Business Of Biotech
The Business of Biotech is the pod dedicated to leaders of emerging biopharma firms. SUBSCRIBE to our new newsletter at www.bioprocessonline.com/bob. We bring you insight into organizational, finance and funding, HR, clinical, manufacturing, regulatory, and commercial challenges you’ll face as you navigate your company from an idea to success in the clinic and beyond. Each episode features guest commentary and best practices from accomplished founders and biopharma industry luminaries. The Business of Biotech is produced by Life Science Connect.
Business Of Biotech
FDA Trials And Tribulations With Connect Biopharma's Barry Quart
We love to hear from our listeners. Send us a message.
On this week's episode, Barry Quart, CEO of Connect Biopharma, weighs in on the current state of engagement between drug developers and the FDA, and how that key relationship continues to evolve under new leadership. Barry also discusses moving the company from China to San Diego, why a U.S. financial reporting structure helps attract investors, and how Connect is finding the white spaces in respiratory disease -- the company's lead candidate is a biologic drug targeting acute asthma and COPD exacerbations.
This episode of the Business of Biotech is brought to you by Ecolab.
Access this and hundreds of episodes of the Business of Biotech videocast under the Business of Biotech tab at lifescienceleader.com.
Subscribe to our monthly Business of Biotech newsletter.
Get in touch with guest and topic suggestions: ben.comer@lifescienceleader.com
Find Ben Comer on LinkedIn: https://www.linkedin.com/in/bencomer/
This week's episode is brought to you by Ecolab. Looking to lower production costs without compromising quality, purolite Purification Resins from Ecolab Life Sciences offer unmatched performance with uniquely uniform beads for consistent results every time. Plus, with dual contingent supply, you get supply chain security you can count on. Discover the power of PuroLite Res at PuralightResinscom. Slash Ecolab that's P-U-R-O-L-I-T-E-R-E-S-I-N-S dot com. Slash E-C-O-L-A-B.
Ben Comer:Welcome back to the Business of Biotech. I'm your host, ben Comer, chief Editor at LifeScienceLeader, and today we're speaking with Barry Cord, ceo at Connect Biopharma, originally a Chinese biotech that has now moved to San Diego. I'm excited to speak with Barry about ConnectBio, which is developing an intriguing product candidate an antibody targeting acute asthma and COPD exacerbations, and to learn about the challenges and benefits of moving ConnectBio to California. We'll also delve into Barry's past experiences as a leader of regulatory affairs at BMS and Pfizer and get his take on the inner workings of the FDA. Past and present. Barry is a biotech founder and CEO as well. He co-founded and led Ardia Biosciences and invented a drug for gout, before selling the company to AstraZeneca for over a billion dollars. All told, barry has overseen the FDA approval of nine drugs to date and hopes to make it to 10 at Connect Biopharma. Barry, thanks so much for being here.
Barry Quart:Yeah, my pleasure Thank you for that great introduction.
Ben Comer:What led you into the biopharmaceutical industry? Initially, I think you started out as regulatory affairs manager at BMS.
Barry Quart:Yeah, actually when I started it was still just Bristol-Myers, so I hate to date myself and it was in clinical research. So I've had the opportunity across my career to be involved in many aspects of the drug discovery development area, went into regulatory affairs and really was a tremendous experience in terms of understanding really the nuts and bolts of drug development and how to maneuver products through the FDA, although I will say the FDA of the early 80s and 90s is definitely different than the FDA that we have today, both on the good side and the bad side. It took forever to get drugs through the FDA process in the 70s and 80s, before PDUFA, where they had a time limit on how long they could take. It would literally take them over a year to open the boxes before they started even reviewing the application. So it's been a very interesting process to see how the FDA has evolved over those years and I think one of the things that's unfortunate in the current era is that the pharmaceutical companies, biotech companies, don't have the opportunity of relatively frequent interaction with the actual reviewers In.
Barry Quart:You know, in my early days you could pick up the phone and call the reviewer and ask them a question so that when you're designing a study or you have an issue, you had relatively quick response and could make sure that you're doing things that will ultimately be successful for the product. Now, now everything has to go through their bureaucracy. You have to go through a project manager. You're lucky if you get a response. You're constantly pinging them trying to get a response. So you know, while there's a time limit on how long they can take, the whole process has really been changed in what I would say not necessarily a positive fashion, and now obviously, we're going through an even more dramatic change where you know all I could do is hope that ultimately we get to a better place. But you know it's hard to tell right now.
Ben Comer:Yeah, you know I want to get back into the FDA in just a minute, but I'm really curious to ask you about, you know, your departure from big pharma and into biotech. You've worked at several companies. I won't name all of them, but one thing that stuck out to me on your resume, barry, was your co-founding and leading Ardia and your invention of a gout drug, xerampic. Is there a story to tell there about how that happened?
