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Cynata Therapeutics Ltd (ASX: CYP) is a clinical stage regenerative medicine company specializing in stem cell therapeutics that has a proprietary technology for manufacturing induced pluripotent stem cell (iPSC) derived mesenchymal stem cells (MSCs).
I had the honor of interviewing Dr Ross Macdonald, CEO of Cynata Therapeutics. In this interview, we discuss Cynata’s technology platform, the company’s world first achievements, and its clinical trial underway for GvHD. We also explore the company’s strategic goals and the importance of its partnership with Fujifilm in Japan.
Interview with Dr. Ross Macdonald, CEO of Cynata Therapeutics
Cade Hildreth: How did you first become involved with Cynata Therapeutics?
Dr. Ross Macdonald: For the last 30 years, I have worked big pharma and biotech, with a focus on the M&A, licensing, and business building. A few years ago, I became familiar with a group of venture capitalists who had participated in the future of Cynata in its original form, which was then a private company. They had a plan for growing the company and getting it to where it is today, listed on the Australian stock exchange (ASX: CYP).
They approached me in 2013 to see if I would be interested in joining them on that journey. I took the position of CEO at that time and we executed on that plan. That is how we got here today.
Cade Hildreth: What is Cynata’s CymerusTM technology? More importantly, why is it revolutionary?
Dr. Ross Macdonald: In many ways, it is a very simple approach. We are not seeking to reinvent the wheel in term of the therapeutic applications of mesenchymal stem cells (MSCs). Instead, our technology takes a more practical and pragmatic means of manufacturing the product for therapeutic use.
Of course, like many novel technologies, safety and efficacy are the primary goals, but manufacturing is often the last thought in the inventor’s mind. This can represent a major roadblock to the eventual industrialization of cellular products. In fact, as I’m sure your readers will be aware, there are many products that sit on the shelves in pharmaceutical and biotech companies that never see the light of day, despite being documented as safe and effective. That’s simply because they are very difficult and/or uneconomic to manufacture.
The first-generation approach to the manufacture of therapeutic MSCs is not practical. It relies upon deriving source material or precursors MSCs from donated tissue, primarily bone marrow or adipose tissue. Because the source product is in scarce supply, massive expansion of cells in culture has to be undertaken to yield sufficient quantities to treat even a small number of patients.
Over time, a significant body of data and literature has confirmed that MSCs and their relatives have a finite capacity for culture expansion. Meaning, they change their biology substantially after even a few rounds of population expansion. Therefore, the business model of extracting MSCs from donor derived material and expanding them prolifically in culture is “broken” from an industrial point of view. When it comes to producing millions of doses of MSCs to address global diseases – such as stroke, cardiovascular disease, or arthritis (targets in which MSCs have shown utility) – the first-generation approach simply does not work.
Like many technologies, a small revolution can make a very big difference. In this case, the development of iPSCs has enabled many companies to explore new means of manufacturing their own cellular products. In our case, our technology is specific to the manufacture of MSCs. In some ways, it is revolutionary, because it enables the industrial scale manufacture of therapeutic MSCs, whereas before it was a cottage industry.
Cade Hildreth: Who discovered the Cymerus technology and how did Cynata come to acquire it?
Dr. Ross Macdonald: The Cymerus technology originated at the University of Wisconsin, Madison, in one of the leading centers worldwide for studying stem cell biology and cell biology generally. James Thompson who is one of the inventors of Cynata’s Cymerus process was the first person to isolate embryonic stem cells. He has been termed the “The Man who brought you Stem Cells.”
James Thompson and his colleague Professor Igor Slukvin are the inventors of our core technology, along with their laboratory colleagues. The patents are filed and those patents are owned by the Wisconsin Alumni Research Foundation (WARF), which of course is a preeminent body which has responsibility for commercializing the intellectual property (IP) arising from the University of Wisconsin. Professor Slukvin is a co-founder of Cynata and still involved in our business.
We came to acquire the technology in a very fortuitous convergence of events. We had an entrepreneur in Australia who was one of the founders of Cynata who saw an opportunity in a very recently published paper in the journal Cell Stem Cell on the process of deriving MSCs from pluripotent precursors. The publication focused on the intriguing cell biology, but also of course, the scientific concepts were what enabled the commercial technology that we are now developing.
That individual, Ian Dixon, contacted WARF after reading the article. He is a well known entrepreneur here in Australia, and of course, WARF was interested to further develop and commercialize their technology. Ian created an entity around that IP and that began the genesis of Cynata Therapeutics.
Cade Hildreth: Fascinating. When did you come on board?
Dr. Ross Macdonald: 2013. About the middle of 2013. Then we IPO’d the company at the end of that year to list it on the Australian stock exchange.
