without the specific nitty gritty scientific names which there’s not market sensitive information but it matters from a commercial perspective if you get what I’m saying with that.

I understand.  Let’s focus on the headlines then, can I summarise the headlines by saying that the phase two trial results indicated that your drug does actually cure HIV as opposed to just supress it?

I think there’s one thing to just clarify.  Our drug on its own and our approach on its own will not cure HIV infection.  We’ve certainly not ever said that or claimed that.  What we are saying is that our drug is part of an approach.  There’s a number of different reservoirs that are set up in the body with HIV infection, the main virus present is in the T Cells and current anti-retroviral drugs work very well at that. 

There’s a few different reservoirs that are established right at the beginning when somebody is infected.  Two of the main ones is latently affected T Cells and the other ones are these tissue macrophages that are set up in the infection in the blood as monocytes, they then do what monocytes do which is to go out into all the different tissues where they turn into their final cell type called a macrophage sitting there looking for foreign objects, foreign material that comes into the body.  They’re infected with HIV, an active Trojan Horse is sort of sitting there slowly producing and releasing HIV into the periphery.  So our drug clears the virus in that particular reservoir. 

To actually cure HIV you need a couple of different approaches.  There are other groups who are working on the latently affected T Cells with kick and kill type approach, these are cells that are infected with HIV but not actually replicating it, just sitting there not doing anything and there’s a few groups who are doing what’s called kick and kill.  Given these particular drugs that are still in development to activate that virus that’s not doing anything, get it replicating and current anti-retrovirals will then work against it.  I think what we have is a key part of a central cure strategy but on its own it’s still going to be needed to be put with current anti-retroviral drugs and to improve patient outcomes in the shorter term but also part of future cure eradication strategies once other drugs have been developed to take care of those latently infected T Cells that I mentioned.

At the risk of asking over-simplistic questions people who are infected with HIV, do they always have the virus in both macrophages and latently infected T Cells or is it one or the other or what?  Will your drug cure some people entirely or not cure anybody but only eradicate the virus from part of where it’s sitting?

It’s really the latter.  I guess in terms of understanding the reservoirs that’s a really key part of HIV research internationally.  Until fairly recently when people have talked about these reservoirs it’s been a relatively handwaving situation where people know there’s these reservoirs and in broad terms, in terms of characterising exactly where they are and exactly how may types there are and all of that, that’s a fairly new area of research.  While I say sort of broadly in these two areas, the latently infected T cells and then the monocyte macrophages whether it’s the same in all infected individuals or whether it’s different that information is still not really 100% clear.

I would say as a general concept that both of these types of reservoirs would be present in all patients.

Given that is the revenue model for your drug clear?

We believe this is.  The point of the trial is to show that we cover HIV within these cells.  There’s two different ways that this can be used.  One is in the future for future eradication strategies working with other groups that are working in the latently infected T Cells to come up with a curative strategy as something to eradicate the virus in all patients.  The other thing is a more tangible nearer term which is showing that you can have a clinical benefit in patients now by having a drug that you can add into current anti-retroviral treatment that will make an impact in those patients now.  What I mean by that is it’s known that individuals who are infected with HIV long term anti-retroviral, so the virus is below the level of detection, and as you know these people have often been on drugs for quite a long time, might be well into their 50s, and doing quite well.

A question has come up well, why don’t we just keep those patients on anti-retroviral drugs forever, why does it matter?  The reason why it matters is that this lifelong infection has to be managed and that comes with its own issues.  There’s obviously their compliance, having to take tablets every day even though it’s now much better than it was, it’s a once a day tablet, still you have to take it every day and there are some side effects associated with it.  There’s costs, expenses to both the individual in terms of financial as well as some stigma and they may not have family or friends who are aware of the situation.  There’s also cost to the healthcare system if you consider in the major markets there’s something like US $20 billion per annum healthcare burden from people being on anti-retroviral drugs, that’s quite a significant burden to the population.

There’s also issues with development of resistance and one of the most important things are some clinical issues with people who are long term on anti-retrovirals with the virus always there at really low levels in their system.  One of these main things is chronic inflammation.  Having that virus there just in those really low levels just makes the immune system always activated, it’s always trying to get rid of that virus, it’s always on and it sets up, aside from chronic inflation in patients, things that other associated conditions with that.  It can increase cardiovascular disease, lymphoma, type two diabetes and other disorders.