Barry Quart:Yeah, there is a story to tell, so I take a step back was at a biotech. My first biotech foray in San Diego was a company called Agaron Pharmaceuticals which was just drug discovery. At the time I joined joined we fortunately had a very interesting HIV protease inhibitor that had been designed by the chemists and the X-ray crystallographers and decided to develop it ourselves and we took it from the lab bench to a US approval in the late 90s and just over three years, because we actually had remarkable collaboration with the FDA who was working hard to get drugs out to HIV patients, and you know that was a tremendously successful, rewarding period of time. Unfortunately, what happens is that then that company got swallowed up by Warren Lambert. Warren Lambert got swallowed up by a bigger fish, pfizer, stayed on to run the La Jolla Laboratories for Pfizer, which basically was my old labs at Agaron, and then it's hard to go from a small biotech or even a midsize biotech back to large pharma. They're just so slow and so many processes. So I essentially kind of retired and took a break from pharma and then had the opportunity to take over a public shell with my co-founder and bring some technology into it, and the goal of that what became Ardea was to bring in some HIV assets, kind of continue on from what I had been doing at Agaron and bring in some products specifically focused on resistance.
Barry Quart:This was a period of time where HIV resistance was a significant issue and so we had the opportunity of in-licensing some NNRTIs for resistant virus, and an RTI is for resistant virus. The only issue was is that the data that was provided us at the time that we brought it in it looked like it should be a once a day or maybe even longer half-life, and that's, you know, the first drugs approved for HIV. We pushed them through as quickly as we could because you had 50,000 people dying a year at that point and the fact that it might be three times a day, you know, that's OK as long as it actually, you know, had a significant benefit to the patient. But once those drugs were out and successfully getting patients, you know, changing a fatal disease into a chronic disease now patients wanted something that was less frequent, easier to take, less side effects, and so that's kind of where the focus was and we were looking for something that was definitely once a day, put it into a phase one study, healthy volunteers, and unfortunately it was going to be another at least twice a day product, and so it was disappointing. And, to be honest, at that point it was a question of you know, do we just pack up? And you know close shop, because you know our primary opportunity certainly didn't look like it was very exciting.
Barry Quart:But as I was going through the data in this Healthy Volunteer Study, I noted that every person who got the drug saw a dramatic decrease in uric acid levels, and uric acid is the underlying cause of gout. So that led me to think well, maybe there's clearly some pharmacology going on here. Ultimately, figured out, it was a metabolite of the HIV drug that was producing this effect of lowering uric acid and we turned that metabolite into xerampic. And it was a period of time where it was great, I think, because it shed light on a pretty much forgotten disease.
Barry Quart:There hadn't been really a lot of attention on gout, even though it affects millions of patients. It's just one of those diseases where I think clinicians felt like this is a self-inflicted disease. I'm going to spend my time, you know, trying to help patients with you know other kinds of problems, even though a lot of them were self-inflicted at the end of the day. But with Gowd it was always felt like you know if you just followed the right diet you wouldn't have a problem. But so it was a great opportunity to develop something to help a very large population of patients.
Ben Comer:Yeah, I mean, and that's a big pivot you said you noticed this benefit in a study of healthy volunteers who I guess you know had said as part of intake, you know that they had gout and this was just something that kind of popped out, or that investigators were raising their hands and saying you know, yeah, you know, we're noticing that it's having this effect.
Barry Quart:Actually no, these were healthy volunteers so they didn't have gout. But so every, every person has uric acid. Uric acid is just a byproduct of a breakdown of in the body and normally in people who have normal levels of uric acid people who you know have normal levels of uric acid it gets excreted through the urine and it's never a problem. And in people who have gout their levels go up too high and so once you get to a certain concentration in the blood it starts to crystallize out in the joints and basically is a white powder that is now floating around in the joint space and at certain periods of time during the year that produces a very dramatic inflammatory response.
Barry Quart:In that joint Tends to be the big toe Interesting. It's kind of colder environment, less solubility of the uric acid sitting out there at the end of the foot, and it can be very startling to people because it's intensely painful and it's like I don't remember stubbing my toe, but it hurts like hell. And that's the first time. Usually they get diagnosed with gout, because not that many people even monitor uric acid. It's, you know, it's just a marker that ultimately, if you have gout, you're going to concentrate on, but otherwise people pretty much ignore it, and so, since everyone has it, it was an opportunity to see a change even in the healthy volunteers, because it was a profound change. This wasn't just a modest decline. It went down over 50% from their baseline, and that's something that's noticeable.
Ben Comer:Yeah, absolutely. And so you discovered this effect. You pivoted to developing this gout drug. What did you have to do operations-wise? Did you have to hire new people that were experts in this therapeutic area? Did you have to change, kind of you know, your manufacturing strategy? What did you have to do?
