In April this year an Australian biotech startup came equal second in a huge international competition in China’s southern city of Shenzhen to find the most promising startups for Chinese investment.
The company’s name is Imunexus. Based in Melbourne and founded less than two years ago, it uses a technology based on what it calls ‘imunexins’, which founder and Chief Scientific Officer George Kopsidas describes as “little modules that allow us to convert existing antibodies into better versions of those same drugs.
“This approach overcomes limitations with the original antibodies, by enhancing the way they engage the body’s immune system. This makes them better equipped at killing cancer cells.”
The modules are used to make what are called in the industry ‘biobetters’ – recombinant drugs similar to but not identical to existing drugs, and also overcoming the intellectual property restrictions of the original drug.
“An important feature about Imunexin technology is that it’s modular in nature. Its retrofitting capabilities give us unprecedented levels of flexibility for generating bispecifics from existing antibodies,” explains Dr Kopsidas.
A bispecific antibody is an artificial protein that binds together two types of antigen, thus greatly increasing the immune response. For these reasons biobetters are booming.
Big pharma companies like AstraZeneca, Eli Lilley, GlaxoSmithKline, Merck and Roche are all researching biobetters, and have acquired many startups that are specialising in the area.
Coming second in the competition in Shenzhen was worth $75,000 to the fledgling company. Preliminary judging in Sydney, Munich, Tel Aviv, Tokyo and Silicon Valley selected 25 projects, from hundreds of entries. The competition is called the ‘Innovation competition of International Talents’ and will be held again next year.
The winners potentially have access to a pool of US$100 million, put forward by 56 venture capital companies in Shenzhen. Another Australian company, Quanticare, came tenth.
“It ended up being a bit like a reality TV show,” says Dr Kopsidas. “But one of the judges was Barry Marshall, an Australian who won the Nobel Prize for medicine in 2005. He understood the technology and I think he gave us the high score.
“Apart from the prize money, it gives us access to the venture capital world in China. But language is an issue. Once you get past Hong Kong, English virtually disappears. There’s a lot of potential but we haven’t capitalised on it as yet.”
One area Imunexis has decided to concentrate on are antibodies that fight lung cancer. That was one of the reasons the Chinese were attracted to company’s technology – most of the Chinese adult male population smokes, and lung cancer is a major killer.
Imunex is tenanted with CSIRO in Parkville, next to the University of Melbourne. As one of Australia’s leading molecular biologists, Dr Kopsidas was able to negotiate a deal whereby Imunexus could be located within one of Australia’s premier scientific precincts. He is very positive about the company’s prospects.
“Biobetters give us exceptional growth potential for the company,” he says. “One of the key differentiators of the technology is that we base our products on existing well validated, commercial antibody drugs. That de-risks the developmental pathway – it is a lot cheaper and a lot faster than the conventional development.”
Imunexis has developed and patented a range of imunexins which Dr Kopsidas says are different to other approaches.
“We’re only aware of one other group globally that has a very similar approach. They were a German company that was acquired by a US major, but the antibody drug market is so huge that we could have ten or twenty competitors and there’ would still be room for us to make a significant impact on the market.
“There are a lot of antibody drugs that are on the market now, like Herceptin for breast cancer. But the trouble with a lot of these drugs is that cancers develop strategies to evade the body’s immune system, which means they often have to be used in combination with other treatments such as chemotherapy.
“Our imunexin modules allow the antibodies to better engage in the body’s own immune system to actually eliminate the cancer. Our technology it gives us access to any antibody. Half of our conversations we have are about which antibodies we should choose to work on. There are so many options – we have to be really disciplined and focus on a couple of products.”
Dr Kopsidas says Imunex is still a few years away from a saleable product. “We’re still at the proof of concepts stage, working out the animal testing aspects of our products, but we’ve only been doing R&D for just over twelve months.”
Imunexus has been funded by small seed investors. “We funded ourselves at the start, then we had a number of high net worth individuals who put larger amounts, which gave us just over a million dollars in startup funding. Now we’re rolling into phase two, to raise something in the order of $3 million.
“Proof of concept is still around two years away. That will be a major milestone, when we could think of listing on the ASX.”
“The ASX has been cracking down on premature listings, which has actually caused us some problems. Interest in biotech is pretty low in Australia, and many companies listed too early in the biotech boom ten years ago.
“Most potential investors are interested only in the short term view. Once we get to the proof of concept phase, it’s going to get very interesting because then you’ve proved that your technology works.
“We’ve decided to take three products through. It will take us around $2 million dollars per product, and then once they’re at the proof of concept stage they could be worth $40 million each. You get quite an uplifting value.
“We’ve chosen antibodies that are already on the market and have been through the whole validation and clinical trial process. We’ve eliminated a lot of the risk of traditional styled biotech for that reason. Our only real danger is not raising the capital to get to proof of concept. The science is pretty straightforward.”
Dr Kopsidas says VCs in Australia tend to be opportunists. “They are very risk averse. They keep talking about our products really being too early, but they don’t seem to be able to get their head around that it’s not a new product per se, and that the risk of developing that product is significantly low.
“They all say to us to come back with a clinical product, something going into phase two, but we won’t need them then, it’s too late.”
He also says the Australian banking sector doesn’t really cater for startups. “One of them even wanted eighteen months of a track record as a business before we could get a corporate credit card. We needed an expensive piece of equipment, but not for love or money would anybody do an equipment finance loan.”
It makes Shenzhen look attractive, but Dr Kopsidas is not learning Chinese just yet.
“The Chinese government wants you to move your operations to Shenzhen, so we have talked about a commercialisation office if we did get some capital, which they seemed happy with. We would never really move our R&D there – that would just be too disruptive.”