Interview with Adi Mohanty, Co-Chief Executive Officer, BioTime, Inc. (BTX)

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By: Dr. George S. Mack, Principal Analyst at BioDecade

We’ve been following BioTime for several months and it’s one of our favorite small-cap biotechs. BioTime is a late stage clinical biotechnology company focused on developing and commercializing products addressing degenerative diseases, specializing in aesthetics, ophthalmology, and cell-drug delivery. Its pipeline includes Renevia, a cell delivery product, and OpRegen, a retinal pigment epithelium transplant therapy. BioTime also holds equity in Asterias Biotherapeutics (NYSE: AST), OncoCyte Corporation (NYSE: OCX), and AgeX Therapeutics (a privately held company).

I recently had the opportunity to sit down with BioTime’s co-CEO, Aditya Mohanty, to discuss the current state of the company’s product pipeline, and the future of it’s two leading drug candidates Renevia and OpRegen. What follows is the transcript of our conversation.

George S. Mack: Adi, you have a near-term product in your pipeline, and it’s called Renevia (injectable hydrogel polymer delivery matrix for autologous [patient’s own] adipose-derived precursor cells), which is being studied in patients with HIV-related lipoatropy in the E.U. I’m wondering about the difference between it and Premvia, which is being studied for cosmetic indications, age-related facial volume loss, here in the U.S. What’s the difference between the two? Or is it basically one product?

Adi Mohanty: Premvia is in many ways probably easier to consider as a brand name—or a name for a product in a certain market. For all practical purposes, Premvia and Renevia are the same. There might be some differences in presentation, meaning the number of vials we have in a set.

GSM: Ok, it’s the same product, but Premvia, in its indication of age-related facial volume loss, is being studied and administered to patients with a stromal vascular fraction (SVF). Is that right?

AM: Both Premvia and Renevia, are currently being used with stromal vascular fraction, which is a spun-down version of fat– some selected adipocytes out of regular liposuction. It’s a fat graft. We also have some early data of just Premvia/Renevia with fat alone, but that has not yet been introduced into human. The reason Premvia/Renevia is such a great aesthetics product is that it can be used with SVF, it can be used with fat, or it can be used by itself. But, the most advanced data we have is with SVF.

GSM: You generated some outstanding data that you reported in October from your pivotal study of Renevia in patients with HIV-related lipoatrophy. This problem affects the quality of patients’ lives because loss of fat in the face makes them look gaunt or emaciated, and it hurts these patients with business opportunities, as well as in their relationships with family and friends. There’s a great need to perk up their faces, isn’t there?

AH: Yes. For many years now there have been some great medications, the anti-retrovirals, that help HIV patients live longer, healthier lives. These patients look sicker because of these drugs, which actually create a lot of these atrophy problems. A significant number of these patients end up with clinical depression. So, it’s not just whether they can get a job, or how people look at them, they are suffering from clinical depression. So, in many cases they are prescribed these aesthetic procedures because their self worth is affected so much that they have clinical depression.

GSM: Renevia exceeded expectations. Briefly, tell me how much better it performed than traditional fat grafts?

AH: When we ran the trial, we ran two arms. We ran one where there was no treatment. We watched these patients for six months, and then we treated them. The other arm was treated at the start. What we were trying to figure out was what volume of fat was retained at the end of six months. We introduced 5cc of graft on each side of the face, and we wanted to see how much of that graft still remained at 6 months. To your question, volume retention at 6 months is highly relevant because fat transfer by itself is a pretty common procedure, and the patients who are seeking natural grafts go to plastic surgeons where they have a liposuction, and then the surgeon takes the fat and injects it into the face.

There are lots of published papers– several hundred patient studies– with fat grafts, and it is well accepted by plastic surgeons that these traditional fat grafts drop to somewhere in the range of 50% of original volume within three to six months after treatment. That’s a huge change in a short period of time. If a patient is seeking cosmetic enhancement and has spent $8,000 out of pocket on average, and gone through the procedure, and then in six months they are down to half volume, that patient is not happy.

In our studies, we found that the 5cc of Renevia engrafted, still showed 5cc of volume after 6 months. So, that’s 100% retention in a period when fat grafts have diminished considerably. Some of the patients we have followed for so far for 12 months, and they still had about 70% retention. So, if you can get 70% or higher retention after 12 months, that is a substantial improvement over any natural graft that exists on the market today.

GSM: Adi, do you have reason to believe that non-HIV-infected patients, those seeking facial aesthetic treatment for purely cosmetic purposes, e.g. a 40-50 year old woman in good health, might respond even better than these good results you’ve seen in HIV patients?

AM: That’s something we would actually like to show in patients, but we don’t have human data on what you’re talking about right now. We have some studies where our principal investigator has taken some of the fat extract from both HIV patients and non-HIV patients for study. When you look at those cells in various ways, you can tell that the cells are healthier in non-HIV patients. We don’t know if that translates to clinical endpoint performance in some way. What we think we are seeing now is that the non-HIV patients perform similarly to the HIV patients.