Barry Quart:Well, at this stage of the organization it was still pretty early and we had, you know, a pretty small group, so, definitely, from that point on, any hiring we did was people who had more inflammatory, more rheumatology experience, so gouts generally treated by rheumatologists or internists, and so, yeah, definitely kind of closed down the virology group and, you know, built up the inflammation side of the organization. But it was, you know, this was a pretty small group at the time, so it wasn't a huge overall. It was really more of changing focus, moving word, but, uh, yeah, definitely, uh, a definitely a significant pivot. We went from an HIV-focused company to a gout-focused company and that was, you know, the challenging part of that was telling the story to the investment community because, you know, they made a decision to invest in the company based on, you know, hiv and the AIDS market at the time clearly was very robust, and now I have to go out and explain.
Barry Quart:Well, that was a great idea, but we have an even better idea now. Here's a completely untapped opportunity and with millions and millions of patients, and we were successful in raising the money to develop the product. Ultimately, you know, to registration. As you noted, we actually sold Ardia to AstraZeneca while it was still in phase three. So they took the bet that the phase three studies would be successful and wanted to get involved early before launch planning and so they could get a significant head start and making sure it had a successful launch. That in and of itself was interesting because very shortly after they made that decision they changed CEOs who then he changed the focus of the company to and decided primary care and not that exciting anymore.
Ben Comer:We want to be in oncology, we want to be in immuno oncology, we want to be in immuno-oncology, and so that whole company pivoted and we were kind of left with we're not sure who's going to sell this product. On therapeutics as CEO and oversaw the approval of four drugs there, I believe. I think they were mostly anti-emetics Is that right? Maybe an anesthetic as well? Yeah, so.
Barry Quart:I moved out of again once we got taken over by a large pharma. Not quite as interesting to run the company. We were a wholly owned subsidiary. So I continued to run our DA for a year but definitely was not nearly as rewarding as running an independent company. So moved to what was a small company called AP Pharma that had had several failures in getting their one drug approved, which was a long-acting anti-emetic for chemotherapy-induced nausea and vomiting, and decided to see if I could help them. Took over the company, ended up kind of rebranding it to Heron Therapeutics, ended up kind of rebranding it to Heron Therapeutics and ultimately got that product approved, that second one in the same area of chemotherapy-induced nausea and vomiting. And then the first drug, what was called Sustol, was based on their in-house polymer technology. So AP Pharma was a polymer technology company that saw the pharma companies around it in South San Francisco and Redwood City getting swallowed up for large amounts of money and felt like we'd rather be in that business than making polymers. So they, you know, can we take one of our polymers and turn it into a drug delivery device? And one of their polymers was quite good at releasing drug over an extended period. So that first drug, sustol. They took a short-acting, very effective agent and turned it into a much longer-acting agent for chemotherapy-induced nausea and vomiting. And that was valuable because that nausea and vomiting can last up to five days and in fact there's an initial period and then there's a delayed period, and so if you just take something that's going to work for a day, you can have severe nausea and vomiting, you know, day three, day four. So it's important to have that extended release of the drug.
Barry Quart:As I said, we ultimately got that approved, which was challenging because it was a new polymer, complicated to make. We had to go through a lot of hurdles with the FDA. But once we were getting it approved, my view was what else can we do with it? We've already had to set up manufacturing. We've got the FDA to approve it. The next drug that we put into it's not going to take anywhere near as long, hopefully. And so you know what else can we do with it.
Barry Quart:And we thought you know why don't we put a local anesthetic and use it for post-operative pain, where you could put this polymer into the incision and it would be like using Novocaine with a dental procedure block the pain at the site of where it's being generated, but do that over an extended period, and most severe pain with a surgical procedure usually lasts around three days, and if you can get people past that three-day period, you know, then their pain usually can get controlled by, you know, tylenol, advil. You don't have to take narcotics, and so that was really the goal. Can we extend the benefit of a very, you know, commonly used local anesthetic, bupivacaine? Make it last long enough to get the patient past where they need to take opiates?
Barry Quart:Big issue with opiates at that period was really becoming to the forefront as more people dying than back in the AIDS epidemic period, and so that seemed like a great opportunity to benefit patients. If you don't take an opiate, you can't get addicted to it, and let's see if we can avoid the need for opiates after surgery. And so we took that through the development process, very challenging and, I will say, very disappointing in terms of the FDA's participation, let's say, in that development process and with HIV drugs. They were very open to collaborating and giving input on a very frequent basis, making sure that we delivered to them drugs that could get approved and get approved quickly In those days the first few HIV protease inhibitors, which were the cornerstone of the AIDS cocktail HIV protease inhibitors, which were the cornerstone of the AIDS cocktail.
Barry Quart:They went through the review process in just a matter of a few months because there was so much pressure on the FDA to get these drugs out. So I went to them and said, hey, why don't we work together again? That was highly successful. These drugs obviously saved millions of lives.
