Merry Christmas, Business of Biotechers! On this Christmas Day release, we’re taking a trip to the land down under to visit with Dr. Sam Costello, a former gastroenterologist-turned managing director and co-founder at Adelaide, Australia-based BiomeBank. We covered some ground on this one, most notably the unique path BiomeBank took to chalking up the first donor-derived microbiome therapeutic approval of its kind, anywhere in the world. In a segment of biotech that’s been particularly battered of late, that’s a big, big win. We also talked about what’s behind Australia’s foray onto the global biotech scene, the public/private partnerships supporting that growth, why U.S. biotechs, in particular, are flocking there to conduct clinical trials, and whether Foster’s is really Australian for beer. Don’t miss it!
You've listened along for years -- now you can watch along, too! Go to bioprocessonline.com/solution/the-business-of-biotech-podcast, where you can put faces to voices as you watch hundreds of interviews with the world's best biotech builders. While you're there, subscribe to the #BusinessofBiotech newsletter at bioprocessonline.com/bob for more real, honest, transparent interactions with the leaders of emerging biotech. It's a once-per-month dose of insight and intel that you'll actually look forward to receiving! Check it out at bioprocessonline.com/bob!
Merry Christmas, Business of Biotechers! On this Christmas Day release, we’re taking a trip to the land down under to visit with Dr. Sam Costello, a former gastroenterologist-turned managing director and co-founder at Adelaide, Australia-based BiomeBank. We covered some ground on this one, most notably the unique path BiomeBank took to chalking up the first donor-derived microbiome therapeutic approval of its kind, anywhere in the world. In a segment of biotech that’s been particularly battered of late, that’s a big, big win. We also talked about what’s behind Australia’s foray onto the global biotech scene, the public/private partnerships supporting that growth, why U.S. biotechs, in particular, are flocking there to conduct clinical trials, and whether Foster’s is really Australian for beer. Don’t miss it!
You've listened along for years -- now you can watch along, too! Go to bioprocessonline.com/solution/the-business-of-biotech-podcast, where you can put faces to voices as you watch hundreds of interviews with the world's best biotech builders. While you're there, subscribe to the #BusinessofBiotech newsletter at bioprocessonline.com/bob for more real, honest, transparent interactions with the leaders of emerging biotech. It's a once-per-month dose of insight and intel that you'll actually look forward to receiving! Check it out at bioprocessonline.com/bob!
The business of biotech is produced by LifeScienceConnect and its community of learning, solving and sourcing resources for biopharma decision makers If you're working on biologics process development and manufacturing challenges, you need to swing by bioprocessonlinecom.
Dr. Sam Costello:If you're trying to stay ahead of the Cell or Gene Therapy curve, visit cellenginecom. When it's time to map out your clinical course, let clinicalleadercom help. And if optimizing outsourcing decisions is what you're after, check out outsourcepharmacom. We're LifeScienceConnect and we're here to help.
Matt Pillar:In this financial market. Plenty of young biotechs are eating gravel, so to speak, for the first time. But it's especially hard times for the microbiome therapeutic space Flagships. Evelow was the most recent to hit the kill switch that, coming on the heels of 40 pharma phinch therapeutics, federation, bio and more either winding down operations or folding into other efforts. A dozen or so more have drastically reduced headcount and programs to preserve cash in recent months. But the scientific premises that microbiome therapeutics sought to capitalize on during their hype cycle a few years back haven't gone anywhere, and for some microbiome companies they've even seen some regulatory wins. Adelaide, australia based Biome Bank is one such winner. I'm Matt Pillar. This is the Business of Biotech and on today's episode we're taking a perhaps sobering but certainly pragmatic and optimistic look at the microbiome therapeutics market with the founder and leader of a company whose fecal microbiota transplant therapy was the first of its kind approved anywhere. That leader is Dr Sam Costello, and I'm thrilled to have him on with us today. Dr Costello, welcome to the show.
Speaker 3:Thanks, Matt. Thanks for having me on.
Matt Pillar:It's absolutely my pleasure and we're going to have an extensive conversation here about the microbiome market. What's going on in Australia? Why on earth your company is Biome Bank is interested in moving some facets of operations to the United States, where things are going as well. We're going to get into all that, but before we do I want to get to know you a little bit better and from what I understand, you know I've chatted a couple of times now and you were a gastroenterologist, a practicing gastroenterologist, for a time before deciding that you're going to join industry and found Biome Bank. So tell us, give us, I guess, the why story behind that. Like why would you? You know, you got a, I'm sure, a thriving practice doing really well practicing medicine, and you thought, well, you know what, I want to jump into industry. Like why?
Speaker 3:Yeah, yeah. Well, I mean I suppose it sounds a little crazy on the surface, but I mean I undertook a PhD focused on fecal transplant for ulcerative colitis and this really began in 2012 and ran a study where we showed you can induce remission of FMT induce remission of ulcerative colitis using FMT and during that process I set up a stool bank in an academic laboratory in Adelaide and through that started to supply local hospitals and doctors with a basic product, an FMT product.
Matt Pillar:So that was sort of like a side business to your practice.
