Small Pharma Increases Valuation Through Revenue Diversification

The biopharmaceutical industry is finding ways to increase valuation through opportunistic initiatives. In this corner of the biopharmaceutical space, Enteris BioPharma has managed to generate revenue by outlicensing its drug formulation technology, which enables the oral delivery of peptide-based therapeutics. With this revenue, Enteris is investing in strengthening its own internal pipeline of pharmaceutical products. In this interview, Brian Zietsman, CFO of Enteris, will discuss how this strategy is diversifying drug development risk, and increasing valuation.

Moe Alsumidaie (MA): What is Enteris focusing on?

Brian Zietsman (BZ): We have a proven, patented, drug delivery technology that allows drugs that are typically

Brian Zietsman

administered as an injectable formulation to be delivered orally as a tablet. Using our technology, called Peptelligence, we are working with some pharma companies with programs ranging from pre-clinical development through the clinical phase or with FDA. We are also developing our drugs; two of which are currently in the clinic. Our lead program, Ovarest, is being developed to treat endometriosis. With that program, I'm excited to say that we've recently announced positive Phase 2 data where we got significant suppression of estradiol in line with Lupron Depot, which is the gold standard product. We are also developing Tobrate, an oral formulation of tobramycin. The indication we're going for is to treat uncomplicated urinary tract infections. We've completed a Phase 1 safety study which showed that the molecule was safe to be delivered orally using our technology.

MA: So, Enteris is both a drug development company and a formulation enterprise. How do you manage conflicts when collaborating with other sponsors?

BZ: Initially, we work on a fee-for-service basis. Companies will come to us looking to convert an injectable to an oral formulation. We will then design a program whereby our formulation technology is tested in animal models. Based on the results of the studies, those companies may look to advance their molecule into clinical development. We require that our partners engage in a license with our technology before commercializing the product.

MA: What are the challenges in developing orally-delivered peptides?

BZ: Up until recently, no one believed that you could deliver a peptide orally. The reason for that is the Gastrointestinal (GI) tract is naturally designed to degrade and digest peptides. So to deliver a peptide into the bloodstream and the systemic circulation, the peptide needs to remain intact while it passes through the stomach. Assuming you're able to do that, the next challenge is promoting absorption of the active pharmaceutical ingredients (API) which requires protecting the peptide from proteases. These are molecules in the intestine that digest proteins as well as peptides. Once you're able to do that, the challenge becomes dissolving the drug and then lastly, to facilitate the transport mechanism of the peptide into the bloodstream. I’m happy to say that our technology is unique and can overcome each of these challenges.

MA: Please describe Peptelligence's mechanism of action.

BZ: The way it works is it’s an enterically coated tablet that has, what we refer to as, our “secret sauce.” It has two functional excipients. First, it keeps the tablet intact as it passes through the stomach. When it leaves the stomach, there's a change in the pH level that causes the enteric coat to peel off, which releases both functional excipients as well as the API. Our useful excipients help to assist with both solubilizing the API as well as a permeation enhancer. As a result, the active drug is then absorbed into the bloodstream in a paracellular transport mechanism.

MA: From a business standpoint, could you describe the opportunities that Peptelligence affords Enteris, both in terms of your internal pipeline as well as working with partner companies, to engineer their peptides for oral delivery?

BZ: Enteris is built around Peptelligence. Over the last several years, this has become a significant revenue generator for us and has exceeded our operating costs, which has allowed us to fund the development of our internal programs. So, for partnered companies, Peptelligence offers an opportunity to expand the value of their molecule by developing another formulation. We think we’re a strong market differentiator compared to our competitors. We have clinical validation proving that our technology works. Peptelligence is a versatile formulation, it's easy to work with, and we offer full chemistry, manufacturing, and controls support (CMC) to our customers.

MA: Please describe Ovarest. What outcomes is Ovarest focusing on for endometriosis improvement?

BZ: Ovarest is something we're developing to treat endometriosis, a debilitating disease affecting 6 to 9 million women in the U.S. Research tells us that if you're able to suppress estradiol, a woman's hormone, it is likely to lead to pain reduction that is experienced with endometriosis. We recently completed a Phase 2 proof of concept study with Ovarest and achieved significant suppression of estradiol. The suppression level that we reached was similar to that of the gold standard which is Lupron Depot, an injection. Based on those results, we've concluded that our technology works and that an oral leuprolide will be effective to treat this condition.

MA: Do you hope that Ovarest is going to be better than the gold standard (Lupron Depot)? Moreover, how much do you think? Could Ovarest be as effective or have fewer side effects or adverse effects compared to Lupron Depot?

BZ: We believe that we've proven that our technology will be as effective as the gold standard. Lupron Depot is currently available either as a one-month or three-month depot injection. The problem, and the reason why it hasn't been widely used by patients is the side effects can be significant, which is menopause. If the side effects are severe, taking the injectable formulation means there's nothing that the doctors can do for their patients once the injection has been administered. It’s going to be in their system for either the one month or the three-month duration. With Ovarest, which is an oral formulation, you take your tablet in the morning, and if the patient suffers from side effects, the drug leaves your body sooner, and those symptoms subside. Additionally, taking the tablet is a lot better than going to a doctor's office for an injection. So, the patient's compliance and convenience are going to be a huge advantage with an oral formulation.

MA: From a business standpoint, can you describe the work that Enteris is doing with Cara

Therapeutics? How is this collaboration working, and what are some of the challenges and successes you've had?

BZ: Cara is an example of a client where the engagement has grown from initially doing one preclinical study to now, where they have four programs that are currently in the clinic utilizing our technology. Those four programs are across multiple therapeutic areas in chronic pain for osteoarthritis and three for pruritus in hemodialysis patients with chronic kidney disease and chronic liver disease. Cara has also announced that they're looking to expand into the dermatological space and this is an area where an oral would make much sense.

MA: Why is your technology the best in terms of competitors? Why would companies want to work with Enteris rather than someone else?

BZ: When you look at our competitors, a number of them are stalled in the pre-clinical stage, and their technology is not proven. If you look at our pipeline, we have multiple programs in the clinic, and we believe the results that we've achieved shows that our technology is proven. Our technology is the leader in this field and works across a broad range of therapeutic areas. Our only limitation is the size of the molecule. What sets us apart from our competitors is that our technology is available to be used for other companies on their molecules and is available for partnering.

MA: What is Enteris looking forward to in 2019?

BZ: 2019 is shaping up to be a banner year for us. We're finding much interest in our technology, gaining new clients, and working with them on their molecules. We are also positioning our two internal programs for licensing. Our strategy is to hand the baton to another company who has the wherewithal to take them into Phase 3, complete the clinical program, and ultimately market the product. So there's many facets, a lot of different pieces to our business, all of which have continued to go from strength to strength.

Moe Alsumidaie, MBA, MSF is Chief Data Scientist at Annex Clinical,.