The worry we would have had in the beginning is more around safety. It is fair to assume that HIV patients are highly immune compromised, and there are all kinds of reasons for their bodies to react unfavorably. But we have generated a really nice safety profile, and that gives us some confidence that we won’t have a safety issue in non-HIV patients. Given the health of the non-HIV cells, we should get at least similar performance in terms of engraftment and longevity or durability of the graft.

GSM: The last I heard you were intending to file in the E.U. for a CE Marking of Renevia in first quarter of this year. We are now in the first quarter. Is that still on track?

AM: Absolutely. We are confident we will file fairly soon. So, yes, first quarter. We are on track to file within the next several weeks.

GSM: Could you possibly expect approval of Renevia by the middle of this year?

AM: It is possible. You know, once you file, it’s in the hands of the regulatory agencies. It’s a little less predictable, but the average time the agency has taken for a filing like this one is around six months. So, we think definitely this year we should get approval. It could be in the middle of the year, but for sure it will be this year.

GSM: You were delayed about six weeks in the filing because you wanted to modify the packaging of the product. I’m wondering, was this a convenience factor for plastic surgeons and ENTs? Or was this something else?

AM: It was a choice we made. Instead of filing at the end of December like we had planned, we thought taking a few extra weeks to include a more enhanced packaging or presentation would be beneficial. The original packaging actually had a four-vial presentation that was a little more cumbersome. The new packaging has a two-vial presentation that is a significant improvement in the handling at the physician’s office. We think that taking that little bit of extra time with the new presentation makes a significant impact in terms of our ability to get physicians more excited about using it once it’s approved.

GSM: I’m guessing you have plans for label expansion of Renevia/Premvia. Don’t you?

AM: Yes. Our plan is to expand our label rapidly after approval, and our base plan is to keep generating data everywhere and to see how quickly we can expand the label for a lot more uses—beyond HIV patients and even beyond facial aesthetics. There are so many places where the fat graft is used—including for hand, for lumpectomy and other areas.

GSM: I’d like to switch topics to your other big pipeline product, OpRegen (suspension of human embryonic stem cell-derived retinal pigment epithelial (RPE) cells), a cell therapy product, which is being developed for the dry form of age-related macular degeneration (dry AMD), and for which there are currently no approved therapies. OpRegen cells are implanted or injected subretinally where the hope is that they will survive and durably implant to replace dying RPE cells, which support the photoreceptors—the rods and cones. Today we are seeing gene therapies being tested in genetic eye disorders. So, do gene therapies represent a competitive risk to BioTime’s OpRegen?

AM: Ah, it’s a good question. Dry AMD has been very difficult to figure out. We don’t know the mechanism of action of the disease, and so there’s no accepted knowledge of the disease pathway or how it occurs and progresses. That’s why it’s been so hard for investigators to introduce either an antibody or small moledule or a complement inhibitor which might insert themselves into the disease pathway and modify the disease. Even if we don’t really know the mechanism of the disease, we do know that when you lose the RPE layer of cells, that leads to loss of photoreceptors and visual acuity and progression to blindness.

Our approach is to think of it a bit more as a transplant. If you have a bad liver or a bad kidney. There are so many ways a patient could have gotten to that point of organ failure, but if you’re lucky, you get a transplant. That’s what we’re doing. We are transplanting new, young RPE cells. As long as they take or engraft, again, like a transplant, they should work the way they are designed to work.

To your question, the reason I’ve given you all that back story is that when it’s unclear how the disease arises and progresses or what the pathway is, it is difficult to figure out what gene to address. Gene therapies to date have been successful when they’ve identified the one gene and then tried to modify or address that failed gene. When you don’t know the one gene, it’s hard to address with a gene therapy. More likely, there are multiple genes involved that you have to modify. So, it is then easier to address the whole cell rather than to modify the gene.

So, I don’t see how it would be easy to develop a gene therapy competitor for dry AMD. Nothing is impossible, and it is not going to be easy. We think that in some ways a gene therapy might even been complementary. When you have dry AMD, you have lost the RPE layer, which is how you know you have dry AMD. Gene therapy or not, you’re still going to need to replace some of those RPE cells.

George, we think of it as a transplant. Even if you find other ways to treat dry AMD—to slow the progression of the disease, those methods could be complementary modes of treatment rather than competitive modes of treatment.

GSM: On November 14, BioTime presented the latest data from its ongoing phase 1/2a open-label, single-arm, trial (NCT02286089) with OpRegen. So you are well into human studies now. My understanding is that in BioTime’s animal models of dry AMD, you are seeing these RPE cells survive and improve the vitality of the photoreceptors. We all want that to be the case in humans, and we—investors and patients—would like to see clinical evidence that visual acuity is improving in your study.