Speaker 3:Well, yeah, so it wasn't so much a business at that point. I was just supplying patients locally who had C difficile infection that was refractory antibiotics. In 2013, there was a paper that came out in New England Journal showing the clear superiority of donor FMT over what was the then standard of care vancomycin, which had a huge delta. So you know, 80, 90% fewer rate with FMT versus about 30 with vancomycin. So that really got a lot of attention and really locally doctors started to expect that this therapy would be available. Patients and patient families knew that this was available and so and in many cases, matt, this therapy is saves a colon. You know colactomy is the would have been the outcome if you're failing antibiotics or or death. You know it's a potentially deadly condition C difficile and so we had this service established and expectation established. But towards the end of the study, research funding had dried up and I needed a way to sustain the service. I could also see there was an unmedical need throughout many other parts of Australia and our region, so Asia generally.
Matt Pillar:Let me interrupt you real, real quick. There you mentioned locally a couple of times you set up this, this bank you were serving. When you say you were serving doctors locally, are you talking like real, real local, like local to Adelaide?
Speaker 3:Yeah, yeah. So initially you know I was doing this operation myself. I was collecting the stool and screening donors, banking it, and I'd get a get a call from a doctor and jump in my car, grab the, jump in my car, grab, grab some out of the freezer, drive it over to the hospital and sometimes administer it myself or give it to the gastroenterologist to administer. You know there's a patient in intensive care who needed it, and it was really a basic operation at that stage and and, but it was highly effective and so we needed a way to sustain the service and could see that it could be supplied more broadly, and so we joined with the hospital research foundation, who provided seed capital to us so that we could. We formed a company that could then transact with hospitals and really our primary aim at that point was to develop an approved therapy. So we built a clean room, bought on a quality team, a reg team, and started to aim towards that and had a second aim of developing cultured, so second generation microbiome therapies.
Matt Pillar:Yeah, that's fascinating the original for lack of a better term product that you were banking and hand delivering. You're like the Amazon Prime to the Adelaide area, same day service. That quote unquote product was that like? Was that an approved therapeutic product, or explain how that works?
Speaker 3:No, so I mean, in those days it was a little wild west in the sense that there wasn't a regulatory framework in Australia for for FMT, and it was a really I mean it's been an interesting developments during that time. I mean FMT and be done in Australia for many years, probably 30 years at least, and so and we've been, we've undertaken this I don't know I have personally since 2012 here, and so at that time we had sort of local ethics approval, but there was no national framework. It didn't really fit into the existing regulatory framework, and so over that period of time, a number of stakeholders so clinicians, patient groups, et cetera worked with the TGA to establish a framework, and that was essentially what became TGA 105, where this is the framework for which these products so microbiome therapies, adonadrive, microbiome therapies are regulated in Australia, and that, that is through that program, is how we achieved our approval.
Matt Pillar:Yeah, so the decision to found a biotech effectively, would you say that at the time when you decided to do that, that sort of evolution or revolution of the framework was a catalyst? Like, was that part of your thought process? Like, this is a time to sort of strike because there's there are actually some parameters being put around this therapeutic idea.
Speaker 3:Yeah. So I was involved in some of these discussions and I could see that a framework was being laid down and there was a path to, there was going to be a path to approval. And so we were a small company, but the I mean the TGA, I think were forward thinking and pragmatic here. They had a situation where essentially, an important and potentially life-saving therapy was being supplied to patients to set a framework where that had to stop. Instant land and you know, demand phase clinical trials would, of course, led to a lot of morbidity and mortality, and so they set up transition arrangements whereby you had to meet certain criteria.
Speaker 3:So the first was GMP. So we built you know, we built, we've fundraised and built a clean room and then we had to have a dossier, have prepared and submitted. In that that dossier had many of the components that you would require from pharmaceutical, but the key, two key differences were that there wasn't a requirement for batch-to-batch consistency in terms of the composition, because of course that's not possible with a donor-derived therapy such as this. The second was that we could use existing data package. So we had real-world data that we'd accumulated, and so there was a requirement to submit that and then continue to supply that, and so that framework we saw was possible and really allowed patients to continue to access therapy during that time and then now to supply therapy you'd need an approval. So this is also improved safety and all of these other aspects, because there are strict requirements around screening and that sort of thing.
Matt Pillar:Yeah, so is that advantageous to be involved like heavily involved sort of, at the ground floor or early on?
Speaker 3:Yeah, I think yeah, a lot of clinicians were involved in those discussions and you know, patient advocate groups and these people that led to what was, I think, a considered and pragmatic solution. I mean, you could see, in the US there's a different approach, say with enforcement discretion around a similar time, and in Europe and other jurisdictions they've taken different approaches and these sort of therapies are regulated in different ways. It has been, I'd say, heterogeneous around the world.
Matt Pillar:Yeah, yeah, tell me about that. During that transition from practice to founding of the company, was it a clean break or did you continue to practice for a while and kind of build the company up in the background? What did that look like?
Speaker 3:Yeah, I did, matt. I mean I didn't wake up one morning and think do I want to be in Biotech? It was this sort of clinical need to start with, and then, and so I continued practice. I wound it down. I was working a couple of days a week in practice and then running the company. But I could see that to make it work it was going to need absolute dedicated focus. And the other thing was with the second arm to the company, the culture therapies, when I could see that we had the technology to build an artificial microbiome, so a co-cultured consortia that would be scalable to global markets and actually be able to make a difference to the big problem of loss of gut microbial ecology. That's the moment where I thought I've got to quit and absolutely focus and dedicated focus on this, because to get that to work, to actually make it, to allow us to really develop that technology, I was going to need to be all in.
Matt Pillar:Yeah, the origin story doesn't really get more organic than that. It's truly an organic growth right Sprouting of a Biotech.
