Medica morphs into Cytopia, wins record ARC grant

Medica Holdings officially became Cytopia (ASX:CYT) this week, as it took the next big step from being a biotech investment company to a biotech company in its own right.

And the newly-minted company today announced it was the recipient of the largest ever Australian Research Council linkage grant -- AUD$1.2 million, part of a three-year, $3.6 million project with Monash University's Department of Biochemistry and Molecular Biology to design drugs to treat immune diseases, cancer and cardiovascular disorders. Cytopia will provide the majority of the balance to make up the project funds, using a combination of cash and in-kind support.

"The grant will allow us to accelerate the refinement of existing drug leads into candidates for pre-clinical testing, using rational, structure-based computer design," said Cytopia's managing director Dr Kevin Healey. "It will also broaden our range of drug discovery targets."

The targets include the JAK kinases, a family of enzymes active as intracellular signalling molecules with key roles in inflammatory disease.

"In the past we've had a commercial relationship with Monash to undertake some X-ray crystallography on a small basis," explained Cytopia's chief scientific officer, Dr Andrew Wilks. "With the ARC grant we can boost our involvement in the project, speed it up, broaden it out."

Turning point

Medica, a pooled development fund with investments in two other biotechnology companies, made the decision earlier this year to merge with its subsidiary Cytopia in order to focus on the development of Cytopia's cancer drug candidate, expected to enter clinical trials next year. "I think it's a turning point. It's certainly a focusing point," said Healey.

Healey said the company was pushing forward with three major programs:

• Lead anti-cancer compound 10997, which is undergoing formal pre-clinical evaluation and clinical manufacturing after demonstrating efficacy in six animal models.
• An anti-inflammatory program targeting JAK3 kinase as a key molecule in transplantation rejection and inflammatory disease where inhibitors have shown in vivo activity.
• A collaboration with US company Myomatrix, which is evaluating potential lead molecules in animal models, to develop JAK2 kinase inhibitors for use in treating cardiovascular diseases, including cardiac failure and pulmonary hypertension.

The pre-clinical evaluation of the anti-cancer drug -- a small molecule drug which has a novel mode of action and is potentially orally available -- should be completed by the end of the year, and the company hopes to begin Phase I safety and pharmacokinetics trials by early 2005.

Partnering potential

While Cytopia plans to carry the anti-cancer program forward into clinical trials itself, the company is in talks with major pharmaceutical companies about the JAK3 kinase inhibitor with material already under evaluation by some potential partners.

"It's a hot topic at the moment for big pharma," Healey said. "We're really looking to partner this one as it is a very broad opportunity."

While Cytopia will retain its PDF status for the time being, Healey said shareholders had given the board of directors the discretion to deregister as a PDF if in the best interest of shareholders.

"There are no immediate plans to do so, but it frees the company to do so if it becomes necessary, such as if an offshore investment opportunity came up," he said.

The company also has no plans to immediately offload its investments in Xenome, in which it has a 22.4 per cent stake, and Alchemia, of which it owns 14.3 per cent. Xenome has recently started a Phase I clinical trial, while Alchemia is making strong progress in its development of a generic synthetic heparin product.

"We think Alchemia has got huge potential commercially and we would be reluctant to sell before that is realised," Healey said.