AM: First, you are correct. We have some phenomenal animal data. We’ve seen RPE cell engraft in hundreds of animals. We’ve seen the appropriate monolayer formation and even rescue of vision. So, that was the basis for getting the FDA’s Breakthrough Therapy Designation (Interviewer’s note: Breakthrough Therapy Designation may be granted by the FDA to a drug or other agent which has demonstrated preliminary clinical evidence that it could represent a substantial improvement over existing therapies for a serious or life threatening disease indication). And, we are Fast Tracked by the FDA. The most encouraging thing for me is that not just in the animal models but some of our patients in the study are now beyond one year, and we can actually see the RPE cells, which have engrafted, and are alive. That’s very encouraging because it looks so similar to the animal data. It’s important to see these effects translate to humans because we often see things that work in animals that don’t necessarily work in human patients. So, that’s great.

GSM: When you get to a pivotal phase 3 study with OpRegen in dry AMD, will it be hundreds of patients in a trial, or could enrollment be a the smaller side?

AM: I think to get approval, it’s going to depend more on the size of the benefit added to the all of the standard clinical trial requirements. A very high statistical significance in phase 2 would naturally mean a smaller pivotal trial could be employed. We are getting a pretty good safety signal from the patients enrolled in our OpRegen trial right now. I think that’s encouraging. And in a few months we might have some functional data. If we have excellent functional data from even three patients, I think that changes everybody’s outlook towards the possibility of treating dry AMD with a cell therapy.

GSM: I want to stay on this topic for a moment. How many patients must you have in a phase 3 trial testing OpRegen against dry AMD?

AM: I think it’s a fair question, and I’m not going to try to hedge. What I’m going to tell you is that because cell therapies represent a new treatment modality, there is no well-defined pathway or guideline from the regulatory agencies. However, as I said a moment ago, that depends on the size of the signal. We expect to get functional responses sometimes later this year, and the size of these responses will define the size of the trial. George, let me give you an example. This is an exaggeration to make the point, but if you have a patient in your study who had a 20/200 vision, which is the normal cutoff for legal blindness in the U.S., and suddenly he’s at 20/20, then that would be a phenomenal result, and you would only need a handful of patients to show statistical significance between treatment and no treatment. Understand, that was an exaggeration. If you improve vision from 20/200 to 20/160, that would be great because the patient is not going blind anymore, but then you would need more patients to show statistical significance. So, the size of the signal we get from phase 2 will determine the size of the trial.

GSM: So, do you have an idea how long a phase 3 trial with OpRegen would take? How long before this therapy could be commercialized and reach patients with dry AMD?

AM: I’m going to give you a two-part answer. Development of OpRegen will take a few years to reach the patient. It is not eminent. The second part of my answer concerns the investor community. If an investor is looking for a place to put their money, we should have enough data for conviction, for an inflexion point, in the next few months. Investor return will be fairly soon, but for the patient expecting treatment, it will still be a few years.

GSM: Ok, a few years to approval and commercialization. That brings me to another question. What’s the size of the market and the potential for OpRegen?

AM: There are about 20 million people in the Western world with dry AMD. Companies like Genentech (a unit of Roche Holding (RHHBY)), Novartis (NOVN), Regeneron Pharmaceuticals (REGN), Allergan (AGN)—really serious pharma companies– have tried many different approaches to dry AMD. All of them know us, and any data we generate and publish creates an opportunity for investors. All of these companies will ultimately get involved in some way.

As to the market opportunity for dry AMD, all of these companies I’ve just mentioned, as well as some investment banks like Raymond James, have at some point discussed the market for a therapy to treat dry AMD. The market size for dry AMD is $40-$50 billion.

GSM: Adi, BioTime’s market cap is currently around $344 million. Your share of your external investments, which include Asterias Biotherapeutics (AST), OncoCyte (OCX) and AgeX Therapeutics (private) are valued at more than $200 million. That means the market is only valuing your pipeline—Renevia and OpRegen– at just under $150 million. If you only carved out 25% of that $40-$50 billion market for OpRegen alone, and not even counting Renevia, you would be a large cap company. Do you think investors just don’t understand the capital structure of BioTime?

AM: There are several things to unpack here. One is what you just said, which is that lots of people are unaware, and even when they are aware, they still don’t know how to include our ownership in the external investments. That issue comes up in all the conversations we have with investors. People will say, I didn’t know you had that. Then, when they know, they don’t know how to account for these outside investments.

GSM: One of your private equity investments is a company called AgeX Therapeutics, which is focused on ageing and the diseases associated with ageing. There are so many diseases of ageing including cardiovascular disease and oncology. You’re going to spin AgeX out. When will that take place?

AM: Soon. We are targeting the second quarter of this year. It goes to that question you asked me about our cap structure. The purpose of this spin-out is to simplify the cap structure. That will hopefully be a very nice, healthy dividend to our BioTime shareholders.

GSM: Such a pleasure speaking with you, Adi. Thank you for the time.

AM: Me too. Thank you too.

Disclosure and Declaration

Dr. George S. Mack, the author of this report is an independent contractor. Dr. Mack was compensated by Sylva to author this report. He owns, or his family owns, shares of the following companies mentioned in this interview: None.

Disclaimers & Disclosures: For a full list of disclaimers and disclosures, click here.

Contact: info@sylvacap.com

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