Phylogica launches IPO, touts protein libraries

Perth company Phylogica has launched its IPO and is hoping to raise AUD$5 million from the sale of 25 million shares at $0.20 to support the preclinical development of three lead candidates -- including an asthma therapeutic -- and its protein libraries.

The company, a spin-off from a collaboration between Perth's Telethon Institute for Child Health Research and the Fox Chase Cancer Center in Philadelphia, USA, uses functional proteomics to identify lead candidates for further development. The company intends to develop its candidates through the preclinical stage, prior to licensing them out to pharma partners for clinical development, according to CEO Stewart Washer.

Phylogica's technology is largely based on the work performed by chief scientist Paul Watt and his colleagues at the two institutes over the last six years to develop large libraries of naturally occurring protein fragments ranging in size from 15-100 amino acids, which they call phylomers.

"A lot of companies have random peptide libraries, but these haven't yielded much in the way of peptide-based therapeutics," chief scientist Paul Watt told Australian Biotechnology News. "Most blockbuster peptide drugs are large, naturally encoded and highly structured peptides like insulin or calcitonin. The next generation of peptides tend to be fragments of proteins. These are more stable as they've been through the evolutionary selection process."

Phylogica's unique insight is that all proteins contain combinations of sub-domains, of which there are about 1000 classes. The company's libraries contain millions of naturally occurring examples of these, culled from a diverse range of micro-organisms from across the evolutionary tree, with thousands or millions of examples of each sub-domain.

These libraries can be screened using a reverse yeast two-hybrid assay -- which the company calls the Discriminator Blocker Trap -- to identify high affinity hits capable of blocking interactions. In combination, according to Watt, it's a very effective drug discovery platform, with an unprecedented hit rate that identifies peptides with exquisitely specific affinity for the target.

"There is no need to optimise the peptide using mutagenesis, although that is an option," Watt said.

Using the platform, Phylogica has already identified three lead candidates, which are in various stages of pre-clinical development. The most advanced project is focused on mimetics of the house dust mite allergen Der p I, a major cause of asthma and allergic rhinitis (hay fever), which are promising candidates for use as a desensitisation vaccine. In animal studies, antibodies are produced against the phylomer that also bind to the original mite allergen, and the company hopes that they can be used to induce tolerance to the mite allergens.

A second project focuses on stroke, and the associated death or degeneration of nerve tissue following an ischemic event. A number of phylomers have been identified which target the jun-jun interaction associated with stroke-related apoptosis, and these are currently being evaluated in animal models in collaboration with WA's Neuromuscular Research Institute.

The company has also begun to look for phylomers capable of acting on novel targets in type II diabetes including JNK protein kinases.

Washer says Phylogia plans to generate the high quality data packages needed to attract clinical development partners from biotech or big pharma, rather than move into clinical trials on its own. They are already in contact with a number of companies interested in their technology.

"What we believe is that we have the next generation of antibodies," he said. "Phylomers are small in size, so they are easy to synthesise, and easy to scale up manufacturing, there is a much better patent landscape, so there is better royalty stacking, and there is the potential for alternative delivery mechanisms to injection to be used."

In the near term, there is also the possibility of generating revenues from contract research, or more preferably through co-development deals with companies interested in trying the platform out on their own targets.

Along with the $5 million to be raised in the float, Phylogica has another $2 million in the bank, and Washer says the cash should last for at least two years.

"We plan to partner early and partner well," he said. "We don't want to be a pharmaceutical company."

The company's board of directors includes chairman Aki von Roy, former president of Bristol-Myers Squibb Europe and founder of a number of biotech companies in New Zealand, Harry Karelis from listed investment group Biotech Capital, former director of the UK's Rothschild Asset Management Bioscience unit Bruce Fielding, and Perth biotech entrepreneur Saliba Sassine.

Perth investment bank Azure Capital is managing the IPO, which has not been underwritten. The offer is expected to close on March 18, with the listing anticipated for March 30.