Cizzle Biotechnology Holdings plc (LON:CIZ) Executive Chairman Allan Syms caught up with DirectorsTalk for an exclusive interview to discuss acquiring 5% economic interest of AZD 1656, what it is and what its looking to treat, more about St George Street Capital & Conduit Pharmaceuticals and how the agreement works from a financial point of view for the company.
Q1: You’ve announced today an agreement with Conduit Pharmaceuticals and St. George Street Capital to acquire a 5% economic interest of AZD 1656 and that’s to treat inflammatory pulmonary and cardiovascular disease. Can you just tell us a little bit more about this and how it fits with Cizzle Biotechnology’s previous agreement on AZD 1656?
A1: First thing I’d say, I’m actually delighted that we have been able to achieve this today. We thought back in September when we announced our initial deal with St George Street Capital that it was a very important part of the company’s development. The company is focused and will remain focused on being a company that’s going to provide innovative new early-stage detection tests for cancer, but is also true that as a business, we have a broader interest in how we can develop our expertise and diagnostics across the pharmaceutical industry.
One of the things that we were very keen to do back last year was to get into the area of what is known as companion diagnostics. Companion diagnostics are, as the name says, a companion and there are companion to a therapeutic. So, on the one hand, it’s great to be able to detect cancer early and that’s what we are focused on, but it’s also important as new drugs are brought to bear in the marketplace, that you are able to select your patient populations carefully. That means only treat those people that are going to respond and try to remove those that won’t and these types of tests are called companion diagnostics because they can tell you which patients will or won’t respond to a potential therapeutic. In doing so, they make clinical trials more efficient, they make it more safe for patients to do or to take part in these trials and eventually will assist and help drug companies bring their products to market.
That’s an important strategic goal for us because it means we cut across not only detection but we also help those companies that then try to find cures for patients. So, our initial deal with St. George Street Capital was exactly that, which was they have a big interest in this drug called AZD 1656, which we’ll talk a bit more about today, and wanted a company that could work with them on a companion diagnostic and that’s us. Because that’s so important, we think we can add a lot of value to the development of that drug through the companion diagnostic.
We also had the opportunity at that time to acquire an interest in the royalties that will come from the commercialisation of the drug. At that time, our deal was limited to a cap of £5 million which is great, a £5 million royalty to the company plus we got asked to develop a diagnostic test, a companion diagnostic, for which we’ll have £1 million in fees. It always was the view that wouldn’t it be great if we could build on that early relationship and try to get more involved with St George Street Capital and, as it turns out, their commercial partner called Conduit Pharmaceuticals.
So, we were actually able to do that, which means we’ve uncapped our relationship which means there is no cap now to our stake and we’ve acquired 5% interest in the royalty stream so we’ve significantly increased our ability to bring money and value to our shareholders.
Q2: Can you just explain for us a bit more about what AZD 1656 is, its history and what it is looking to treat?
A2: All these great code names are wonderful when they’re on paper, not so easy to pronounce.
AZD 1656, the clue is in the title AZ, which is AstraZeneca, so this was a drug originally developed by AstraZeneca in the field of treating diabetes and, as you know, many many drugs go through the system and they don’t always meet the commercial goals of a company, they don’t always meet the requirements at any particular time for something.
Many drugs get put through the early toxicology testing to make sure they’re safe for use in humans and they can get to a point which is, in the pharmaceutical industry, known as Phase II, which is actually quite a long way down the road. A lot of money would’ve been invested into developing this drug but for whatever reasons, the drug doesn’t progress and effectively, I hate to use the words ‘sits on the shelf’ but they’re not being developed.
