Phylogica Hitting Milestones and Targeting Downstream Revenue Opportunities

Drug discovery company Phylogica has hit significant milestones delivering to its global pharmaceutical partners and is set to change its business model to ensure that it has a greater share of the downstream revenues which spring from its research.

The Perth-based ASX listed company is a leading peptide drug discovery company which utilises proprietary Phylomer peptide libraries and screening methodologies to identify unique drug candidates which can then be developed by its pharmaceutical and biotechnology partners.

The range of potential therapeutic applications from the Phylogica platform is diverse, offering the ability to develop new drug treatments for diseases such as stroke, traumatic brain injury, burns, would healing and acute respiratory distress syndrome.

Phylogica chief financial officer Nick Woolf says collaborations with global companies such as Janssen Biotech, part of the world’s leading healthcare company Johnson & Johnson, Pfizer, AstraZeneca’s Medimmume unit and Roche’s US subsidiary Genentech are all on track for delivery and are positioning the company for growth.

“We are experiencing great progress on our collaborations,” says Woolf.

“The most recent one with Janssen was signed at Christmas 2011 and we were paid A$1.2 million on signing.

“That project is now underway. It’s our biggest project to date and is the broadest in terms of the deal, and more than ten viable drug candidates could come to the market as a result.”

At the end of May, Phylogica announced it had achieved a research milestone in its collaboration with Pfizer to discover new novel peptide-base vaccines, triggering an undisclosed payment.

“We hit a milestone in June when our peptides triggered a predetermined end point,” says CFO Nick Woolf.

“The structure of the deal is that it is an option to licence, and they are now evaluating our peptides with a view to exercising that option, and the option period is within this calendar year.

“When one of our partners exercise their option this is not only a financial event for us, somewhere in the millions of dollars, but it is also a very clear validation of our platforms and means that are partners are closer to taking our research into their own pipeline and pushing it towards clinical development.”

Phylogica’s business plan has been to become a specialist drug discovery company offering peptide discovery services to the pharmaceutical industry in exchange for upfront licence fees, milestone payments and downstream revenues arising from the drugs that it discovers.

CFO Nick Woolf says that in addition to the four partnerships it has already signed, the company is to talking to new prospective partners and in the new deals Phylogica is likely to secure a greater share of downstream revenues.

“Most of our deals to dates have been around milestones and royalties,” he says.

“In our upcoming deals we are seeking to retain the right to co-develop drugs with our partners, and that will see the evolution of our business model.

“Under the evolution of this model we will fund the clinical development and as a result will benefit from the profit share.”

Phylogica was listed on the Australian Securities Exchange in 2001 and was created through spinning out technology from Perth’s Telethon Institute for Child Health Research, Cambridge University in the UK and the Fox Chase Cancer Centre in Philadelphia, USA.

Phylogica’s market capitalisation is currently just under $22 million.