Barry Quart:Opiates are killing more people than HIV at the worst period of the AIDS epidemic. Let's collaborate and get a drug out there so patients don't have to take opiates. And their response at that time was not interesting, which was unfortunate, because I think we could have gotten our drug out to patients sooner and that would have been very beneficial for patients. It would have also been more beneficial for shareholders because unfortunately, with the delays at the FDA and you know manufacturing difficulties, we ended up launching that product right during COVID and launching a hospital product when hospitals are basically closed down to you know elective surgeries or you know just opening up but you can't get your reps in because of HIV. You know prohibitions. It was problematic and you know the product never really got the best shot at being successful because of the timing of launch was just terrible.
Ben Comer:And you credit that. You know the kind of unwilling and granted COVID was going on and I assume a lot of the agency was very focused on COVID. You know treatments but there wasn't the same amount of clamoring patient groups, others, media really pushing for you know, a non-opioid analgesic at that point and as a result maybe the FDA wasn't acting as quickly on it.
Barry Quart:Yeah, there's no question, and this was actually pre-COVID that you know because of the development process went on for quite a few years.
Barry Quart:And yeah, I went to talk to them well before COVID and you know it wasn't just us there was. You can find pictures on the Internet of people who had lost children or relatives to opiates bringing a giant heroin spoon to the FDA and protesting the fact the agency was doing so little to really deal with the opiate issue except approving opiates faster than they were approving drugs to avoid opiates faster than they were approving drugs to avoid opiates.
Ben Comer:Yeah, you know, that's a good point, because it's not like no one was talking about the opioid crisis at that point in time. Maybe it hadn't reached its absolute height yet, but it was going in that direction, no question.
Barry Quart:No question, you know, I think obviously there's, you know, different internal politics at the agency and I'm sure it's not that the individuals that work there didn't care. Yeah, unfortunately, I think we're going to go even further with the current administration trying to completely disassociate the FDA from any potential entanglements with pharma collaborative effort. Whether they're obviously the regulator and we're obviously, you know, working to develop drugs, it's still in the best interest of patients for us to communicate in a collaborative fashion so that they can tell us hey, we need you to do X, y, z, and if you don't do that, then the likelihood of you're getting this product approved goes down. You don't have to follow our instructions or guidance, but that's obviously in the best interest of moving the product along. But if you don't have that kind of back and forth communication, then we're just trying to do the best we can and guess as to what they're ultimately going to accept.
Ben Comer:Which doesn't benefit anyone patients, businesses or agency.
Barry Quart:Exactly so. It's a lot of money that you spend answering questions already, and answering questions that you don't need to is, you know, an additional waste of a lot of resource.
Ben Comer:I want to come back to the FDA a little bit further into our conversation, but let's talk about Connect Biopharma a little bit First. You know what, barry. What convinced you to join Connect Biopharma as CEO and what was your due diligence process like? What kinds of questions did you ask before taking the CEO role?
Barry Quart:This was an interesting project because I wasn't really looking for necessarily going back into running a public biotech. At the time the company approached me. They were looking to change the management, bring people in with more development experience, more experience working with the investment community, and, you know, would I take a look and I spent three months going through their data, you know, under CDA and basically kind of reanalyze their primary trial, you know, looking at their raw data and I, you know I've I at the end of that, felt like this was an incredibly undervalued asset, asset that worked much better than people perceived and had a unique opportunity to fill a void that really hadn't been focused on. And you know I love those kinds of opportunities where you can, you know, truly change how patients are treated and, you know, and produce some very significant clinical benefit across, you know, a large population of patients. And in this case there's a number of biologics that have been developed for asthma and many that are in development for COPD, and all of those drugs are solely focused on trying to reduce the number of asthma attacks.
Barry Quart:We call them exacerbations, but basically where a patient can be stable over a period of time and then all of a sudden has a hard time breathing and they go to the medicine cabinet, they get their inhaler. They use their inhaler and it's not helping. And you get to the point where you know when you can't breathe, breathe well, that produces a lot of anxiety. Yeah, and you can die from an asthma attack. So what happens is you have over a million people a year that go to the emergency room for an asthma attack. They're treated the same way that they were treated 20 years ago they get a dose of steroid and they get more bronchodilator a dose of steroid and they get more bronchodilator. I'm trying to overwhelm the system. Until they get the relaxation in the lungs and the muscles in the lungs relax, get air into the lungs. Most of those people get treated at the ER and set home. People get treated at the ER and set home.
Barry Quart:And what we found was is you have all these biologics that are being used, but none of them had ever really been focused on that acute episode Biologics people tend to think they take days, weeks, maybe months to work Right, maybe months to work Right. You're trying to target the immune system, inflammatory processes, and that can take a while. And so you know, nobody really targeted the acute use of a biologic. But what I found in the data that Connect had generated was one of the things they did really well was to start looking early when they started treating these chronic patients, and it showed that the drug worked rapidly. In fact, as I delved into their data, I found that the majority of the benefit was derived the next morning after a dose. So less than 24 hours you saw multiple hundreds of mil improvement in airway function, or FEV1, as we call it, which is a very dramatic improvement in airway function very, very quickly in airway function very, very quickly. And that led us to say you know, this is a unique opportunity, a complete white space.
