HOW A MERGER JUMP-STARTED A PROMISING DRUG’S DEVELOPMENT
Gur Roshwalb, M.D., isn’t afraid of a challenge. When Dr. Roshwalb, CEO of Akari Therapeutics Plc, saw a unique opportunity to reinvent a well funded but struggling U.S. biotech company by merging it with a cash-strapped British company with a promising new drug therapy for patients with rare conditions, he took it.
Celsus Therapeutics had plenty of cash on hand when Dr. Roshwalb became CEO but its lead therapy did not meet its mid-stage study endpoint, so he scouted out Volution Immuno Pharmaceuticals and the two companies agreed to a reverse merger, lining up $75 million in fresh financing and taking the new biotech entity public as Akari Therapeutics Plc.
Akari’s lead product, a next-generation C5 inhibitor called Coversin, is being studied as a potential first-line therapy. Another drug already on the market works in a similar way but is administered via an every other week IV treatment – Coversin is designed to be delivered in a more convenient, patient-friendly, daily single-injection form. Akari is also poised to bring new treatment options and new hope for patients with other rare conditions as well.
Helping people is a significant part of what drives Dr. Roshwalb. “I care about the patients. It may sound like something really simple and easy to say, and there’s no doubt that we’re all in this to make money, don’t get me wrong, but in truth I really, really do care about the patients,” he says. “Hearing from patients—what they want, how they want it, what’s wrong, where we could do better—I think it’s very important.”
In an interview with Ashton Tweed, Dr. Roshwalb explains how the merger came about, the challenges and rewards behind the deal and why a protein discovered in the saliva of the Ornithodoros moubata tick could change people’s lives:
Why did you leave private practice medicine to become a biotech analyst?
The study of medicine is very exciting; the practice of private medicine can be a little bit less so. I really liked the learning aspects and the constant challenge, which I didn’t quite feel I was getting when I was in private practice. I realized I was not really utilizing my full capacity and there were other things I was interested in. So I interviewed at a few different places and was politely told that while I know a lot about medicine, I know nothing about anything else. I decided to get my MBA and got hired at Piper Jaffray, where I first covered biotech stocks as an associate and then covered specialty pharmaceuticals as a senior associate.
You moved on to Venrock. What did you gain from your experience there?
I wanted to expand upon my operational experience and Venrock is a phenomenal venture shop. I really loved my time there; great people, great work, but as an investor I was mostly looking at other companies wishing that I could help them do what I thought they needed to do. At some point you’ve got to put your money where your mouth is. Not that you don’t do that as an investor— you do, but only peripherally—and I really wanted to get operational experience.
When you joined Celsus as CEO, the company was in trouble. Why?
When I got there, Celsus was unable to raise capital for various sorts of reasons. At the end of the day, I finished up a trial for them and was able to raise $21.7 million, so we turned it around and then uplisted to NASDAQ under my watch. But in February 2015, our Phase II asset in dermatology did not meet its endpoint in a placebo-controlled trial. At that point you have to recognize that you’ve got to stop, the drug doesn’t work as you expected it to.
So why did Celsus acquire Volution?
When the drug trial failed, Celsus was basically a NASDAQ shell with about $3 million and we had to figure out what to do next. We were introduced to a British company, Volution Immuno Pharmaceuticals, which had Phase I data for a C5 complement inhibitor that we thought was exciting. We looked at a lot of different companies at the time but what was attractive about Volution was that the predicate biology of its asset Coversin was very well understood. There’s a competitor product out there made by Alexion Pharmaceuticals called Soliris®, which blocks C5 into breaking down into C5a and C5b. Coversin does exactly the same thing, just at a different point than C5.
Because the mechanism of action was so well understood, it was pretty clear that Coversin was going to work. Our biggest issue now is to manufacture it, show safety and get the FDA and the European Medicines Agency to approve our development plan.
What was your role in the creation of Akari Therapeutics?