Speaker 3:Yeah, and it's funny because if I'd known, I suppose, the complexity of it all, being naive to it was advantageous, because if someone had sat me down on day one and said, oh, this is what's required, I would have thought, ah no.
Matt Pillar:Let me tell you what you're setting yourself up for here.
Speaker 3:Yeah, exactly, but you're sort of slowly in and that's been wonderful because there's so much to learn. I love learning and especially the entrepreneurial aspect, the business side of it it's been. It's invigorating learning new things and scary and risky at the same time when you were making that transition.
Matt Pillar:What, personally, having been a practicing physician and working in the space and then, as you said, gradually and in a metered and responsible approach, building a company. There had to be times even though you're a naive optimist right and naive optimist there had to be times where you're like there are some challenges here that I may not be tooled up for, geared up for what were some of those kind of personal and professional challenges that you faced down and overcame?
Speaker 3:Yeah, I mean the unknown. I mean there was this challenge that I didn't know what it was to run a biotech and so and a startup business, and so there were a whole lot of elements there, and I've been really lucky that I've been surrounded by people who have been far more knowledgeable than me in many different areas, and I suppose it was trying to identify what those gaps were, find people who could mentor or educate me. So we've had many challenges, so regulatory challenges, financial challenges, issues. Around me, we have a product that's approved and out in the market, so learning about that, trying to set up, supply, many different aspects. And then there's the scientific aspects around the culture, therapies that are very complex as well, and so I mean we have, I think, some of the world's leading scientists in this space and so learning from them in that, and we have a board that has. We have people with biotech experience, us biotech experience on the board, entrepreneurial experience, corporate financial experience, and I've learned a lot from these people.
Matt Pillar:Yeah, yeah, yeah, that's a good segue into some questions. I wanted to ask you about the sort of the biotech scene in Australia. From the, I guess the general maybe naive or rudimentary, I think perception of Australia to US biotech says like hey, that's a great place to go run clinical trials. And I've got some questions for you about that a little bit later on, like why that appeal exists. You know whether that's regulatory, financial, whatever it might be. I've heard from several biotech leaders that Australia is a desirable place for financial and regulatory reasons to run clinical trials. Beyond that, I want to, I guess, get a lay of the land for the biotech scene in Australia. You're an adelaide and I will put my geographic ignorance on full display here. Tell us about Adelaide and then tell us, like where is the biotech scene centered in Australia? Is it Adelaide, is it Sydney? Is it like where's the hub?
Speaker 3:It is distributed. I mean Australia is obviously it's geographically a large country but from population wise a lot smaller than US, and so you know it's 25 million people, and so the biotech scene is primarily centered in Sydney and Melbourne, the two largest cities. I mean there is quite a vibrancy and I think here in Adelaide as well, but 70% of the biotechs are in Sydney and Melbourne, so there's probably about close to a thousand biotech companies in each of those two cities and the biotech scene is growing and the life science sector generally. I mean it's growing. I was talking to Lorraine Cherouf, who's the CEO of Osbitech, recently and she was saying it's growing. So I think 43% since 2019, 60% since 2017.
Speaker 3:And you're right, australia has had an economy that has been initially resource focused and more recently services financial services and these sort of things but biotech has been a relatively small player. But that is changing. And the real opportunity here, matt, is that Australia is world-class at basic research. So medical research, you know, top 10 in the world in terms of output. You know significant medical journals at that level. But the commercialization into biotech has really been lacking. I mean there's some outstanding companies, you know CSLs based in Australia and around our resmed cochlear. There were real success stories. But that gap where we perform more poorly at the translation, commercialization that to me, is opportunity, when you have all the right early stage inventions and we just need to develop that second stage. And that's what we're doing and we're really passionate about.
Matt Pillar:Yeah, yeah, when you talk about that, you know I guess the foundations of building an industry there are like support mechanisms that I think about. When I think about support mechanisms or support institutions here in the States, you know, maybe it starts with academia. You know it includes obviously access to capital and the financial markets. You mentioned a few of the bigger players that are Australia based. So you know you obviously want a community of established biopharmament, maybe some big bio. Obviously that's a market to sell to, a market to support, a market to partner with. So I want to work through some of these, I guess some of these elements individually. Let's start with, like capital access. You know, I mean globally. It's a struggle right now, I get that, but like in good market conditions and current market conditions, what does that look like in Australia? Access to funding and kind of go forward juice, if you will.
Speaker 3:Yeah, yeah, yeah, and it's critical, isn't it?
Speaker 3:That's the lifeblood.
Speaker 3:So I mean there is a smaller pool of capital in Australia and than the US and less VC specific, so biotech specific focused VC funding here than the US, but the situation certainly improving, I would say.
Speaker 3:I mean it has been rough recently because of the you know global conditions and that's the same everywhere. But I think one thing that is is why I'm really optimistic in this space as well is that Australia has really well capitalized superannuation systems, so that's like pension funds. I mean, we have the world's fourth largest pension pool in the world and you know our population is the 55th biggest, so there's a really big pension funds relative to population and you know that's that's, I think, 2.6 trillion US dollars sitting there. A lot of that's deployed into larger biotech. So late stage biotech, some of that money and now some of that is being deployed into into VCs and that can then enter the earlier stage biotech. So I think that that's a real strength that Australia has and can be, I think, you know, averaged by the biotech community if we approach this in a smart way.