Barry Quart:Nobody's evaluating biologics in this area. No biologics are approved and in fact all of the biologics that are approved for asthma say explicitly don't use to treat an exacerbation. So it's like, okay, I've got the drug that looks like it can work immediately with dramatic improvements in what you're trying to do for an asthma patient having an exacerbation, asthma patient having an exacerbation and let's, let's see if we can't develop this for that population and it. You know, we now, just in this last week, announced that we've initiated two phase two trials, one in asthma patients, one in COPD patients, looking at the use of the drug and in the acute setting of people having an exacerbation, a goal of showing, you know, improved airway function, hopefully showing fewer people that get the drug in the ER, get hospitalized. If they get hospitalized, hopefully we can show they stay there less days and then, just as important, we've also found that people who have had an exacerbation have a pretty high risk of having another one in the following weeks.
Barry Quart:And that's a key issue from a health economic point of view. Because if there's anything I learned from trying to sell drugs in the hospital is that it's not always how much you're benefiting the patient. It's you have to show the hospital why it benefits them. Yeah, they're the ones paying for that drug. It gets covered under their single bundled payment and if you can't show them why there's value to the hospital, it almost doesn't matter that you're benefiting the patient.
Barry Quart:So showing a health economic improvement is really critical and we found that quite interesting. That patient goes into the ER, they get treated, the hospital gets a single bundled payment for that visit. So it covers everything covers the drugs they get, the doctor et cetera and that covers that patient for a month. So if the patient comes back in two weeks, three weeks, with another exacerbation, hospital doesn't get paid again. So they actually have a vested interest beyond just good health care to not have that patient come back. And if you have almost 50% of patients having either a worsening of that index exacerbation or a second exacerbation during that four-week period, you have a great opportunity of showing a health economic benefit that will help convince the hospital that oh yeah, I'm going to use this drug because it benefits me. Yeah, it's good for the patient, but it benefits us too, and that's really important.
Ben Comer:Yeah, and this is ratamicobart that we're talking about. That has just entered two phase two trials. It's targeting acute asthma and COPD exacerbations, but it's not competing with something like albuterol, a rescue inhaler. But can they be used together and you alluded to the fact that those don't always work when someone's struggling to breathe Can they be used together? But I guess clarify first that they're not competing with one another, correct?
Barry Quart:Correct. So you know definitely something I've learned over the years the fastest, most expedient way to develop a drug and get it approved and get it used is to add it to standard of care, as practice doesn't change that fast and it's a pretty high hurdle to get it to change. So if you can show, hey, here's standard of care, here's adding our drug, a dramatic improvement for that patient, that's the best way to get drugs out to patients and get them used. So yeah, our our approach is you have patients coming into the ER that they get the standard of care, they'll get that steroid, they'll get more inhaler. But we even know with that standard of care, half of them are going to get either worse as soon as they leave the ER or have another episode within a few weeks. So our approach is these studies are blinded, randomized trials. Patients will get ratamicobar or placebo on top of standard of care and we'll be able to look at improvements in airway. How many people have a recurrence? Do we get them out sooner? So we're benefiting the patient, hopefully, and the facility, and that will help ultimately justify approval and use of the product.
Barry Quart:But definitely the standard of care is the backdrop. No problem using it along with inhalers and truthfully we think there's a good rationale for the fact that it'll make the inhaler work better, that there's some potential kind of synergy there. So you know, we hope to be able to show that as well. But just to also point out that the drug's already been in a chronic asthma study. You know, 24-week study showed very good improvements in airway, very good reduction of exacerbations, the endpoint that you use for chronic studies. So the drug can clearly be used chronically and it's not to say that we're not interested in that market. But our target right now is this complete white space where nobody has developed a drug to date, and that is for the acute exacerbation. Ultimately, down the road I could easily foresee this drug being used acutely and then patient does well, clinician keeps along.
Ben Comer:I think it was an important point that you made that I just want to underscore about the time it takes to change the standard of care. I mean particularly when you have a generically available inhaler and it goes back to opioids as well for pain. When you have a very cheap and effective drug as the standard of care, it makes it that much more difficult, despite the kind of benefits profile of a new product sometimes.
Barry Quart:No, you're absolutely right. I mean, going back to the opiate issue, we demonstrated that our drug, which ultimately was launched and called Zinrolef, that that product produces much greater pain reduction than opiates. You can take as much opiate as you know under the you know prescription. Can take as much opiate as you're you know, under the you know prescription guidelines on how much opiate you're allowed to take in a day. You can max out and you still won't get the same level of pain benefit as you got from our drug.