Cade Hildreth: I know Cynata has been exploring the use of MSCs to address lung disease. What benefits have Cymerus derived MSCs demonstrated in these studies?
Dr. Ross Macdonald: Our goal with these studies has been to ensure that the MSCs we produce using our Cymerus process have all of the right properties and characteristics, both in vitro and in vivo.
Of course, the definition of MSC is a very broad term. In fact, Dr. Arnold Caplan, the initial scientist who was involved in the description of MSCs, has often said they probably should not be called stem cells at all. He often refers to them as “Medicine Secreting Cells,” which is an interesting take on the three letter acronym.
We want to ensure that in addition to having the right in vitro properties, the MSCs we manufacture are effective in addressing diseases in models where MSCs have been demonstrated to be effective. As I said earlier, we are not trying to re-invent the wheel. We are simply trying to reinforce an existing body of data.
Asthma is a disease area for which we announced preclinical data earlier this year. Our final report in the preclinical study was quite compelling. It confirmed Cymerus™ MSCs can exert beneficial effects on all three key components of asthma, which are airway hyper-responsiveness, inflammation and airway remodeling. Practically speaking, well-controlled asthma is less likely to be the primary target for MSC therapy than more severe lung disease.
Well-managed patients can control their condition with conventional medication, so they are unlikely to head to their physician for a cell therapy treatment. However, there are many lung disease patients with more severe conditions, such as COPD or ARDS. For these patients, a MSC-based approach could be extremely valuable.
Cade Hildreth: Cynata’s clinical trial is now underway for GvHD, which is a world first. What is the global significance of this trial?
Dr. Ross Macdonald: Yes, indeed, it is a world first, being the first formal clinical trial of an allogeneic, iPSC-derived cell product. The study involves centers in both the UK and Australia that are actively recruiting. The global significance of this is that it is first clinical trial of an iPSC derived allogeneic product. Dr. Takahashi in Japan has conducted an autologous iPSC derived trial a couple of years ago, but it was terminated and they later switched to an allogeneic product. That trial commenced earlier this year, but I understand it’s not a formal clinical trial – it’s more of a physician-sponsored study.
Cynata’s clinical trial is the first of its kind. Given the excitement about the far-reaching clinical potential of iPSC derived products, this is a major advance for the field. It establishes that individuals who are interested in bringing iPSC derived products – not just MSCs – into the clinic can actually do so. That’s an important achievement.
As for GVHD itself as a target for MSCs, that is not new at all. It was one of the earliest diseases in which MSCs were found to be useful. Dr. Katarina Le Blanc and her team were instrumental in driving the interest in the clinical potential of MSCs for the treatment of GvHD.
Again, we are not blazing a new trail here, which obviously implies much lower risk.What we are doing is simply following a path that many others have led in front of us. If you want to use an analogy, it is a bit like the explorers have gone through the jungle already. We are coming along afterward and making their path into a highway. They have done all the hard work showing that if MSCs are fresh and robust, they are very effective in GvHD. Of course, in these early studies the practical aspect of manufacturing sufficient quantities of MSCs was not addressed.
Cade Hildreth: That is definitely exciting. What other world firsts has Cynata achieved?
Dr. Ross Macdonald: We are the first to scale-up manufacture of an allogeneic cGMP iPS celll line. We sourced that cell line from Cellular Dynamics International (CDI) when they were still an independent company listed on NASDAQ. Two years ago, they were acquired by Fujifilm, who by coincidence, also happen to be a major shareholder in Cynata and our strategic partner for GvHD.
Nonetheless, CDI was the first company, the first commercial enterprise in the world to develop a cGMP grade iPS cell line for clinical use. Lots of scientists around the world have been working on iPSCs for laboratory use, but CDI jumped through all the hoops to develop a clinical-grade line, which we sourced and then upscaled into the manufacture of our MSC product.
Cade Hildreth: When you look at the industry as a whole, what other MSC products have been commercialized and how is Cynata’s MSC product different?
Dr. Ross Macdonald: The first product to reach the market was the product from JCR Pharma in Japan – a product called TEMCELL – which previously JCR had licensed from Osiris, one of the earliest companies creating MSC-based therapeutics. JCR persevered with the Japanese Regulatory Agency, and that product is now being used as a therapeutic for GvHD in the Japanese market.
We understand also that Tigenix has a product in registration in Europe for Crohn’s disease related fistula. The good thing is that MSC products are now starting to achieve commercial success, which starts to attract the interest of big pharma. This interest will grow as the number of indications being addressed by MSC therapies begins to broaden.
