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ASLAN Pharma – A Very Focused Business Plan
Two years ago, Carl Firth, PhD, MBA, was scrutinizing the possibilities implicit in Asia’s drug development scene. Firth had deep roots in the Asia-Pacific pharmaceutical sector. He had spent five years in Asia working for Merrill Lynch/Bank of America as Head of Asia Healthcare. Prior to that, he worked for AstraZeneca (NYSE: AZN) as Regional Business Development & Strategic Planning Director, Asia-Pacific. So he had a good idea of how much had been accomplished, and how much promise it held for the future.
That led Firth to ask a very non-rhetorical question: “What can we do to leverage all these high quality assets?” The answer to that question is ASLAN Pharmaceuticals, a Singapore-based drug development startup with a virtual business model.
“The Asian pharmaceutical world started out with basic manufacturing,” Firth told ChinaBio® Today in an exclusive interview. “From there, it added new capabilities such as discovery, while emphasizing quality and innovation.”
For Firth, the opportunity in Asia extends beyond the drug development and CRO sectors. The regulation of clinical trial approvals also presents advantages in certain countries. "The regulators in Taiwan, Korea and Singapore offer speed, efficiency and a desire to innovate,” he said. “Four to eight weeks are normal for an IND approval. There are significant cost savings in doing pre-clinical and clinical work in Asia. But cost is not the main driver. Quality and a belief in innovation is.”
Unlike Asia, western centers of drug regulations are becoming increasingly conservative, said Firth. That becomes a problem when patients are facing urgent unmet needs. “Asian investigators and regulators are willing to have a deeper conversation of the risk/reward tradeoffs,” he declared.
For Firth, that openness could lead to a clinical trial that involves combining two experimental drugs, for example. With a more conservative regulatory approach, one of the agents has to be an already-marketed pharmaceutical. In general, if a clinical trial uses an innovative approach, Firth believes it will be easier to run in Asia.
China figures in ASLAN’s future. The company plans to work with high quality CROs in China and Taiwan for pre-clinical and manufacturing work. And its larger clinical studies will also involve China: “There are some great investigators there, and plenty of patients in need of better therapies in areas like gastric cancer,” said Firth. However, “For many first-in-man studies, other countries in Asia today offer more efficient and straightforward environments,” he continued.
The Deals So Far
ASLAN has in-licensed two molecules to date, both of them aimed at cancer, and both could possibly treat gastric cancer. This is not a matter of chance; it is central to ASLAN’s strategy. “We will try to build a position around a particular disease. Our edge will be that we are targeting specific patient subpopulations, and exploring rational combinations of therapies,” declared Firth. “We think the two drugs we have in-licensed so far may be effective in gastric cancer for selected groups of patients, and potentially in combination with other targeted therapies.”
In July, ASLAN announced a license agreement with Array BioPharma (NSDQ: ARRY) of Boulder, Colorado. ASLAN will develop ARRY-543, a HER2/EGFR inhibitor that has completed Phase I trials for solid tumors in the US.
Array says ARRY-543 differs from the already marketed HER2 inhibitors because it targets the entire family of HER2 receptors. As such, it has potential competitive advantages in treating tumors that signal through multiple HER2 family members.
ASLAN will conduct Phase II trials of the molecule, now known as ASLAN001, among patients with gastric cancer in Asia. There are about 350,000 newly diagnosed cases of gastric cancer in China each year, a much larger incidence rate than the 20,000 in the US. Following the company’s plan, ASLAN will out-license the drug to a pharma that will be responsible for Phase III trials. In this transaction, ASLAN will “share a significant portion” of the proceeds with Array when (read: if) ASLAN out-licenses the drug for this indication.
ASLAN’s second in-licensing deal, announced earlier this month, is with Bristol-Myers Squibb (NYSE: BMY). ASLAN will develop a BMS oncology candidate, BMS-777607, following a pre-defined development program (see story). Now called ASLAN002, the molecule is a small molecule inhibitor of the MET receptor tyrosine kinase for treatment of solid tumors, which targets gastric and lung cancer.
Unlike the first deal, ASLAN has exclusive rights to ASLAN002 in China, Australia, Korea, Taiwan and other selected Asian countries. BMS will retain rights to the candidate in the rest of the world. “It’s a complex contract,” says Firth. “BMS has certain downstream rights. By default we have most of China. The data will be of use in all territories, which we will share with BMS under certain circumstances,” he added.
BMS uses the metaphor of an oyster to describe its drug development strategy. BMS plants the early-stage molecule in an external pharma, which develops the drug candidate into something more valuable. In this case, BMS trades the East Asian rights for clinical development work that it can use to advance the drug elsewhere in the world. That plan suits ASLAN just fine.
Firth says ASLAN is close to a third deal, which he expects will be announced soon. The company will continue building its portfolio through 2012, he adds.
