Thinking big? Think US, advises new Biota chief

By Melissa Trudinger
Monday, 23 September, 2002

The single most important thing an Australian biotechnology company can do to increase its chances of success, according to new Biota Holdings CEO Peter Molloy, is to be on the ground in the US.

"The deal-making market in the US is worth $5 billion per year," Molloy said in an interview with Australian Biotechnology News on Friday.

Molloy will himself be running the show from the US, and maintains that any company serious about forming partnerships with big pharma and other biotechs should at the very least base its business development activities there, if not the CEO.

"Biota is one of the few biotech companies that recognises this and has done it," he said.

Molloy, whose background includes stints at Faulding and Pharmacia, said that in recent years pharmaceutical R&D had been pulled back from global outposts, leaving the US and to a lesser extent Europe as the hub. What that meant for countries like Australia, where pharmaceutical R&D had always been a bit thin on the ground, was that the academic and emerging biotechnology sectors were left behind as the main flag-bearers for R&D.

According to Molloy, the average pharma deal takes 13 meetings, 18 months and meetings with 26 people. "That's the reason why Australia doesn't do more deals with the US," he said.

Molloy said he planned to be active in the US deal-making arena, and would spend about 60 per cent of his time Stateside -- about right, he said, for the activities of the company in Australia and in the company's US subsidiary Biota Inc.

Molloy comes to Biota with 20 years' experience in pharmaceuticals and biotechnology. In addition to his positions at Faulding and Pharmacia, he has been CEO for three biotechnology companies: SLIL Biomedical and Moleculon in the US, and Florigene in Australia.

"One of the things that attracted me to Biota was that it had cash," allowing him to focus on the strategic agenda, Molloy said -- a contrast with other cash-starved biotech ventures he had been involved with in the past. "The company also has more than one technology, one product. What I have learned over the years is having options."

Biota is currently focused on two technology platforms. The first is a multi-valent coupling technology (MUCO), which is initially being used to develop Flunet, the second generation successor to Biota's flu drug Relenza (zanamivir). The second is N.MAX, the nucleoside drug discovery platform, which was acquired by Biota in May 2001.

The premise of the platform is the use of a proprietary coupling agent to link drug moieties together, allowing the drug to bind to more than one site on the biological target. This increases the potency and/or the selectivity and also extends the duration of action.

Flunet, which uses the MUCO technology on zanamivir, is 100 times more active than Relenza, and could be administered once a week, instead of twice daily, Molloy said. The company is in the process of choosing the final clinical candidate from a panel of three choices and is in advanced licensing negotiations with a pharmaceutical company, which will provide global development funding, milestones and royalties.

"We hope to finalise that by the end of the year," Molloy said.

But Biota's strategy was not necessarily to go for the big pharma companies, he said -- Flunet, like Relenza, was not destined to be a blockbuster.

"Influenza is still a big opportunity, but not a blockbuster opportunity," Molloy explained. "One of the crucial forces with the Relenza failure is that big pharma is looking at blockbusters. In the case of Flunet we need to be targeting pharmas that are not top tier."

In addition to Flunet, Molloy says the MUCO technology can be used to develop and improve anti-bacterial, anti-inflammatory and anti-viral drugs.

Biota's US subsidiary Biota Inc, based in Carlsbad near San Diego, is developing Biota's other technology, the N.MAX drug discovery platform. Based on modified nucleosides, the platform has already scored with a major pharmaceutical deal with GlaxoSmithKline (GSK) to develop drug leads for hepatitis C, providing Biota Inc with AU$4 million upfront and potential for milestone payments, royalties and additional funding.

"Suddenly N.MAX has become the most important thing we are doing," Molloy says. "It gives us cash and currency."

He claims that the technology has blockbuster potential, and says that before the company even finished setting up Biota Inc, GlaxoSmithKline was knocking at the door.

There are currently around 50 nucleoside drugs on the market, for treatment of viral infections including herpes and HIV, and as anti-cancer agents. GSK is indisputably the market leader for such drugs. But Molloy said their side-effects could be miserable, which was where Biota Inc had an advantage.

Traditionally, nucleosides are delivered to the cell in an inactivated form, and the conversion to an activated form by addition of phosphate groups occurs in the cell. This process happens in an unregulated way with the potential for generating toxic by-products.

In contrast, the N.MAX platform delivers the nucleoside to the cell as a pro-drug, with the phosphate moieties masked, and protected from degradation. Enzymes in the cell easily remove the masking groups and there are no toxic by-products produced.

But Molloy said Biota Inc was not resting on its laurels after making the GSK deal, and expected to make another pharmaceutical deal in the next 18 months or so. He said that in parallel to the Hepatitis C program, the company was planning to begin development of a number of other drugs to provide proof of concept and patent exemplification.

"The way we are going to do it is to go after existing drugs and modify them using N.MAX," he explains.

The company plans to use the technology to discover at least three new lead compounds in the next couple of years. And Molloy said he saw no reason to stop with anti-viral and anti-cancer drugs -- the technology could be used to expand into other markets like anti-bacterial and anti-fungal, where the toxicity of the existing nucleoside drugs prevented their use, he said..

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