As the CEO of the company that failed, I had to go find an asset to acquire and successfully convince the other side that they wanted to merge with us. I then had to help raise capital. Concomitant with the reverse merger with Volution, we did a $75 million private investment in public equity (PIPE) with some blue chip investors.
We really had three sets of challenges. The first was showing Volution the benefits of this deal, as opposed to another way to raise money. The second challenge was making my board understand that they wanted Volution and to agree to the terms, because the truth of the matter is Volution had a much stronger bargaining position. We needed them while they sort of needed us. There were other options they could’ve pursued. And third was convincing the old shareholders that this is the deal they want to do. I also helped Wall Street understand the Coversin story in a way that would resonate with that group.
How do you shape the story for Wall Street?
There are lots of different ways of presenting what you’re trying to do. Soliris® is the product already on the market and we have a product that we want to be next to market. Investors want to know why you are going succeed. What’s different about you? What’s really important to get across to investors is why you are different, how are you different, why will you succeed. I think I made a difference in shaping that message.
How does Coversin work?
Coversin is a tick-derived salivary protein. The immune system does two things in the body in a very general sense: it identifies foreign things and kills them. There’s a bridge between identification and destruction, and that’s called the complement system. One of the ways an antibody can destroy its target—for example, a bacterium—is by turning on the complement system. You then get what’s called a membrane attack complex, which is essentially a very non-selective bomb that cuts a hole in the cell membrane and blows up the cell. The problem is when that bomb is turned against the cells in autoimmune disorders.
Your typical blood-sucking parasite, like a mosquito, doesn’t care what happens to the host. If a mosquito bites you and then flies away and you get a big, itchy welt, the mosquito couldn’t care less. Ticks, however, are very different because the tick takes a blood meal from its host for anywhere from 12 hours to two weeks, depending on the tick. In order to stay on the host for that long, somehow the tick has to be suppressing the local immune system of the host so that the host doesn’t respond. Dr. Miles Nunn, Akari’s chief scientific officer, was tasked with finding that complement inhibitor.
What diseases will you be targeting with Coversin?
Initially, we’ll be targeting the same diseases as Soliris®: paroxysmal nocturnal hemoglobinuria, (PNH) and atypical hemolytic uremic syndrome (aHUS). We intend to expand into new markets, including Guillain-Barré Syndrome.
Where are you in the development of Coversin?
We’ve started the Phase II trial for PNH and we hope to have data from that by the end of the year. We plan to start the Phase II trial for aHUS in the fourth quarter of this year and hopefully start a Guillain-Barré Syndrome trial in the first quarter of 2017.
How does Coversin differ from Soliris®?
Soliris® is an antibody that binds to C5, which is at the very end of the complement cascade. When C5 gets broken apart, one of the parts becomes the bomb that blows up the cell. By stopping the breakage of C5, you inhibit that bomb.
Coversin does exactly the same thing Soliris® does. Coversin also binds to C5 and blocks the breakdown of C5 but does it on a different point of C5. Unlike Soliris®, which is given intravenously every other week, Coversin can be given as a subcutaneous insulin-like injection once a day. That difference is important to patients because they want to be able to take control of their disease. Patients don’t want worry about, “Where am I going get my IV when I’m on vacation?” Or telling their employer, “Every other week, I have to take a morning off to go take a drug.” Patients want to be empowered; for them to have the freedom of taking an injection really can make a difference in their lives.
Ashton Tweed would like to thank Dr. Gur Roshwalb for this interview. If your company needs help from members of the Ashton Tweed Life Sciences Executive Talent Bank, we can supply that assistance either on an interim or a permanent basis. Additionally, if you are among the many life sciences professionals affected by the changes in the industry, Ashton Tweed can help you find the right placement opportunity — from product discovery through commercialization at leading life sciences companies — including interim executive positions and full-time placements. In either case, please email Ashton Tweed or call us at 610-725-0290. Ashton Tweed is pleased to continue to present insightful articles of interest to the industry.