ASLAN’s Business Plan
According to Firth, western pharma has developed more molecules than it can put into clinical trials. However, most investors are not interested in these pre-clinical drug candidates because, never having been tested in human, they present too much risk .
On the other hand, that’s not true for Phase III candidates, which have shown efficacy in the Phase II proof-of-concept studies. Even though Phase III trials are expensive, venture capitalists and pharma execs alike feel they can game the Phase III risk better than the unknowns of all three phases of the clinical trial maze.
Put all these observations together, and you’ll have ASLAN Pharma’s business plan: the company will in-license drug candidates that are no more than six months from starting clinical trials and move them through Phase I and II human studies in Asia. Once the candidates have achieved proof-of-concept in Phase II, they can be licensed back to their original owners or to a third party to complete the regulatory process.
ASLAN uses a risk-sharing model to structure its deals. It does not typically pay an up-front fee or other milestones, but will share the proceeds of an out-licensing after Phase II: “We want partners to work with us not because of a large upfront payment, but because they believe in us. We offer the possibility of a share on the back end, a bigger payout than is available for a Phase I drug candidate,” said Firth.
ASLAN is responsible for all Phase I and II costs, though it may follow a protocol agreed upon with the out-licensing pharma. Thus, ASLAN is accepting a significant amount of risk. The company feels its team, many of whom worked in drug development at AstraZeneca, can assess a drug’s prospects as well as anyone.
The team includes Dr. Alan Barge, former global head of oncology and infection at AstraZeneca, and Dr Mark McHale, former head of molecular sciences, respiratory, AstraZeneca.
According to Firth, the structure of each in-licensing deal will vary, depending upon the needs of the out-licensing company. “Sometimes we have the right to control the drug after Phase II, sometimes not.” The out-licensing company may ask for a right of first refusal, or ASLAN may own the molecule, with a share of any subsequent licensing going to the originating pharma.
Because ASLAN has developed a risk-sharing model, an out-licensing pharma that demands very specific back-end conditions will, in turn, force ASLAN to seek more compensation for the increased risk. “We are reasonably flexible with different deal structures. We try to accommodate our partners, to find out a way to give them what they want, and then structure the deal so that we are also compensated as well,” declared Firth.
However, the company does not want to run a Phase III trial – at least, not a global Phase III. “We might run a Phase III in a specific area such as Asia if it is part of a global trial, but we have no interest in running the whole thing,” said Firth.
Firth readily admits ASLAN is not the only company pursing risk-sharing drug development deals. But he declared simply, “A single company is not enough to progress all the available compounds to market. Different companies will have different strengths. It’s good to have different spaces in which to operate, each one with its own strengths to offer.”
In April of this year, ASLAN completed a relatively modest $12 million Series A capital raise (see story). The funding was led by BioVeda Capital and joined by Sagamore Bioventures and entrepreneurs from China, Hong Kong and the United States.
Other China in-licensing startups this year, such as BeiGene, Hua Medicine and Ascletis, have announced first rounds from $50 million to $100 million. But Firth isn’t concerned by the relatively small size of its first funding round. He points out the headline numbers of other companies aren’t always available until some future triggering event. The money, in other words, may not yet be in the bank. Nevertheless, Firth admits ASLAN will have to be in the fundraising mode again soon.
“As we expand our portfolio, we will raise more. We want to grow in a more conservative manner. As we generate value, we will raise money as we need it. The small initial investment forces us to be capital efficient, and show we are more efficient than big pharma,” said Firth.
ASLAN and its Niche
ASLAN’s business plan is notable for the many things it doesn’t do – discovery, pre-clinical development, global Phase III trials, and marketing approvals. The company is virtual now, and it intends to stay that way. Its headcount currently numbers about 12, most of whom are in Singapore, a number that Firth predicts will top out at no more than 20. “That cap constrains our size,” he said, “limiting us to around six compounds at any one time. We want to concentrate on the assets we do have.”
Although the company is young, and even though it hasn’t been very long since it began in-licensing candidates, Firth says the clinical trials are already underway. “The test of a company like ours is about the compounds and the execution on those compounds. We will have results from the first studies next year, probably in the second half.”
ASLAN is named after the Middle Eastern word for lion, much as C. S. Lewis used the name for the mythical lion in his Narnia books. Singapore, Firth points out, calls itself the Lion City, and he feels a lion also reflects the courage of ASLAN’s management.
To Firth’s way of thinking, ASLAN is positioned to take advantage of the way the pharma industry is evolving. Asia is becoming more important now that it has gained the ability to innovate and to do quality work. As global pharma seeks innovative, differentiated strategies for development, there is no one model, much less one company, that can satisfy all the needs. ASLAN believes it offers one very viable alternative. Given its success in securing partners, the industry seems to agree.
See our other articles on ASLAN.