The other thing is a syndrome called HAND, HIV Associated Neurocognitive Dysfunction.  Basically, what that means is that there’s neurological effects from having virus present in the body.  The cells infected with HIV that we’re targeting across the blood brain barrier right at the start of infection set up – they turn into microglial cells in the brain and they sit there slowly producing and releasing HIV.  HIV associated neurocognitive dysfunction off hand, more than 50% of HIV positive individuals have some form of neurocognitive defect and that’s starting to become a real burden to those patients.  Our drugs, because we know it crosses the blood brain barrier, we have done lumbar punctures in patients in previous trials, has the potential to target virus against those particular macrophage cells that are present in the brain that seems to be one of the main things behind this problem.

The other part of this clinical trial was initially to see whether we can dampen down that immune effect and what I mentioned when I say chronic inflammation what we measured in this trial was how do we impact on immune activation markers.  These are markers that indicate that the immune system if it’s in a heightened state or if it’s starting to calm down to a more normal level.  One of the markers that we measured, and we’ve put this out into the public domain, is called soluble CD163 which is a very unexciting name. 

Why this marker matters is because high levels of it is associated with worse clinical outcomes in patients.  One of the sort of wish lists at the moment within the field is can we reduce immune inflammation and soluble CD163 is a good marker of that.  One of the key findings from this study was that we see a significant reduction in virus level in this soluble CD163 in the cohort that took our drug, BIT225, in conjunction with anti-retroviral drug compared to those who took placebo with the anti-retroviral drugs and that’s a really important finding because if we can dampen down that immune response that’s a positive outcome for patients.  That’s the reason why we can start discussions with potential partners, something that can be added starting to be used sooner.  It’s not really looking at it in terms of its potential to eradicate although that’s what it does but it’s more tangible than that.  This will have a positive benefit to patients now.

Are the distributors of the anti-retroviral drugs seeing you as a disruptor to their business?  Because obviously they have an ongoing business of selling these things that people take once a day, you potentially disrupt that.  Are they seeing you as that or as a potential partner?  Are you in fact looking to set up an auction between them to bid for your IP?

Well that’s the ideal situation, having more than one buyer for your product, set that up.  I think the industry the number of major pharmaceutical companies, big pharma, that are in the anti-retroviral drug space, they are all very interested in this area and some of them are getting a bit long in the tooth.  They’ve got quite big bank charges to protect in terms of the HIV space, they’ve got their clinicians, they’ve got their sales and marketing team and everything out there, they get a fair whack of their revenue from these products.  They’re coming to the cliff, the potential for more generics coming along and then losing that share is quite a real prospect.

To have new drugs that can be added in to protect their space is certainly quite attractive from a financial benefit.  I think the other thing that’s important to note is that in particular in the US more and more treatment decisions are being made by the insurance companies and if there’s ways that you can look at reducing down the cost of treatment looking not just currently but looking ahead then the insurance companies of course are very interested in that.  It’s not just the need for drugs to start clearing out these reservoirs to eradicate and ultimately to cure HIV or in the shorter term to have an additional clinical benefit.  The pharma companies want to do that for their own financial reasons but this also will be driven, the economics of this, by groups such as the insurance companies in the US.

Is HIV the only virus that hides in these macrophages and the other things that you said, latency T Cells, or do other viruses do the same thing and are they then susceptible to your drugs?  I’m thinking in particular of hepatitis.

Yeah, well some different viruses have different reservoirs, certainly the herpes groups of viruses have reservoirs which are more neurological which is not the space that we’re in.  In terms of the hepatitis, hepatitis C in particular is a pretty straightforward virus.  Once you’ve cleared it from the blast it’s gone unless you get reinfected then there doesn’t appear to be any reservoirs.  That’s in contrast to hepatitis B.  There’s a number of different hepatitis virus types which can get quite confusing.  Hepatitis C which is really, current treatment for that that has come on the market in the last couple of years had been very efficient, that’s a blood borne virus primarily from IV drug users.  The current drugs that work on that are extremely expensive and there are issues around that.  Once someone has been treated it goes away.

