Avacta Group Plc (AVCT) Earnings Call Transcript & Summary

Today, we talk to Chris Coughlin, CEO of Avacta, U.K. company focused on peptide drug conjugates for the treatment of cancer. Chris, you've had a really interesting career as an oncologist moving through both pharma and biotechnology companies and working with some fascinating technologies along the way to reach Avacta. You've had a fundamental influence on this current transformation, but you started off as a clinician. What initially made you want to be a doctor?

So my parents will tell you that when I was around about 8 or 9 years old, I saw a heart -- an open heart surgery on television. Loved it, thought it was so cool. Whereas the rest of my family, I have 2 sisters like this is disgusting. But as long as I can remember, I always wanted to be a doctor. I was the weird kid on the street where all the baby dolls were always sick, and I had to take care of them. I got a doctor kit when I was little. It's just -- it's always been something that I wanted to do to take care of people.

Excellent. And what drove your move into the pharmaceutical industry because you move from a clinician into a pharma?

So I originally became an oncologist because when I was a young teenager through to my early 20s, I lost 3 important men in my life to this disease. I lost my grandfather to lung cancer, my godfather to esophageal cancer and my best friend's father who was kind of my other dad to stomach cancer. And those 3 losses at that early stage in my life were really impactful. And I wanted to do something against cancer. I wanted their deaths -- almost to avenge their deaths. I wanted to beat up on this disease. I loved being a pediatric oncologist, I loved it. I was really good at it. You take each individual patient and develop the treatment plan all the way through their course through the disease. The reason that I decided to move over is twofold. The first was while I was really good at holding an individual hand and taking care of that individual family, it felt like I wasn't going to make a big impact. And the second is that as a pediatric oncologist, we don't do the big trials, and we weren't involved in adult oncology, which is really where, let's say, the big advances come from. And so the opportunity that came originally was through translational medicine. That was my first job, moved into the clinical space. And I really started to see the impact of how pharmaceutical companies and biotech companies work with academics. And it's really -- it's a fantastic partnership. And I'd love the seat that I have at the table now. But it's really with the academics and the companies together that make the trials happen.

Excellent. And it's International Women's Day. Do you think you face any particular biases or barriers or even advantages to being a woman in either the sort of clinical or more pharma industry?

So I think medicine is one of those places where men and women work so well together. I think you would find almost every female physician will say, I get respect from my male colleagues. And it's really a collaboration. I think that in the sciences, specifically, we also see that the differences between the male and the female brain, of which there are many, are actually advantages to have men and women on the team. I have an incredibly supportive Board racing through right up through to Avacta now where we've just recently hired our second female director. I was the first. And so I think that it's important. I think having both the male brain and the female brain even in the boardroom and making decisions is important. It's interesting to watch how men and women behave differently, make decisions differently, analyze data differently. And so everywhere that we can have that collaboration, I think, is really important.

Before we move back to your career, recent changes in the U.S. administration have brought a big change in the approach to DE&I initiatives in the U.S. Do you see this as having a major impact long term?

I don't, to be honest with you. I think that most companies, entities as they're hiring are looking to build diverse teams. And do we need those strict rules in place? Probably not. But I think that back to my comments on the Board meetings and whatnot, that diversity and the diversity of thinking really benefits any entity. And so I think that we may not need those rules, and we can hope that we continue to build diverse teams for the diversity of thinking.

Excellent. That sounds encouraging. Now back to you. Post your time in large pharma, you moved into biotech, working with some of the leading companies in the cell therapy space, Immunocore and then Tmunity. The cell therapy space is still in the relatively early stages of becoming established. How do you see it playing out from a clinical perspective?

So cell therapy, we think about 2 different ways of delivering cells. One is using a patient's own cells, and this was the first approved products, using a patient's own cells and creating what we call an autologous cell therapy. The challenge with autologous cell therapies is the scalability and the sheer cost of the manufacturing, the time that it takes to manufacture and the cost. Those are hard to ultimately scale to global perspectives. The gains that we're going to make are allogeneic cell therapies and that is where we use donor cells and those donor cells can then be turned into medicines. That's a big challenge, I think, out there in the cell therapy space. And to be honest with you, I grew up in cell therapy. My postdoc mentor was actually the inventor of that first CD19 CAR T cell, Carl June. So I fell in love with cells very early on. If you think about medicines and the development of medicines, we started with small molecules. Those were enabled by chemistry and how could we make them. The next were biologics and that was enabled by recombinant DNA and manufacturing. And so cell therapy is sort of the new discipline and that's really going to be enabled by manufacturing. I probably wouldn't have left cell therapy except that the technology at Avacta -- for me as an oncologist wanting to make a dent in this disease, the technology at Avacta, the pre|CISION platform was so exciting and compelling. And the more that I got into it, initially, that summer that I first started with them, the more I really fell in love with, just the sheer impact that this platform could have.

So Avacta has a variation on a more traditional type of oncology treatment. Could you introduce the technology and tell us what attracted you to Avacta in the first place?