Matt Pillar:Yeah, yeah, what about? Excuse me? I woke up yesterday morning with like the post Thanksgiving, I don't know head cold. I tested for COVID, did a rapid antigen test at home. I don't know, they're not 100% accurate. It said negative and I feel fine otherwise, but I'm a little congested from the throat up, so excuse me for that.
Speaker 3:But what about the? I feel safe here from the other side of the world.
Matt Pillar:Yeah, we're speaking through a screen. It'll catch everything, you're good. The talent pool I talked about academia. You know you talked about translational sort of being a catch point there. What is the? What does the academic scene look like in Australia? Like, where is the next gen and the ongoing sort of talent and IP pool coming from?
Speaker 3:If you look at Australia in and of itself, do you have like the equivalent of Harvard's and MIT's and yeah, I mean we don't have a Harvard, mit, oxford, cambridge top five in the world university here, but we have a number in the world's top 100 universities and so I think I can't remember. I mean it might be four or five in the world's top 100, our local university here in Adelaide is top 100. But we've had a lot of top research coming out of Australia. I mean, my local university has four or five Nobel Prize winners. There is absolutely a well-class research In microbiome, say we have. So.
Speaker 3:Sam Foster is our chief scientific officer, was involved in seminal publication in the field Culturing the Unculturable. That was published in Nature and really described methods to actually be able to grow human gut microbes. This was in 2016. So he and colleagues showed this and prior to that point it wasn't possible to have a microbiome therapeutics industry other than a donor-driving industry like a cultured microbiome theories, because of course, you need to be able to grow them, and so breakthroughs like that have been done by Australians, just to give one example. But typically what's then happened is either that those results haven't been capitalised on with good say often IP protection and then commercialisation historically. But I think that's definitely changing, that this has been recognised by government and there are schemes now in place to help with that. Research funding is given now on the basis that people's track record with commercialisation is considered and this culture is changing with this and understanding that commercialisation is necessary to get products to patients and also there's economic opportunities for the country in doing that.
Matt Pillar:Yeah, yeah, tell me, I guess, elaborate a little bit on that the incentive programs that Australia itself, like the government there, is putting into place to foster growth of the biotech community.
Speaker 3:Yeah, so I think probably the most successful so far has been the R&D tax incentive.
Speaker 3:So this is a scheme whereby the Australian and federal government will reimburse about 42 cents in the dollar spent on R&D in the industry, and so that's been hugely helpful for us because it's essentially a non-dilutive capital, for a lot of what we've been doing has been R&D, and so that's been a real help and actually some of that is successful even to foreign companies. If they're working in Australia, so doing clinical trials in Australia, they can potentially access that, and that has really driven a lot of the I suppose mini boom in biotech that we've seen, and particularly in the clinical trial space. There are also funds the Medical Research Future Fund, which has been spun out of Australia's sovereign wealth fund, and so that's a large amount of capital that's been deployed into medical research, but it is targeted at research that has commercial potential and really encouraging the IP generation and then commercialization of that, and there are a number of other programs now, and so I think that explains part of this rapid growth in the last five or 10 years.
Matt Pillar:Yeah, you mentioned that some of those incentives are available in some cases to global companies, companies from the US, perhaps, or the UK, who are coming to Australia to conduct clinical trials. And I'm curious about whether there's any sort of reciprocity or benefit reciprocity of a value or benefit to the Australian biotech scene as a result of those companies coming down there to conduct clinicals, or if it's more of a nuisance at any point where it's like, hey, we're trying to grow our own community down here and you're consuming access to our patient population. What's the balance there?
Speaker 3:Look, I see it as overwhelmingly positive.
Speaker 3:I mean, I just think the ecosystem thrives off connection, and I mean I was in, say, boston recently, and just walking around there, I remember being in a bar and sitting down having some food, and the guy next to me was running a biotech.
Speaker 3:We just chatted for an hour casually, and I had a whole lot of contacts that I could then make and learned a lot from him, and so the more we can draw in, I think, the better we'll all be, and there is a bit of competition now in hospitals to run trials and patient access. I think, though, we're founded by three clinicians, and so we have extensive networks of local, say, gastroenterologists, say, for our trials that we can access very easily. So that's not a problem. And I think the local CROs getting this business makes them more, builds their skill set, makes them interacting with companies, say, from the US and Europe, improves their offering, and so that feeds back into the ecosystem. And then the companies that supply that are analyzing samples out of these studies. They're building large capacity as well, so that then feeds back into the system. So I think it's just overwhelmingly positive.
Matt Pillar:Yeah, that's terrific. Total question out of that field. When you stopped at that bar in Boston and you were talking about that biotech exact, were you drinking a Fosters or is that like marketing hype? Fosters isn't really Australian for beer.
Speaker 3:Well, the funny thing is you can get Fosters generally overseas. It's very hard to find it locally in Australia. Yet I can't remember it might have been the same Adams, I can't remember.
Matt Pillar:Yeah, that's the reason. That's great. So, yeah, there's another good segue. You're talking about spending some time in Boston. You're talking about the advantages of US and UK and beyond companies coming down to Australia to do some business. The last time you spoke, you mentioned that you were seeking to, or in the process of, opening a satellite office in the US. Is that first, are you in the process of opening a satellite office here?
Speaker 3:So we're not in the process right now, but we certainly want to do that For some of those reasons. We talked about connectivity. We do have a director based in Boston and other connections to the US chief operating officers of American and head of process development of American and we want to be linked to that ecosystem. And the US is still the global leader in biotech innovation huge amount of innovation there and half of the world's farm market so we want our products to get into that market ultimately. So there will necessarily be a presence in the US and so we're working towards that. I mean probably post-capital raising. We would look at that, yeah.