However, our model is very different than the existing products. TEMCELL, the Japanese product, is manufactured from donor bone marrow derived MSCs, so it is definitely a “first generation” product, as we discussed earlier. In contrast, our approach is a “second generation” approach that uses iPSCs as the starting material. We do not rely on multiple donors for massive expansion of derived MSCs. We have one donor, one time from whom the iPS cell bank is derived and minimal expansion of the MSC product itself is required to produce sufficient quantities.
With Cynata’s CymerusTM technology, cell expansion is undertaken at the level of the iPSCs, which are pluripotent stem cells capable of essentially infinite self-renewal.
Cade Hildreth: Can you speak in greater detail about the importance of doing the cell expansion with pluripotent iPSCs, rather than with multipotent MSCs?
Dr. Ross Macdonald: The original dogma suggested that MSCs, being a “stem cell”, were capable of large scale replication in culture. Unfortunately, what was found in later years was that is in fact not the case. A large body of literature now confirm that MSCs are capable of fairly substantial self-renewal, but not without important changes to the cell characteristics.
Therefore, while one may be able to generate large quantities of viable MSCs, the potency and clinical efficacy of those cells may be significantly compromised. This was a finding that became apparent when MSC products began progressing through more advanced clinical trial stages. In the early days of the GVHD studies, the Phase I and II trials involved small numbers of patients. In these situations, the data was generally very good.
Unfortunately, when it came to Phase III studies where larger quantities of MSCs were required, then the cells had to expanded extensively and the data was much less compelling.
Subsequently, scientists have sought to explain this phenomenon. Today, it is very clear and validated by a large body of literature that when MSCs are expanded in culture, they lose their potency. It is quite simple. If, on the other hand, one expands a pluripotent stem cell, such as an iPSC, then under the right conditions these cells are capable of infinite self-renewal without experiencing genetic or phenotypic changes.
Therefore, Cynata does all of our cell expansion at the pluripotent stem cell stage. The final manufacturing step is to differentiate those expanded cells to the MSC product. What we end up with are very fresh, potent MSCs that have not themselves been extensively expanded. Of course, the cells’ grandparents were very extensively expanded, but pluripotent cells are capable of infinite expansion.
It is this approach that differentiates our process from the first generation strategy of deriving MSCs directly from bone marrow, adipose tissue (fat), umbilical cord, or the placenta. In these cases, it is the MSC itself (or its close relative) that has to be expanded.
Cade Hildreth: Cynata has had extensive interaction with regulatory agencies around the world. What have you learned from your interaction with these agencies, including the FDA, EMA, and others?
Dr. Ross Macdonald: When I reflect on the challenges that the early cell therapy companies faced in their interactions with the regulatory agencies, it is clear that the regulatory agencies have substantially evolved. If we go back to the very early spinal cord injury clinical trial, the roadblocks that regulatory agencies put in front of these companies were legendary.
The amount of data that was required to demonstrate safety in preclinical data was astronomical. Guys like Mike West, for example, who have been through that process have some great war stories about their interactions with regulatory agencies.
Thankfully, things have changed since that time and the agencies have grown with the science. We now see a much higher level of pragmatism, a much greater willingness to have a realistic view of how best to demonstrate safety in a preclinical setting before the products are ultimately approved for human use. Now, the pathway now is much more streamlined.
In particular, we have seen a profound regulatory change in Japan with their legislation that has fast-tracked stem cell therapeutics. A few years ago, Japan introduced the Act on the Safety of Regenerative Medicine and the Pharmaceuticals and Medical Device (PMD) Act that allow conditional and time-limited marketing approvals to be given to regenerative medicine products that demonstrate probable benefit and proven safety in early stage trials.
However, we also see a similar level of pragmatism from the other regulators – the FDA, the EMA, and the TGA here in Australia.
That is enabling companies such as Cynata to take a much faster route to completing their clinical studies, and we hope, ultimately bringing these products into widespread medical application for the benefit of patients and caregivers.
Cade Hildreth: Did you experience any differences in how regulatory agencies treated Cynata’s proposed trials? Or, was there consistency on a global basis?
Dr. Ross Macdonald: Yes, I suppose there are only so many ways you can slice and dice a pre-clinical dossier but there are some idiosyncrasies with each of the agencies. I would have to say that the European agency, and especially the UK, was a little bit easier for us. That is why we pursued the clinical trials first in the UK, because the clinical trial pathway was quicker.
Being a publicly traded company, we want to achieve progress for our investors and results for our potential patients. An efficient clinical trial pathway was valuable for us. Additionally, the UK MHRA is a well-recognized regulatory body, which added further value.
Cade Hildreth: What other clinical trials or pipeline developments is Cynata be pursuing?