Absolutely. And I brought a few tools that I like to use to introduce it. So if you imagine that my cell phone here is a molecule of an anticancer drug. This drug is designed to kill specific types of cells, generally speaking, actively dividing or a cell that is using a specific pathways. But this drug can get into the GI tract, it can get into the bone marrow cells, and it can get into the tumor equally. It doesn't know the difference. And so it's able to kill all of those. Now where it can kill those normal cells or normal tissues that's where we see the toxicity. If you imagine my mouse is a small piece of protein. It's called a peptide. It only has 2 amino acids, so it's very tiny. We take this peptide and we stick it on the cell. It does 2 things. One is it changes the physical, chemical properties, meaning it now can't get into the GI tract, it can't get into the bone marrow, but it also can't get into the tumor. It's inert. What happens is, though, this peptide is very specifically removed by an enzyme that's only in the tumor. So while it can't get into the GI tract, it can't get into the bone marrow. As soon as it sees the tumor, the tumor rips this off. And now all of a sudden, you're concentrating this drug right where it's supposed to be used, which is in the tumor. And the exciting part, I could still remember the Board meeting where we looked at the first biopsy data and just seeing the sheer difference between the tumor concentration and the plasma. And we sort of all looked at each other as I was still just a director and said, game over. Like it works. It really concentrates. And so now the question becomes how many and what are the best drugs to attach to that peptide?

Absolutely. So you've been instrumental in reshaping Avacta into a pure-play technology company to take advantage of this -- the pre|CISION platform. Now the lead product, FAP-Dox, is a conjugate of doxorubicin, which is a very traditional and very well-used chemotherapy. How do you see that one changing current treatment approaches?

So doxorubicin is described by oncologists as nobody's favorite drug. It's 50 years old. It was actually approved when President Nixon was in office in the United States, so a very long time ago. It is still used despite its severe toxicities. It is still used in 3 disease settings. It has mostly been abandoned in solid tumors, except for straight across the board in breast cancer. It's used in a subset of head and neck cancer, salivary gland, and it's also used in soft tissue sarcoma. The reason is for those 3 diseases, it works. And any time we've tried to step away, specifically in breast cancer, every time we've tried to reduce the use of this wildly toxic drug, survival rates go down, and oncologists don't like that at all. And so the impact of FAP-dox or AVA6000 is really going to be in those 3 disease settings. As we've been talking about recently, the data in salivary gland cancer, very exciting, high unmet need. So it's one of those places where it's fairly straightforward how to get it on the market. Breast cancer, there's all kinds of different trials we can do. We're starting in triple-negative, high unmet need. It's actually one of the places where doxorubicin is still used in the metastatic setting, believe it or not, because it works. And so the impact of this particular drug, in my mind, is those 3 disease settings, but it could really make an impact in breast cancer. It's used in the adjuvant setting in breast cancer, meaning where patients are still curable. And despite its toxicities, it's used because it works. And the breast oncologists that we've been speaking with as we open the trial and open the expansion cohorts, very excited about the opportunity in metastatic cancer, but moving it up into the adjuvant setting where we could really make a dent in this disease means so much to us. And it's one of the reasons that we keep going with this one. We think it's got an important place to play in those diseases.

Excellent. Now the second product in the pipeline because the advantage of this being a platform is you can attach different toxic elements to it. FAP-EXd is a conjugate of a much more toxic chemotherapy, but not one that's been approved so far. So why are you so excited about this particular program?

So exatecan, which is our next precision medicine, it went all the way to Phase III. It was in a lot of patients a number of trials. There are reports out there showing that as a single agent, it was able to induce tumor shrinkage, partial responses like frank responses in patients. It was also wildly toxic. And so at that recommended dose, we saw 90% severe neutropenia. That's really, really high and quite toxic. It also had a problem in that it had a very short half-life. So the half-life of exatecan is only 9 hours. Both of those, we figured out how to fix with precision. So with the exatecan molecule and some really creative chemistry, we've been able to create a sort of sustained-release mechanism. And we can now see through modeling that we can get 60 hours of coverage with exatecan in that tumor with a single dose. And so we've now created a sort of totally different way of administering exatecan. Why are we so excited about this one? If you look across the addressable patient population, the market opportunity for precision medicines, where 90% of solid tumors express some degree of FAP. So that's an incredible addressable patient population. But a TOPO1 inhibitor like exatecan would have activity in a number of those diseases. And so this one, we feel like if we get it into the clinic and it does what we designed it to do, it really -- it doesn't have a lot of limits on it in where we can take it. Now each of those trials cost money and whatnot. So we have a specific, distinct set of diseases that we're going to go after first. But I think this one could have -- it could be that dent that I've been looking for in cancer for much of my career. So we're really excited about this one just for the sheer impact it might have.

Excellent. No, that's looking forward to seeing the progression of that. The pre|CISION Technology has clearly got very broad application. Can you expand on the other potential uses it has?

So one of the next medicines that we're looking to make is a targeted therapy. So it's not just chemotherapy. I know the first 2 have been sort of traditional chemotherapies. But pathway inhibitors, for example, have been very effective in a number of diseases, but they also can carry some very high toxicities. And so therapeutic index with pathway inhibitors is also a problem. We hope to see one of those coming soon to the clinic. We can also use -- if I take the peptide, we can also use the 2 ends of the peptide. We attach this to the drug, but we can attach that other end to a biologic. It's sort of the third box of intellectual property that the company has. So we are working in the background on biologic drug conjugates or affimers. We can also use it with antibodies. And so it sort of has an advantage over traditional linkers used with ADCs in that it's very specifically cleaved only in a tumor. And so you would lose some of those toxicities that we talk about, lung toxicity, liver toxicity, ocular toxicity that we see with a number of the ADCs.

Yes. So it's all about concentrating in the area of the tumor and anything you want if you get it attached to there...

Exactly. Exactly.

That all sounds very exciting. Thank you very much for taking the time today to talk to us, Chris. And I look forward to seeing how Avacta progresses in the future.

Thanks again for the time. Appreciate it.