Matt Pillar:You sort of gave us some of the story around the regulatory context of the formation of your company in Australia. I'm curious about what, should you just mention that you'd like to? I'm assuming the approved product is that what you would like to bring to the United States. Is that sort of in the plans?
Speaker 3:Yeah, so we want to for an orphan disease indication, not for C difficile, because there are existing approved products there. Serious therapeutics fairing have approved products for C difficile and that's not. You know, it's not something we're going after. But this would be for an orphan disease indication. And then the cultured therapies are where we want to take those through our face clinical trials and targeting Ulcerative Colitis and Crohn's disease in the first instance with those. But that would be. You know there's a number of trials to do before we would be close to market with those.
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Matt Pillar:I guess that's where I was kind of wanting to go with. That question is what? What? Having gone through a unique regulatory experience in Australia, you know, if you sort of juxtapose that with what you anticipate in the States with the FDA, what have you and the company sort of done to prepare for that? Because obviously that will be a far different experience from the approval experience that you had down there.
Speaker 3:Absolutely. Yeah, I mean it's a very, very different challenge. I'd say that, having been through a different process with the TGA, it's still. We've still learned a huge amount as an early stage biotech. So you know we have a quality team, a regulatory team. We've had to interact with you know different agencies and have learned a lot in that process and I think those learnings are really helpful when we're looking at our early stage assets.
Speaker 3:Because you can, there are a whole lot of things you know.
Speaker 3:You then need to have, you know, release our sales, all of these things right, and you need to think about that from the start. So how you're designing the product and process so that it would gather data, that's going to be important for you know IND and trials and then registration, and so that's actually been a really helpful process. But we are well aware that this is different and so you know we've, you know, our COO, colby Day has come out of cell therapies and has done this process many times with cell therapies in the US American, and has interacted with the FDA a lot, and so that was a very deliberate to bring someone like Colby into the company. And we've our regulatory team. We've had informal interactions with the FDA at conferences and things and trying to learn as much as we can about that process. But we and yeah, we have a plan for both of these therapies the donor derived and cultured therapy but knowing that there's going to be a lot of challenges there, yeah, yeah, yeah, Would you.
Matt Pillar:would you say that like looking forward, you know, forward looking statement, looking into your crystal ball? You know you, you file your IND in the US and you're ready to go to clinic. Will you sort of follow that trend that we discussed earlier and conduct clinical trials in Australia? We'll be looking to do distributed clinical trials. What is it too early to say?
Speaker 3:So our, our, our phase one B, with a cultured therapy in, say, also Clitus, would run in Australia because there are a number of advantages to do so.
Speaker 3:So the I've talked about our network here. So so, patient network, the R&D tax incentive, the cost and speed of studies as well, so we, we can go into humans without an iron, without the IND, here at the phase one in Australia, and so that and that these are some of the reasons why America, you know, american companies are doing early, early space studies in Australia. So so, so we would want to take advantage of the, the, you know that, all of those things that we have here. But but beyond that, our studies would, would be across both the US, australia and and even beyond. So if, if, if we were to be successful they'll often drug designation and were successful in, in, in, in, in, in, in being able to go forward with it with a, let's say, a single pivotal trial for the donor drive therapy, that that would, that would be necessary in the US but also could have some patients in Australia.
Matt Pillar:Yeah, Very good. I wanted to ask, while we were talking about that True, that clinical trend in Australia, what advice would you give US companies who are considering taking advantage of some of those advantages in in in the clinical trial seen down in Australia? What advice would you give them, you know, in anticipation of bringing their clinical trials down there?
Speaker 3:Yeah. So there are a few things I suppose. So finding a CRO that had really good local knowledge, and that would be important. Getting advice on the, on the R and D tax incentive, I would say, because I don't know how, how this is accessed by by foreign companies, but but I know that it is done and and but getting good advice on that, I think, would be be another thing. And also trying to develop your own network locally, so getting to know some KOLs, et cetera, so that, so that you you're not just, I suppose, just relying on a CRO to, to, to, to do that, that for you, because I mean, I know myself we we certainly have have that advantage and it is very helpful when it comes to, say, patient recruitment.
Matt Pillar:Yeah, I want to. I I want to have a bit of a broader conversation with you about the potential. You know, I mentioned in the intro there. I talked about the sort of hype cycle that micro biome therapeutics experienced a few years ago and we're seeing some of that hype, kind of fizzle, you know, at times here in the States. And yet you know, anytime I speak with people in this space, the indication, the potential indications, like they're far and wide. You know anything that the, you know the gut mediated diseases. Sometimes I'm like wow, like how how do you draw a line from the gut to that indication? Right? So I want to get your general sense again. You know, I don't I don't want you to make any crazy forward looking statements, but I want to get your general sense around. You know what does Dr Sam Costello believe to be possible? Looking forward in terms of you know what, what's next in terms of microbiome therapeutics? Like what? Where does it? Where does the potential begin and end?
Speaker 3:I know it's a very big, broad question.
Matt Pillar:But I hope you kind of get what I'm going for.
