AdAlta courts big pharma with ‘enhanced’ anti-fibrosis drug, locks-in manufacturing agreements

AdAlta (ASX: 1AD) is a step closer to clinical trial stage after it locked-in critical manufacturing agreements for its lead anti-fibrosis AD-214 drug, which is an “enhanced” version of the precursor AD-114.

The new AD-214 was launched in April and retains the original’s unique therapeutic benefits, making it more attractive to potential big pharma suitors.

Additionally, AdAlta’s AD-214 lead drug has collared orphan drug status from the US Federal Drug Administration for treating idiopathic pulmonary fibrosis (IPF), which is the company’s primary fibrotic disease target.

AdAlta has appointed Selexis SA to carry out cell line developments, while KBI Biopharma will be responsible for clinical manufacturing, as well as formula, processing, and analytics.

“Now that we have signed manufacturing contracts, Selexis will immediately start cell line development and we expect to have materials for the four-week non-human primate (NHP) toxicology study in the second half of 2019, and be in the clinic in the first quarter of 2020,” AdAlta chief executive officer Sam Cobb said.

Ms Cobb told Small Caps she believes AD-214 will also eventually help people with fibrotic disease in other parts of the body including eye, kidney, liver and skin.

She said AD-214 has “demonstrated a significant improvement” in half life (the time it stays in the body) in animal studies compared to its AD-114 predecessor.

This has the advantage of less frequent dosing, which is considered a priority for patients and physicians when treating fibrotic diseases.

Unlike AD-114, which is made from one i-body, the newer AD-214 is made from combining two i-bodies and an Fc-fragment, which gives it “enhanced binding” to the diseased cell target: CXCR4 and increased half-life.

What is fibrosis?

Inflammation and damage can result in fibrosis in many body tissues including the lungs, liver, skin, eyes, heart and kidney.

As a result of the inflammation, collagen can build up in the tissue, which causes the fibrosis (also known as scarring).

When the scarring builds up in vital organs like the lungs, liver, kidney or heart, the damage is irreparable and fatal.

AdAlta estimates up to 45% of deaths in the developed world are caused by fibrosis and there is no “satisfactory” therapeutic approach for the disease.

What is IPF?

The disease that has been investigated the most with AD-214 and AD-114 is IPF, which is incurable.

Statistics reveal that 300,000 people around the world live with IPF and 40,000 of those sufferers die annually.

The average life-span after IPF diagnosis is less than four years, with 50% of sufferers passing away within the first two-to-three years.

According to AdAlta, the cause of IPF is still unknown, but certain factors may increase risk including smoking, pollution, chronic viral infections, abnormal acid reflux and a family history.

What is an i-body?

The i-body is a human protein that is part of the next generation of antibodies. It has been engineered to mimic the shape of shark antibodies and comprises two loops that interact with a particular disease-causing cell.

One of the loops is twice the length of human antibodies and according to AdAlta, this gives the i-body “superior” access to grooves and cavities, making it able to target diseased cells that traditional and next generation antibodies can’t.

Additionally, because the i-body is a human protein, the company believes the immune system will not react to it as though it is a foreign body when it is administered for therapeutic purposes.

Competitor pharmaceuticals on the market include small molecules and large molecules.

Small molecules dominate the market and are chemicals that are taken orally and include aspirin, paracetamol or Voltaren. During 2016, sales of these drugs exceeded US$294 billion. However, a number of small molecule drugs lack specificity and come with side effects.

The other large molecule drugs include antibodies or biologics which are relatively new in comparison. These pharmaceuticals comprise Herceptin for breast cancer and Humira for rheumatoid arthritis. They are costly to manufacture but are extremely specific and effective drugs with sales reaching US$90 billion in 2016 for antibody-based drugs.

Although the antibodies have higher specificity than the small molecule pharmaceuticals, the large size of the traditional antibody means it can’t get into the groove of the afflicted cell’s protein or receptor.

This is where AdAlta differentiates its i-bodies, which have high specificity and can access the grooves of their target, while retaining the stability of a small molecule drug.