Barry Quart:But getting surgeons to use it was challenging because they're used to using opiates. It's like, well, I mean, patients do fine, I just give them a short course, nobody gets addicted and everybody's fine. It's like, well, here's the data that shows. You know that we produce far better pain management and if patients have better pain management they can do more physical therapy. They, you know, heal better it was. It's an uphill battle to change how people do their job and in that, in that area because you know, the surgeon has been doing a particular surgery for 20 years. He thinks his patients are doing great. Particular surgery for 20 years. Um, he thinks his patients are doing great. He's not about to say, oh yeah, I definitely I need to to change what I'm doing, cause obviously it's, you know, hasn't been that good for 20 years. It's kind of a mindset that, uh, you know I'm, everything I'm doing is just fine yeah.
Ben Comer:Um. Going back to ratamikabart, this drug, I believe, was discovered in China where Connect Bio was located. It's now moved the headquarters to San Diego. What precipitated that move and what kinds of challenges had to be overcome in bringing the company to California?
Barry Quart:Yeah, it's been an interesting process. It was one of the things that I discussed with the board before joining and they had already come to the conclusion that it was time to make that transition. So this is a company that was started quite a few years ago in China at a period of time when there was a lot of biotechs forming in China. There's great chemists there, great biologists, a highly educated population. So, you know, certainly made sense at the time. A lot of companies you know started labs there.
Barry Quart:But over the years, you know, as what happens in the US biotech market, you kind of have peaks and troughs and it's been a pretty difficult period of time last several years in China to raise funds and so there wasn't the kind of financial support. And biotech is a business that you basically have to keep putting money into it until you get the drug out on the market and then it takes money to launch the drug. So it's a capital intense business. China was clearly not the place to raise that kind of money any longer. So you have to go to the US healthcare investors and US healthcare investors are pretty reluctant to invest in a Chinese company in a Chinese company, to a large part because the information flow is not quite the same as it is with a US-based company. So in the case of Connect it's traded on the NASDAQ but the investors didn't have access to the normal kinds of information that a US-based company traded on the NASDAQ would be providing.
Barry Quart:So, as you know, at Heron, at Ardea, you know we put out what are called 10-Ks and 10-Qs. So every quarter put out what are called 10 Ks and 10 Qs. So every quarter you put out your financial information, you put out an update on what's happening with your development activities and it keeps the investment community up to date and they feel like they can use that as a guide in terms of what's going on. As a foreign filer, you're not obligated to file any of those. You file a much more abbreviated report every six months and so the information in that document is really dated, because it was a quarter behind already when it was filed and now there's not another one coming out for six months. So as an investor, this is pretty stale information and I know I'm not going to get the normal updates. I'm just less inclined to think about investing in a company where there's not the usual data flow and you're held to different accounting standards. The investment community was just not getting the kind of information that they're used to, so we made a decision that you know.
Barry Quart:We still have an office outside of Shanghai. They're doing great work in terms of mostly it's on the chemistry manufacturing side of making red and micklebart. They identified a way to make it much less expensively, so we're optimizing that in our manufacturing lab. That'll get transferred to a US manufacturer that we currently have. That's making it the older process. So we still have activities going on in China, but we moved the headquarters to San Diego. Basically, this was a Chinese biotech with a little outpost in San Diego. It's now, for all intents and purposes, a San Diego-based biotech with a small outpost in China, and we've now put out our first 10K, put out our 10Q a week or so ago and we will continue to put out normal filings that investors look for from here on out.
Ben Comer:Was that a heavy lift to convert ConnectBio to a US filer, you know, to a GAAP reporting structure?
Barry Quart:No question, this was not a trivial undertaking. No question, this was not a trivial undertaking. We had to get another, different accounting firm. That accounting firm had to basically go back and redo previous audits so they could be familiar with what's going on in the company. So very heavy lift by the finance team. I'm very fortunate that we were able to bring in most of the finance team from the last company and that finance team had come from the previous company. So people that I've worked with for many years who are incredibly competent and they made that heavy lift look easy. But I know how much work it took to get done and you know, and working very closely with the new auditing firm, we were able to get it done on time and everything went very smoothly piece of Radha Micobart that I wanted to ask you about, barry.
Ben Comer:In late 2023, connectbio outlicensed it to Cemsir, a large Chinese-based or China-based company, for late-stage trials registration commercialization in China. Can you, I guess, explain the strategy behind that transaction? And really, I guess what I'm curious about is whether that helps with your approach to the FDA, engagement with the FDA, ultimately approval in the US.
Barry Quart:Yeah, so this was a transaction that was finalized before I joined. But what I can certainly say is is that Simseer are great partners. I've met with that company many times. We have a joint steering committee every quarter. They're taking a very active approach towards finishing up development in China and you know, and we anticipate, that they will file first in atopic dermatitis and then in asthma, you know, a year or two after that. But they're working very hard to get the drug on the market as quickly as they can.