Speaker 3:It is. But look, fundamentally the field is necessary, and essentially because gut microbes are critical to our health is the foundational principle. We've outsourced a lot of function, from an evolutionary point of view, to a gut microbe, so there are a whole lot of functions that they perform that we can't ourselves. These range from basic things like digesting our food, but educating the immune system, the lining of the gut requires metabolites that are produced by the gut microbe. I mean a whole range of these metabolites. It might be peptides, neurotransmitters, all sorts of things that have health benefits and are actually necessary for our health, and so we know this. We also know that gut microbes are being stripped out. So if you look at the diversity of composition in communities like the US, australia, we can see that there are significantly diminished diversity. So organisms, but also the functional ability of these organisms relative to populations living more, say, traditional lifestyles, things like antibiotic exposure are correlated with a wide range of diseases later in life, particularly if you have antibiotic exposure early in life. It's a very common disease inflammatory bowel disease, obesity, asthma, things like this. These are associative data, but then we know now that through predominantly through fecal transplant studies, if you replace these missing microbes you can treat disease and cure disease, so C difficile being the well-recognized case, but inflammatory bowel disease, so all strip colitis, there's a large number of trials now A trial we ran, but there's now at least eight meta-analysis of this showing clear superiority of donor FMT over placebo. And so there will absolutely be the microbiome therapies in that space, I'm convinced.
Speaker 3:And then there are other diseases, so liver disease, hepatic and kephalopathy. There's evidence and then companies say, like antibiotics developing the therapy there. On oncology, there's some fascinating, so basic science data, but also evidence again from fecal transplant studies that say, to give an example, with checkpoint inhibitors, a diminished microbiome predicts a poor response to checkpoint inhibitors. In fact, if you collect stool from a responder to a checkpoint inhibitor and transplant it into someone who's failing a checkpoint inhibitor, in some of those cases the therapy could be switched on and graph versus host disease.
Speaker 3:So, matt Farmer, I know you had OVA on the program recently. They're developing a therapy and that looks promising in that space and there are some things that are, I would say, surprising, some data that are surprising. So there are FMT studies in autism that, for instance, where they've showed improvement in both GI but also some neurobehavioral aspects of the disease. Now, these are early pilot studies, but there is a trend towards, certainly we know that loss of organisms is associated with disease, but now replacing them, there is increasing evidence in a range of diseases. And so, fundamentally, the field is sitting on a massive problem from humanity, which is the loss of gut microbes and the health implications of that, and this is a massive problem that needs a solution. And so that's why, fundamentally, I'm so confident that the field will succeed, because it is necessary that we succeed.
Matt Pillar:Yeah, and I think about just a silly anecdote, if you will.
Matt Pillar:My daughter used to show horses.
Matt Pillar:She was an equestrian for quite some time and she had a trainer at one point who, like, if the horse got hurt, like got a cut on its ear or something, it was like oh no, no bother, it's a long way from the heart, was sort of the mantra. It's a long way from the heart, that was like the colloquial thing to say, but it speaks to sort of this. I guess locality of the indication that you're treating with you know, like you said, CDF, I mean it seems like a pretty obvious one. Bowel disease, you know, it seems like relatively obvious. You get into discussions around autism and Alzheimer's, have conversations with you know the gut, brain access and the impacts there. That's where it becomes a little bit more like, like I said, it's harder to draw straight lines to a neo-fight like me, right, but in terms of the business, like as a businessman who's in this space, what is like when you look at biobanks, immediate and potentially long term intentions, is the immediate attention to, or intention to continue to focus sort of on, the gut related indications themselves.
Speaker 3:Yeah, in the near future we have a program cultured therapy for ulcerative colitis that we anticipate would have action with Crohn's disease also. It has a mechanism applicable to both of those. And then adonadribe therapy is often indication. So they are GIF focused. But from I mean from this problem, the philosophy of gut microbes is so huge, matt that and does extend into a number of varying disease areas. We really wanted to make it. We want to make a global impact and from first principles, we believe that these therapies need to be diverse in the composition, so actually have a breadth of function, because we know that many of the therapeutic properties of the microbiome, these ecosystem properties, they exist with the functional complexity, so they're emergent therapeutic properties and when you reduce them to their, you can't necessarily reduce them to the elemental form, so down to one strain and we've demonstrated this in the lab with in the case of our IBD therapy that works by consuming nitrogen sulfide. So we've noted that we've screened our culture collection safer. We've got 35,000 individual strains and we screened it for the ability to consume hydrogen sulfide, the most potent consumer of hydrogen sulfide in the collection. We put that head to head against our consortium of diverse consortium of strains that more looks like a donor community, and actually the diverse consortia outperform the most potent consumer individually. And so we see that the complexity is important, and we've now demonstrated this emergent property. We've seen that more broadly with other aspects.
Speaker 3:And so I think this is our therapies need that component, but they need to be scalable, and so that's the other reason that ultimately, they need to be scalable to be culturable, and we believe so. A co-cultured approach to growing them together is the only way that's economically possible. So, going back to the business, you can't have 150 bioreactors, it's not economically possible. So to grow them together is the only way that you're going to get efficacy, so sufficient diversity to have those emergent functions and be able to produce it at a low cost of production. And so, from first principles, the two things that we wanted, we worked toward, and essentially that's what that's, you know, we go back to why did you quit your job? Well, that's it, because you get that breakthrough. Then I believe we can actually make a meaningful impact globally with those two elements.