Unlike human antibodies, i-bodies are 90% smaller and are stable among high temperatures, proteases and low pH environments.

The smaller size and stability give the i-body enhanced tissue penetration and it can potentially be administered topically, orally, via an IV or inhaled.

However, because the i-body is not as minute as a small molecule, it doesn’t cross cell membranes and is highly specific with its target, which minimises the potential side effects that are often seen in small molecule pharmaceuticals.

How does AD-214 work?

During AdAlta’s trials with its AD-214 in various animal fibrosis diseases including IPF, the target diseased cell is CXCR4. AD-214 works by binding to CXCR4 and has an anti-inflammatory and anti-fibrotic effects, without impacting healthy cells.

During in vitro and in vivo trials on idiopathic pulmonary fibrosis, AD-214 has inhibited fibrocytes from migrating to the lungs and reduced collagen deposits, as well as demonstrating anti-inflammatory and anti-fibrotic properties.

Another positive from these studies, was the normal tissue appeared unaffected.

According to AdAlta, AD-214 can help other fibrotic diseases including wet age-related macular degeneration (eye), non-alcoholic fatty liver disease (liver), hypertrophic scar (skin), and chronic kidney disease (CKD).

IPO and company background

In the company’s 2016 IPO, it raised the maximum A$10 million which has been directed towards advancing AD-214’s precursor drug AD-114 in treating fibrosis.

Since development, AD-114 has demonstrated anti-fibrotic and anti-inflammatory activity in human tissues and animals during pre-clinical trials, with AD-214, which was released last month, proving even more effective.

In late February, a paper was published in Scientific Reports, a Nature publication, which revealed AD-114 slowed the migration of diseased fibroblasts while leaving healthy cells alone.

AD-114 was also found to lower the over-production of collagen.

Government support

AdAlta has government backing, with the National Health and Medical Research Council awarding a A$768,000 grant in December last year to Prof Carol Pollock at the University of Sydney to evaluate AD-114 in chronic kidney disease.

The research builds on previous work and will evaluate the effectiveness of AD-114 on treating chronic kidney disease for the next four years.

According to AdAlta, chronic kidney disease affects around 1.7 million Australians.

“An increase in diabetes and obesity across the world is leading to a massive surge in the number of people diagnosed with chronic kidney disease,” Prof Pollock noted.

“The medical community is looking for alternative treatment options to treat chronic kidney disease, highlighting the importance of research funding to evaluate new clinical targets,” Prof Pollock said.

Early commercialisation plans and upcoming milestones

AdAlta’s i-body platform and drugs have been protected with patents in key countries around the world.

As part of the company’s search for a suitable partner to fast-track the drug to commercialisation, it plans to begin manufacturing AD-214 by the end of this year in readiness for the next stage of trials.

Other milestones for the latter half of 2018 include publishing data on the impact of the i-body on eye fibrosis, as well as developing preliminary NHP toxicology data.

This is expected to be followed by a four-week NHP toxicology study in the second half of 2019, with the first half of 2020 heralding the phase one clinical trial.

Market fundamentals

With no cure for IPF, the only two drugs approved for the disease have limited impact on patients and only slow the fall in lung function in mild-to-moderate IPF sufferers.

Ms Cobb claims there is a clear “unmet medical need” for IPF treatments that can halt the progression of IPF.

Meanwhile, Evaluate Pharma forecasts the market value for IPF drugs, alone, will be about US$4.2 billion by 2020.

Over in the eye fibrosis field, AdAlta believes the treatment market for this disease will be worth US$20 billion by 2023, with treatment of other fibrotic diseases also in the multiple billions such as: liver (US$1.6 by 2020), heart (US$1.4 billion by 2023), kidney (US$11.7 billion by 2022), and skin in the US is currently estimated at US$12 billion.

With the ability to treat a range of fibrotic diseases, AdAlta’s AD-214 drug has potential to generate considerable income if it gets off the ground.

Comments quoted in this article are views and opinions of the company and individuals within the company, not investment advice. You should always seek professional financial advice before making any investment decision.