So, if there is an opportunity to repurpose that drug then there can be a) a lot of money saved and b) bring it very much more quickly to the marketplace if it could be used in other conditions. The other conditions outside of diabetes that were considered at the time was to use it in autoimmune diseases, or diseases of the immune system, and whilst there are a whole range of these particular indications that might be used from infertility to various other conditions, the one area that attracted a lot of the attention last year was the use of this drug for treating patients with COVID. The reason why this particularly has turned out to work so well, following very successful clinical trials, is that it manages the inflammatory response that many patients ended up dying with, which was your body reacts to this virus infection and overloads the immune system and the immune system goes into hyperdrive into things called cytokine storms. One of the key cells that are involved in that process are known as T regulatory cells and it seems that AZD 1656 acts as an immuno modulator on the way that T regulatory cells work, and as a consequence, were able to suppress that hyper immune condition, which is true also for many other diseases.
So, that’s why we got involved because of the immune diagnostic work that we’ll be doing with them, but it has a range of activities and particularly in pulmonary cardiovascular disease. That’s important to us because certain inflammatory diseases like CPOD, like lung fibrosis, which are quite well known diseases are causes in creation of lung cancer. So, we’re a business that’s involved in early detection of cancers, particularly lung cancer, working in the autoimmune space for immune modulators and feeding right back into our core interest which is this will help those patients that suffer from not only cardiovascular and inflammatory pulmonary disease, but could lead to lung cancer so very important strategically for us.
Q3: As you mentioned, you’ve partnered with Conduit Pharmaceuticals and St. George Street Capital, can you just tell us a little bit more about them?
A3: Well, I already introduced the challenge which is that the cost of developing new drugs runs into billions of dollars and the reason why it does that is because there is quite a substantial loss of potentially useful product throughout that development cycle. Many of these drugs have potentially got more life in them so they’re certainly useful, they’re certainly safe to use but if only they could be found another pathway to help people. So, this repurposing of drugs already in development is a very interesting way to take it forward.
St George Street Capital is a charity, it was designed by some very prominent academics and industrialists who said we should really try to repurpose these drugs, we should find a way to help take these drugs into other areas and so be helpful in being efficient in the way in which valuable money is spent on drug development. Their goal was to try to find large pharmaceutical companies, just like AstraZeneca, to identify certain assets that aren’t being currently commercialised, try to identify ways by looking at the science as to how they could be repurposed, and then try to find new commercial partners that may take that forward.
Conduit Pharmaceuticals is a good example of that and they fund this particular type of research so they were very involved in creating, if you like, the important cash that’s needed to take these clinical trials forward. Their job is to take these having taken these repurposed potential drugs from St George Street Capital development to the pipeline, and then find large pharmaceutical companies who would like to then retake those and put them into their pipeline and bring them to the public.
So, we’ve got this great partnership between Conduit and St George Street Capital and we bring the diagnostic capability to that so that’s a great partnership for us all to be involved in.
Q4: Finally, how will this agreement work from a financial point of view and potentially generate future revenues for Cizzle Biotechnology?
A4: This is the real upside of all of this. So, apart from the fact that what a great thing to do to bring these drugs to the market that might not otherwise be there, but we as a business, as we came to market last May, our revenue model was based on develop our early lung cancer detection test, and ultimately partner with other companies, sell it on, possibly royalty deals as we recently announced in China but largely our revenue model is from the sale of that single product.
By getting involved with Conduit and St George Street Capital, and also by developing companion diagnostics, we’re actually able to start revenue so much earlier because effectively we’ll be in contract as the expert company to develop these tests. Certainly the announcements we made in last September when St George Street Capital gives us a fee of up to £1 million which is near term, that’s not a long term revenue stream, so we instantly get into near term revenue streams.
We hope we can develop further companion diagnostics, accelerate those near term revenue streams and then the really big upside is, as we all know, some of these blockbuster drugs are worth a phenomenal amount of money. So, the royalty streams can be very attractive so our viewpoint, we’re earning money now, we’re partnering with great companies, we’re beginning to get pharmaceutical businesses in our pipeline of clients, we have an attractive portfolio of pharmaceutical assets with revenue stream for us in the long term.
All of this on top of what we said we would do last May, which is bring our lung cancer test to market, which we are still doing so yes, very, very pleased with the announcement today.