Matt Pillar:Yeah, yeah, yeah, I'm reminded of a quote. He didn't make it up but he likes to say it. My friend Alan Shaw, frequent guest on the show. You know he likes to say in God we trust. All others bring data and it sounds like in this conversation, in conversations I've had with the leaders of other microbiome companies, there's a lot of data, like, there's a lot of compelling data in multiple indications that point to the value right of this market and the work that's being done there, the research. And yet you know, as I noted early, it's been a tough go for a lot of companies in the space. Yeah, why, like? What's your take on why that is? Is it? You know, I don't know. I could pause it, I don't want to put words in your mouth. I know it's tough for everybody right now. You know there are a lot of study areas biologic therapeutics that are suffering. So what's your take on why it's been a tough go for this space of late?
Speaker 3:Yeah, that's a good question, man. I think at the control, it's a factor. So, as you say, I mean, biotech is hard. It is hard. There are Thank you. No, not all companies are going to succeed. That's a background. And then there's these other backgrounds that have affected all fields Recently, with funding being difficult at that period in 2020, 2021, very low interest rates, a lot of money coming in, and then that all drying up. That's affected everyone and that's certainly affecting companies here.
Speaker 3:You did mention hype as well. That is a factor For the reasons we've talked about. There's genuine reason for hype. I mean, there is a massive problem and we're seeing that solutions are possible, but then there is a whole lot of science and, as you say, data and execution and getting it right. That's important, and so that story as to why this is an important therapeutic realm is true, I think, but that can lead to hype, and the reasons for success come not only from that background but also the execution, and so that is a hard thing.
Speaker 3:It doesn't? There's been many cases of this in the past. There's the dot-com boom. It didn't mean that the future of commerce didn't involve the internet. So, because of the hype at that time and it didn't mean that Amazon wasn't a good company. So it's just that actually working out how to do this right is hard, and the microbiome is incredibly complex. It's a complex ecosystem, so there are a number of factors specific to this area.
Speaker 3:We talked about that therapeutic paradigm of trying to reduce it to an individual strain. That is where traditional, say, small molecule drug discovery has a set pathway. The microbiome doesn't. I mean the release assays are different, how you culture the organisms is different, and on the donor drive space, there are a whole lot of complexities there, while differences batch to batch between the composition, and so that's all had to be discussed with regulators.
Speaker 3:All of these complexities mean that you can't just plug and play, like for a small molecule company could, and so a lot of the companies that have had difficulty have done a lot of hard work, a lot of important work, and have really set a lot of the foundations for others, and I think I've got a lot of respect for many of the companies and people involved in these companies who have done a lot of really incredible work actually, and I don't think all of that hasn't gone in vain. I mean a lot of these things we and others can then build on, for instance, the education with regulators around the world, their understanding of how these therapies might work, how they might be regulated. Things like that are required. So release, assays and these things. That's evolved due to a lot of the work some of these other companies have already done. So, yeah, I mean it's a difficult field and there's a whole lot of other factors at play as well.
Matt Pillar:Yeah, you mentioned, I mean you talked about the fact that the finance, the financial markets are difficult for everyone, regardless of the indication you're going after or the modality that you're developing. Is that more pointed perhaps in this space where, like even you mentioned, small molecule grade example, be even biologics, development of antibodies? I'm not going to simplify, I'm not going to dumb it down. It's very complex work but it's been done over and over again. Your culturing cells, your manipulating cells to attack a specific target that will allegedly do a specific thing. It's not an easy case to make but it's a pretty point blank case to make.
Matt Pillar:If you can get past toxicities and other things, like the investment community is going to go, at least a good part of the investment community is going to go like okay, that's relatable, we've seen that. We've seen it work before. We've funded companies that have seen success in those spaces, so we're going to go with it. Here we're talking about something that is considerably more complex, certainly looks a lot different than the intravenous administration of an antibody, for one example. Does that affect the investor paradigm? Is it like a more finite pool of investors or even big pharma companies who might be interested in getting behind this work, or am I just making that up in my head?
Speaker 3:I think it is a little more niche. I think it's a funny thing. Investment, isn't it? Because when there's most fear in the market and sentiment is most strongly against, then in hindsight often that's the best time to invest it. When there are good underlying fundamentals, value investors, that's what they do.
Speaker 3:We have approved therapies in this space both in the US and Australia, so regulators have accepted these therapies. That's de-risked the field massively. These therapies are donor-derived therapies. They are different batch to batch in the composition. That's a big thing to have acknowledged that. And that fact has significantly de-risked the field. Because if you then go to develop a culture therapy, even if it's a complex culture therapy, and you don't have a perfect batch to batch variation like a molecule of aspirin, this precedent set that this is acceptable. This is acknowledged. This is a part of what these therapies are.
Speaker 3:Not only are they approved, but these are highly effective therapies. So say for CDF, you're looking at a delta of 50% absolute gain over the previous standard of care. That's almost unheard of. It's a huge gain. And say in Ulsterive Collitis, the FMT study I did it part of my PhD the remission rates clinical endoscopic remission rates range 30-40%. This is similar to the most potent available biologic agents. So there are strong fundamentals here.
Speaker 3:And the other thing, matt, which is critical, is that we've co-evolved with these organisms, so these organisms are part of us and are required by us to perform, to be safe, not to be healthy, sorry and therefore the safety profile for these therapies is actually very good, and I believe that's because, essentially, we co-evolve with the organisms and they're not blocking an aberrant pathway, like a lot of, say, small molecules or biologics do, with downstream flow-on effects, like, if you're blocking an immune pathway, you have an immune system for a reason, and so these therapies are restorative, they're not blocking function, and so they have a number of advantages.