Barry Quart:Dupixent is doing extremely well. So one thing that probably should let people know we have a Radimicobar is a second generation Dupixent going after the same target. And you know our goal is, you know, in clinical development, to show the benefits of you know why Radimicobarc versus Dupixent. And they're trying to do the same thing in China, where Dupixent has done a phenomenal job and has launched and it hasn't been on the market there very long. So they're working very actively, you know.
Barry Quart:Going back to the question of what's the benefit? Well, number one, last year the company received over $25 million in upfront and milestone payments. So for a small biotech, significant revenue coming in. Non-dilutive financing is kink in this business in. Non-dilutive financing is kink in this business. You don't want to have to keep on selling shares and diluting current investors and employees, so the ability to get non-dilutive dollars coming in of that magnitude is incredibly valuable.
Barry Quart:And then they're doing large trials in AD and asthma. Now if we want to use that data, we will have to provide a pretty strong rationale to the FDA as to why the patients in China are applicable to US patients. Do they have the same drug levels, Same safety profile? Is the information useful? Is the disease treated the same way? Now it turns out in this case there is remarkable similarities. Asthma is one of those diseases that has kind of international guidelines the GINA guidelines that everybody has adopted, and it's the Bible in terms of treating patients, so patient. The asthma data that will come out of China, you know, we believe will be extremely useful in terms of ultimately getting radimicobar approved in the US and hopefully will allow us to maybe only do one phase three study here, which is a significant cost benefit.
Ben Comer:And that would, of course, require some engagement and some collaboration with the FDA, and I promise to bring the conversation back here. I want to just add given your depth of experience in this area, barry, working with the FDA over, hopefully, 10 approved products with ConnectBio, I wanted to ask you what some of the mistakes are that companies make, especially startups, early stage biotechs with respect to FDA engagement.
Barry Quart:Yeah, you know, I think probably the one that comes to mind in that regard is that the agency generally doesn't give you number one, really clear instructions. They provide guidance. So you have to ask a lot of questions. When you go into a pre-IND or end of phase two, whatever the meeting is, you got to make sure you ask every possible question you can think of, because it's your one opportunity to actually get written responses from them on a timely basis. And then you know, and then when you hopefully, if you have a follow-up at you know, face-to-face meeting after their written responses, you know you gotta, you gotta really drill into any outstanding questions. And then, most importantly, you know what will happen frequently is they'll say we don't recommend you do that.
Barry Quart:But of course it's up to you because they don't have really that many tools to make companies do what they want. They basically have the ability to say, yes, you're free to initiate your program. So you know, open your IND. So that's one period that they have kind of more control than usual, or they can put you on clinical hold. It's not like they can just tell you, hey, we don't think you're ready. You know, hold on it's either, you know, a clinical hold, which is, you know, nobody wants to see that. Or it's hey, we can give you guidance, but you can take it or leave it.
Barry Quart:And so when they're giving companies guidance, you know, a lot of times they tend to ignore it, you know, because they think that they might know better, and which is fine, because the agency is not always 100% right. But you just have to listen carefully to what they're saying. And when they're telling you, we don't recommend this, you got to at least sit back and think about, well, what does that mean? And you know what are they trying to tell us? Because they're not 100% transparent, yeah, but what are they really trying to tell us and I think that will help in most cases is you know, the fact that they say, yeah, you're free to proceed is not a seal of approval that they agree, it's just that what you're doing is sufficiently safe. We can't stop you, but we're telling you we don't think that's the right approach.
Ben Comer:Right, right. We mentioned at the top that the FDA is going through something of a shakeup currently under the Trump administration. Are there any specific changes, Barry, that you would like to see implemented with respect to FDA's kind of standard operating procedures for drug review and approval?
Barry Quart:Well, you know, I think, as I mentioned, you know over the years that I've worked with them and seen a lot of evolution.
Barry Quart:I think the one thing that was the most beneficial for patients and for, you know, the companies and, truthfully, the FDA too was having an appropriate collaborative effort in terms of drug development.
Barry Quart:Our goal is to get drugs out to patients and produce the desired benefit for those patients. The FDA's goal, theoretically, is to get good drugs out to patients that provide a benefit to the patients. We pretty much have the same goal, kind of coming at it obviously very differently, and they are the regulator in a highly regulated industry. But I think that there can be a great benefit to a more collaborative effort. The general approach that's being taken in Washington today is a belief that there's been too much collaboration, there's been too much coziness between the FDA and industry, which, I got to tell you, I certainly haven't seen. As I mentioned, it's been quite the opposite, but nonetheless, that seems to be the perception, and today's world perception is 100% of reality, and so I'm afraid that we're going to end up with even more prohibitions on having that kind of collaborative effort, which is not going to serve anybody's benefit.