Dr. Ross Macdonald: As you are aware, Cade, we have a number of exciting preclinical programs underway. Of course, there is the GvHD trial, but we also have a preclinical lung disease program and a preclinical program in cardiovascular disease. These are areas in which we are heavily investing now.
As to where we will proceed next clinically, the answer will reflect our commercial strategy. Cynata has made a clear business decision to seek strategic alliances and our partnership with Fujifilm is a demonstration of this strategy. Fujifilm is our partner for GvHD, so we will be looking to expand into partnerships in other therapeutic areas. To a large extent, that will drive our next clinical steps.
Cade Hildreth: That’s a perfect transition into my next question, which is about Fujifilm. As a global force in regenerative medicine, what impact has Fujifilm’s partnership had on Cynata?
Dr. Ross Macdonald: In a word: huge. Fujifilm, as you have correctly pointed out, is one of the major players in regenerative medicine field and has invested significantly into stem cells through their acquisition of CDI and their investment in Japan Tissue Engineering Co. Ltd., known as “J-Tec.”
Is has given them a very broad base in regenerative medicine that can be used in multiple therapeutic areas. They have not just pursued only one or two lines of investigation, they actually have a broad portfolio in this field.
For a young company like Cynata, having validation from an industry giant like Fujifilm is hugely important in the eyes of investors, particularly in Australia. Fujifilm undertook extensive due diligence before they entered into the transaction with us. That decision by Fujifilm confirms that our technology is very exciting in their eyes. It is a useful yardstick for other investors as well. Of course, the effect of the relationship with Fujifilm on our balance sheet is also important.
Should Fujifilm decide to exercise their option to license our GVHD product, then the costs of that product and eventual commercialization will be the responsibility of Fujifilm. It takes those costs off our balance sheet. Similarly, should the program be successful, we will receive milestone payments of around $60M AUS and a double-digit royalty payment.
If we look at the near-term market potential of a product for GVHD, that could be very significant to our balance sheet in the near future, because that royalty revenue would go straight to the bottom line.
Cade Hildreth: That makes excellent strategic sense. What are your long term goals over the next 5 to 10 years for Cynata Therapeutics?
Dr. Ross Macdonald: Our major goals are to see the application of our Cymerus technology in as many therapeutic applications as possible. There are now more than 750 clinical trials underway around the world using MSCs. I do not think that anyone would expect that every one of those disease targets to be successful, but even a small to moderate number of successes would be an extraordinary outcome.
Certainly, there are some very important studies on the way at the moment involving MSC-based treatments for stroke and cardiovascular disease, and we are awaiting those results with great interest. If it turns out that MSCs demonstrate safety and efficacy for these disease applications, then the major challenge of commercializing these products will be manufacturing the cells in sufficient quantities.
If the early-stage trials are successful, the question will be, how on earth will the relevant manufacturers be able to produce sufficient quantities of the product and manage demand? For example, stroke is a major source of morbidity and mortality on a global basis.
That then raises the opportunity for Cynata to see our MSC manufacturing technology broadly applied across all this and other therapeutic paths.
Cade Hildreth: What do you think the future holds for stem cell based medicines?
Dr. Ross Macdonald: I think everybody (observers, stakeholders, and investors) is waiting for the next big breakthrough. Many observers have drawn the parallels between stem cell based medicine and the monoclonal antibody revolution of 30 years ago. When monoclonal antibodies were first described, the suggested therapeutic potential of them was massive and the big challenge was how to manufacture sufficient quantities of these extraordinarily complex molecules.
At the time, the pharma industry was dealing with mostly small molecules. Of course, some of the antibiotics were fairly large molecules, but we were still in the early days of pharmaceutical development of biological products and the question of how to manufacture these complex molecules was a real challenge for the industry.
Of course, those challenges were resolved when we solved the manufacturing bottlenecks. Now, here we are today with over forty monoclonal antibody products approved in the US and EU, including several of of the top 20 selling drugs worldwide. 30 years ago, few would have thought that was possible, but here we are today.
I think we are now at the crest of that wave with MSC based therapeutics where everyone is saying, “Hmm, they are interesting, but do they really work, and even if they do, how hard are they to make?” If you cannot manufacture the product, you simply do not have a product. It’s as straightforward as that – you have an academic curiosity, but not a product. Our technology nurtures the need for solving manufacturing bottlenecks and introducing a new era for MSCs.
Cade Hildreth: I agree. It is very clear that history repeats itself and all types of market metrics confirm your hypothesis. There are growing numbers of MCS scientific publications, grants, patents, and clinical trials. Google Trends even confirms that public is searching for information on the cell type at growing rates.
Dr. Ross Macdonald: Yes, it is our goal to introduce a new manufacturing paradigm.