Hepatitis B on the other hand while it’s also a blood borne virus is a totally different class of virus and quite different.  In cases like China the main from of transmission is maternal, most of the adult population is affected and the babies get infected at birth from their mothers and they then carry that virus through their life.  One of the major problems then was liver cancer and other liver disorders in people’s 30s and 40s, and it’s starting to become a major burden to the healthcare system, it’s been a lot of causes for emigration into the US and to other first world countries and this is Hepatitis C is now on the radar of pharma companies and the healthcare industry, and something that we want drugs to treat.  Like HIV there are reservoirs, now they’re not very well characterised and nobody really knows exactly what you’re going to need to eradicate that virus.  People can have flare ups with Hepatitis B and there’s drugs that take care of that but the virus never goes away.

The language around the eradication and the need to cure Hepatitis B is quite similar to the language around HIV but quite a different approach.  As it happens we do have a programme, a drug development programme, that targets Hepatitis B.  It’s at a much earlier stage, it’s still in the pre-clinical term which means that we’re still in the process of characterising how our drugs are working, coming up with a lead compound that we can take forward into first gen manned studies. 

It’s been quite interesting because the way that our drugs work and how we design drugs is we’re targeting a particular class of protein that’s found in a broad range of viruses, it’s found in HIV, it’s found in Hepatitis C, it looks like it’s present in Hepatitis B, it’s in influenza, a few viruses that cause some of the respiratory viruses and our speciality and what our expertise is in designing drugs that target this particular type of protein found in all of these different viruses.  Whether they have a reservoir or not is not really the key part of our story, the main thing is does that virus have this particular protein that we can target with our drugs.

Just finally I wanted to talk to you about cash.  You raised $4.7 million in October through an underwritten placement I think.  How much have you got now and how much are you burning?

That $4.7 million underwriting was for some listed options that were expiring at the end of November.  They were options that shareholders or people that took up a rights issue last year.  As part of that rights issue with each shareholder and people who took up those rights were also given a listed option, 6 cent option expiring at the end of November so that $4.7 million that’s been underwritten is actually for those options that are expiring at the end of November.

So you haven’t got that cash yet?

No, it’s starting to come in at the moment because while it is underwritten how much the underwriters actually get of that depends on how many of our option holders exercise those and what the share price today is sitting – last time it looked about 13.5 cents and the options are at 6 cents so pretty confident that majority of those will actually be exercised by the option holders but if there is any shortfall then the underwriters will step in to cover that.  We’re really pleased to have that money in the bank, it will be great, and we recently received just over a million, close to 1.1, from R&D tax refund or rebate from the Australian government which is a really critical programme for the innovative R&D that’s done in this country, in particular within the biotech life sciences space.

Our cash burn is primarily focussed around our clinical trials, in the absence of clinical trials our burn is back down pretty low, probably in the order of around $250,000 a quarter.  We don’t have a lot of staff, we’re a very small tight team, worked together for a long time, good at doing clinical trials and good at doing this development and utilise external contractors and consultants as and when we need it which allows us to manage our cash flow position.  At the end of November, we’d expect to have this $4.7m, some people have also exercised options that are expiring at the end of next year 2019, 5 cent options.  We’ve had some money coming in from exercising those so we’ll be in a reasonably strong cash position.

Our main focus now is on finding a commercial partner for the HIV programme.  While we are designing what the next trial would look like we at this point do not anticipate running that trial ourselves, we would like to have one of the big pharma in there with us funding that and developing it in parallel, that’s really our prime focus.  Certainly, having a bit more money in the bank from the exercise of these options puts us in a reasonably strong position to get to that negotiation period.  We still are doing some additional work, in particular with Hepatitis C to identify a need and to progress that, a really fascinating and really very valuable programme that we’ve not really spent a lot of money on to date as we’ve been focussed on our lead programme, but it’s in the interest of shareholders for us to really add some additional value in some of these early stage programmes because there is a possibility of early stage deals for things like Hepatitis B.

In fact, just recently I think in the last two or three weeks Johnson & Johnson did a deal with a US listed company, Arrowhead, for their Hepatitis B programme which was in phase 1/2A and I think that that was quite a significant deal, I don’t have the numbers straight in front of me but it was in the order of maybe $1.7 billion or more for them to work together on that.  There’s quite a bit of money even in these early stage anti-viral programmes if you can find the right drug at the right stage and find the right partner and ideally have more than one want you, then you can get a good return for your shareholders.

I’ll have to leave it there, it’s been great talking to you, Michelle, thank you.

Okay, thanks very much.

That was Dr Michelle Miller, the CEO of Biotron.