Exopharm: Reducing Risk. Making Drugs by Purifying not Synthesising
In this note to shareholders and potential investors, the company outlines Exopharm’s risk-profile and how the business of Exopharm compares with other types of listed biotechnology companies.
Exopharm: Context
Exopharm is an ASX listed regenerative medicine company focused on bringing exosomes into clinical use as a cell-free therapy to address health span related medical problems – harnessing the ‘secret sauce’ from stem cells.
The EY Biotechnology Industry Report 2017 1 says “Today, individuals around the globe are living longer, but not necessarily better. The increase in noncommunicable diseases such as Alzheimer’s disease, heart disease, diabetes and osteoarthritis means that for many, growing old is too often seen as a period of diminishment, not opportunity.”
According to a 2018 market report 2, “The global Regenerative Medicine Market was valued at US$5,444 million in 2016 and is estimated to reach US$39,325 million by 2023, registering a CAGR3 of 32.2% from 2017 to 2023. Asia-Pacific is expected to grow with the highest CAGR during the forecast period.”
Listed biotechnology companies have a high failure rate and the Pharma & Biotech 2019 Preview report 4 says that “Biopharma has had a rocky few months, and many expect life to get tougher as we head into 2019”.
In summary, the opportunity in front of Exopharm is big but the risk of failure in biotechnology and biotech stocks is also significant.
Exopharm: Purifying not synthesising
Exopharm’s game-changing approach to making regenerative medicines is fundamentally different from the typical ‘New Chemical Entity’ (NCE) synthetic chemistry focus of many pharmaceutical and biotech companies.
In many ways, Exopharm’s business of purifying therapeutic exosomes from platelets or stem cells is more akin to the lower risk blood products businesses than to the higher risk synthetic pharmaceutical drug development biotechnology companies 5.
The synthetic chemistry development model of others
Pharmaceutical & biotechnology companies typically make so-called small molecule or synthetic drugs that can be taken by mouth (orally available) by designing and then creating complex, unnatural synthetic molecules.
The majority of these projects fail for one reason or another.
- the product proves to be unsafe (safety and toxicity),
- the product doesn’t seem to work in the medical indication they have tested it in (efficacy or potency),
- the product is too difficult to make (manufacture),
- the product is not cost-effective (cost versus benefit),
- the product is not sufficiently better than the existing treatments; or
- the company runs out of money
Safety and manufacture are key hurdles to jump to avoid early failure, but typical synthesised drugs can fail in many ways.
Biomolecules from blood are different
Another class of drugs used to help patients are blood products – biomolecule products derived from healthy blood donors and utilising naturally occurring parts of our blood.
Blood product companies have a strong track record of product and business success These include huge companies – one with a market capitalisation of over A$80 billion – generating significant revenues by the relatively simple process of purifying naturally occurring blood-derived biological molecules from the blood of healthy donors (in which the molecules are at natural healthy levels) and then supplying these purified ‘medicines’ to unhealthy people in whom the same molecule is not functional or at inadequate levels.
One example is ‘Factor VIII’, a blood-clotting biomolecule. Haemophiliacs are missing Factors that make their blood clot, so bringing their level of these Factors up to normal levels makes their blood clot like the rest of us. Blood product companies harvest Factor VIII from the blood of healthy donors and supply it to those whose bodies don’t make enough of it.
Now, let’s go back to our biotechnology risk check-list for Factor VIII purified from blood from donors:
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- safety/toxicity (a natural biomolecule in our body),
- efficacy/potency (works in the rest of us),
- manufacture (made by the donor’s body naturally),
- cost/benefit (very low development costs to be amortised) and
- competition (limited competition).
The blood products business model looks appealing because of the low-risk profile – and it is all about purifying a natural substance.
How Exopharm fits within the product purification business model?
Exosomes are entirely natural nano-capsules, released by our cells, packed with beneficial molecules. They are present in our bodies’ fluids including blood, saliva, urine and milk.
Exosomes are found across nature – in all animals including worms – and plants. Some describe exosomes as the ‘secret sauce’ of stem cells.
When we are young, the bloodstream is rich in regenerative exosomes. But as we age, exosome numbers fall, and the body switches from a state of rapid repair into one of accumulating damage, decline and propensity for age-related disease.
Topping up the levels of regenerative exosomes in the ageing body would make sense.
The ability of exosomes or extracellular vesicles affecting aging and showing promise to improve health span is being widely discussed in both the media 6 and scientific community 7.
Exopharm has pioneered a way to extract and purify this upcoming form of regenerative medicine from the secretions of human cells.
Like the blood products business – and unlike NCE drugs – Exopharm’s proprietary method for purifying therapeutic exosomes (Exopharm’s LEAP Technology) harnesses nature and yields an exosome product that is natural, expected to be lower risk and potentially high reward.
Purifying biomolecules/particles has a compelling risk reward profile and has resulted in many successful drugs.
Australian companies have a strong track record of developing successful medical macromolecules purified from the blood.
Exopharm’s business is akin to a blood factor purification business. Our key manufacturing technology is bio-purification, not synthesis.
Our Plexaris exosome product is derived from blood platelets and is being prepared for first-in-human clinical trials. Platelet derived exosomes have been designed by nature and are present inside all of us – in larger numbers in young people and decline in number as we age.
Exopharm has a unique and patented technology to purify exosomes, called the LEAP Technology. LEAP Technology overcomes many of the problems and limitations of previous purification approaches, and is owned by Exopharm for all uses.
Exopharm’s Development Program starts with treating specific medical conditions with its exosome products, but there is the promise of a powerful broader regenerative health span effect to be investigated.
As age is the key risk factor for numerous diseases, from eye conditions to heart disease to neurodegeneration – using exosomes to bring the body back to a more youthful biochemical state could have wide reaching impacts for living a long and healthy life.
More information about Exopharm’s Development Program please refer to our ASX announcements.
Prospective investors should be aware that past performance of other biotech companies is no guarantee of performance success for Exopharm. Any Investor considering an investment in Exopharm should consult a professional advisor, broker or other professional.
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