Ben Comer:Yeah, certainly there have been some kind of pot shots taken on advisory committee meeting members. You know to your point, do you in terms of improving collaboration and let's hope that there's not a retrenchment, and you know a widening gulf between the FDA and industry. But do you think that there is a new kind of formal meeting structure needed, or is it simply an issue of response time and agency employees working within the structure that exists but being more responsive more quickly? Which one would you like to see New formal meetings or just better responsiveness?
Barry Quart:Yeah, from my personal opinion I think we had. The meetings that are already set up under PDUFA are fine. You can utilize those and get the, in terms of formal meetings, the information you need. I think that there needs to be, again, more ability to interact in between meetings and, you know, again, you can send them questions, you can send them letters saying, hey, we have the following issue can you provide assistance or input? You may never get a response to that or it could take months and months if they get around to it. So that's something where you know a more speedy responsiveness from the agency would certainly be beneficial.
Barry Quart:But you know, going back to your comment on advisory committees, I guess it's all a matter of perception, because people who don't understand this process always harp on oh, this person on the committee got a waiver, but they were a consultant for you know three companies. Well, you know in this world, if you're an expert, if you're an expert in asthma and really understand the use of drugs, how did the? You know the development process, what's best for the patient from a treatment point of view? We're going to go out and seek you.
Ben Comer:Yeah, your expertise is in demand, right, right, I mean because that's the information we need.
Barry Quart:And so we're going to go out and hire you as a consultant and say, hey, can you help us? Here's this new drug. First time there was an IL-4 antibody, I'm sure they went to the leading experts and said, hey, here's the biology. What do you think? Are we crazy or does this make sense? And so those people would have signed up and got a small consulting fee, and you know so. Then the FDA looking for advisory board meeting members. They should go after the leading experts in the world on asthma and development of drugs and asthma and they'll take a look and say, okay, this person, you know, did you know a month of consulting for Pfizer. You know we can give them a waiver. It's not like they are beholden to Pfizer, they're not going to vote yes.
Ben Comer:They're not getting 20% of product sales.
Barry Quart:Yeah, they're not going to vote yes just because they received a few hundred or a few thousand dollars two years ago from Pfizer. So, yeah, they're independent, they work in an academic setting, no problem. That's the kind of people that you want on an ad board. Unfortunately, because there's this perception that, oh, those people are in the pocket of people that you want on an ad board. Unfortunately, because there's this perception that, oh, those people are in the pocket of the industry.
Barry Quart:We can only take people who have never consulted for a pharmaceutical company. Chances are those probably aren't the best experts, because if they had been, are they good ones? Somebody would have gone to search them out and said, hey, you know, what do you think? And then the other problem is is that if they've never been involved in drug development, you know there's there's theory and then there's practice, and there's lots of people that have great ideas about how to develop a drug.
Barry Quart:But the problem is it's impossible to do that experiment. You can't find those patients, you can't get them enrolled, you can't do that study, and so there's got to be a certain amount of balance between what's the perfect way to answer a question and what's a practical way of answering a question, and one that also doesn't take 20 years and $500 million, and so there's got to be a balance and the people that are on these committees need to at least have a sense of that balance. Sense of that balance. And it's always you know, over 30 years ago into advisory committee meetings. It's pretty easy to period where everybody on the committee is going to be completely devoid of hands on experience of being involved in drug development, because they're going to be tainted somehow by the evil pharma.
Ben Comer:Right, right. Well, barry, it's been an absolute pleasure speaking with you today. I, before we wrap up, I want to give you a chance to share your top priorities for Connect Biopharma, kind of, in the short to medium term, what's on deck for you? You know, what are you? What are you most looking forward to and aiming for with the company right now?
Barry Quart:Yeah, so our sole focus is the completion of these two trials that we discussed previously, looking at the drug and the treatment of an acute exacerbation.
Barry Quart:We believe that we can provide really a dramatic benefit to patients that are having a significant issue breathing, get them to the point where they, you know, are stable much faster and hopefully not come back, and so that's our sole goal at this point, you know, get that message out.
Barry Quart:We're fortunate that we have the financial wherewithal to be able to conduct those studies still have a runway into 2027. So we're not out, you know, hat in hand and in a difficult period for financing a biotech where you know we don't have to worry about that. It's all execution at this point and you know we're just excited to get those studies going and hopefully we'll have the data first half of next year and that will assist us in being able to, you know, devise a very clear phase three program. But the great part about this acute opportunity is usual asthma or COPD studies take years to conduct and it's a year follow-up. This is a one-month endpoint and so, as long as we can recruit the right patients, it's a short study. Get the data early next year and rock and roll.
Ben Comer:Excellent, Barry. Thanks again for being here. I really appreciate it. My pleasure, Thank you. That is Barry Court, CEO of Connect Biopharma. I'm Ben Comer and you've just listened to the Business of Biotech. Find us and subscribe anywhere you listen to podcasts and be sure to check out our new weekly video casts of these conversations every Monday under the Business of Biotech tab at lifescienceleadercom. We'll see you next week and thank you for listening.