Speaker 3:Yes, they're a new paradigm, but that paradigm has many advantages over alternative therapies, and so I think we'll look back at this time as a wonderful opportunity, because we got through the difficulties and we had recently have approved therapies. These therapies work. They're life-saving, life-changing, and we can expand on that now with these cultured versions that are more scalable, can be more consistent in composition, better able to be patented, say. All of these advantages, typical advantages you want of a therapeutic. So I just think it's an exciting time and we'll come out the other side.
Matt Pillar:Yeah, that's fantastic. So the advantage, I should say, of having a commercial product aside, what have you found as a leader of Biomank, what have you found to be productive and useful, in sort of the perseverance through an otherwise difficult time, like, is there anything Biomank's doing that you would say is contributing to your perseverance?
Speaker 3:Oh look, I think, coming from the clinic where we started, I mean, we went straight to an indication where it was an urgent need and so, and now we derive some revenue from that that we can help sustain the company from. I think that was an advantage. The other thing is, I mean, perversely, you talked about the access to capital, so that's less able to get huge amounts of money as maybe we could have accessed if we were positioned overseas in some other places. But so that focus on being extremely diligent with what you have, I suppose is forced on us because of that relative situation and I suppose in a downturn that actually is an advantage in that sense and so and so I suppose those things and also, yeah, so I would say I mean also would just be been lucky with investors.
Speaker 3:We've had that been fantastic to this point, very supportive, and I suppose we've really focused our programs. They are small relative to a lot of far bigger companies, but we've really focused on leveraging the product we have and then on this, on our second generation product, really thinking from first principles how it would be able to be as effective as or more effective than the donor drive therapies and scalable. So when you don't have a lot of resources, you definitely have to have to think. I suppose it was a New Zealand physicist, ernest Rulliford, and he said we don't have the money, so we have to think. So there's a bit of that as well.
Matt Pillar:I like that. That's it. Yeah, I'm going to add that one to the repertoire. That's a good one and I find it interesting. You're Australian. You're quoting a New Zealand physicist. I thought there was some sort of inherent friction between Australians and New.
Dr. Sam Costello:Zealanders.
Matt Pillar:Is that just a stereotype that we Americans have adopted?
Speaker 3:It certainly is.
Speaker 3:I think, yeah, I suppose it was like the America-Canada thing and the hockey games. So we get beaten up by New Zealand at rugby. In my state we don't play rugby, so it's played on. A couple of states in Australia and New Zealand are far better than us, despite being a much smaller country. So, yeah, there's definitely rivalry there. But also there's a lot of similarities cultural similarities, and I noticed that in the US there's a lot of similarities between Australia and, say, us and Canada. So as well. So we definitely share a lot.
Matt Pillar:Yeah, all right, I'm getting to the point where I'm abusing your time. I know we've gone long here, so I want to be respectful of that and we've covered a lot of ground. Whenever I have these, I really enjoy talking with you, dr Castello. I feel like we could go on and on, so I'll always offer the opportunity to do a part two and maybe dig a little deeper into some of the moves that you guys are making. But I guess we'll just wrap things up by allowing me to ask you what the next thing you might be doing, next big step, might be, or what you're most excited about for the imminent future of Biobank.
Speaker 3:Yeah, so thanks, matt. I've really loved having talked to you, and actually listening to you for a long period of time has really helped me a lot and helped us, so I do want to thank you for that, because we're not in Boston and so the opportunity to listen to many of the guests you've had on has been incredible, and we've learned a lot about a whole lot of things that have helped us to this point. So thank you for that. The other thing I mean in terms of where we're going next, we want to take our donor drive product into the US market with an orphan disease indication. So we're aiming for that, and we're also wanting to take our cultured therapy forward in a phase 1B next year in Australia for Ulster Colitis.
Matt Pillar:Yeah, yeah, it's exciting times. I mean, like I said, I enjoy talking with you. I appreciate your thanks for the podcast. That means a lot to me. Any time I hear that we're actually my rambling questions sets are actually providing value to someone somewhere. It's gratifying and I appreciate that. So, thank you very much. Continue to listen. We've got some great guests coming up, so there's plenty more to learn for me and plenty more to learn for our audience. So thank you for that. And yeah, if you're going to be in the States any time again soon you said you've got some US guys on your exec team If you're going to be any chance, you're going to JP Morgan in January.
Speaker 3:Yeah, I am, yeah, yeah, we're going to be there. So, yeah, I'd love to catch up or meet anyone that's listening.
Matt Pillar:For sure, yep, I'll be there as well, so I'll be in touch. I'll buy you a Fosters or a Sam Adams, whatever. Yeah, yeah, yeah. Or a West Coast beer, maybe you can one of them like a fat tire or something, I don't know. Yeah, yeah, that'd be good.
Speaker 3:I'd love that, matt.
Matt Pillar:Yeah, thanks for coming on, sam. Thanks a lot.
Speaker 3:Bye.
Matt Pillar:So that's BiomeBank' s, Dr Sam Costello. I'm Matt Pillar and this is the business of biotech. We're produced by Bioprocess Online and Life Science Connect with the support of Cytiva, which demonstrates its support to new and emerging biopharma companies at Cytiva. com/ emerging biotech. If you like listening in on conversations with biopharma leaders like Dr Costello, subscribe to the business of biotech podcast. Sign up for our newsletter at bioprocessonline. com/ BOB. Also, be sure to leave us a review and let us know how we're doing. And, as always, thanks for listening.