Source: Gail Dutton of The Life Sciences Report (9/9/15)

http://www.thelifesciencesreport.com/pub/na/the-promise-of-plants-in-pharmaceutical-production-ibios-robert-erwin

The growing need for recombinant proteins for vaccines and therapeutics is causing the biotech industry to look beyond vat fermentation and cell cultures for protein expression systems that, like iBio Inc.’s iBioLaunch technology, can increase yields quickly, safely and inexpensively. In this interview with The Life Sciences Report, iBio’s President Robert L. (Bob) Erwin describes the iBioLaunch technology and what it offers to drug developers and investors.

Management Q&A: View From the Top

The Life Sciences Report: What’s unique about iBio Inc.’s (IBIO:NYSE.MKT) iBioLaunch technology?

Bob Erwin: Our iBioLaunch technology turns plants into protein factories without altering the plants’ DNA. It is an alternate method of producing recombinant proteins for a variety of applications, but particularly for pharmaceutical use.

There have been many approaches to producing recombinant proteins using many different types of hosts, cells and tissues. Plants grown efficiently in modern hydroponic facilities offer a very attractive, economical alternative to those approaches and to traditional vat fermentation methods.

Plant cells are far more like human cells than many people realize. They can process genes much like human cells, and produce complex folded proteins much like human cells. Essentially, plants can make any protein human cells can make and, in some cases, make them more readily. That capability can be a valuable technical feature if the product of interest is extremely difficult to make.

The two fundamental advantages we see with plant-based technology is that plants can do things that are impractical with more conventional protein expression methods, and plants sometimes offer a much lower facilities capital cost or a lower cost of goods than traditional expression methods.

The iBioLaunch technology incorporates that general set of advantages into a new platform with added features to enhance the overall efficiency of protein expression methods. iBioLaunch gives us proprietary advantages in flexibility that conventional methods don’t quite achieve. Therein lies the system’s very valuable advantage over the standard public domain approaches.

TLSR: How does iBioLaunch enhance overall efficiency?

BE: It enables a person to use a gene of interest to produce a protein at a level of stability and in quantities that can meet practical needs and, in some cases, in very rapid timeframes. iBioLaunch does this by putting a gene into a plant so that the plant can divert its normal biochemical operations to the production of whatever is encoded by that gene.

Turnaround time from gene introduction to protein harvest is only a matter of days. So whether iBioLaunch is used to generate small quantities of lots of candidates for screening during early development, or to produce commercial quantities of a single protein, the platform enables developers to significantly increase efficiency, saving substantial time and money.

TLSR: How is this approach different from transgenics?

BE: Our approach isn’t transgenic. Instead, we use transient expression, which means we’re not altering the chromosomes of the host cell or, in this case, the host plant. Our plants are not genetically modified organisms (GMOs). They are normal plants that are temporarily hijacked to produce the protein of interest. These plants never go on to produce pollen or seeds. They are harvested and ground up. Their tissues are extracted and the protein is purified and eventually put into a vial or a syringe.

TLSR: This approach can be used to develop therapeutics for multiple disease applications. How versatile is the iBioLaunch platform?

BE: The ability to target multiple diseases comes from the broad range of protein types that can be produced recombinantly in green plants. The iBioLaunch platform has been used to develop vaccine candidates for influenza and for pathogens like yellow fever and malaria. For a vaccine, this involves production of relatively small quantities per dose of the antigen to prevent the disease. At the other end of the spectrum, some diseases are actively progressing and need much larger quantities of proteins, such as monoclonal antibodies.

Our iBioLaunch technology is versatile enough to scale from very tiny doses per patient to products that require very large doses per patient. That’s rarely done with more traditional methods. The simplicity of putting genes into plants temporarily to produce proteins allows us great flexibility. That flexibility enables us to potentially develop products for clients whether their interest is vaccination, or treatment of cancer, or treatment of infectious diseases or other diseases such as various forms of fibrosis.

TLSR: How fast is the development process?

BE: The initial production of protein typically takes seven to 10 days. Most of the development time prior to clinical trials is spent screening recombinant proteins to identify lead candidates, or to screen for potency and stability of variants around the product. Our technology reduces the time required for these tasks.

In terms of responding to infectious disease outbreaks, the ability to scale up rapidly is attractive not only for development, but also commercially, and is important from a public health standpoint. That’s led to government sponsorship of some of the research that we and our collaborators have done.

For traditional manufacturers who make the same product the same way year after year, speed is less important. Those manufacturers are more interested in cost reduction. For them, plants offer the advantages of relatively low-cost production because they eliminate the need for the stainless steel tanks and sterile fluids used for vat fermentation.

TLSR: What does this platform bring, specifically, to vaccine development?

BE: It eliminates the chicken-egg production method and the expense of growing animal cells. That’s the focus of our work in Brazil with Bio-Manguinhos, which is part of Fiocruz, a state-owned corporation that serves Brazil’s Ministry of Health and also sells and exports products. We’re working with Bio-Manguinhos to eventually replace chicken-egg production of a yellow fever vaccine with a plant-produced recombinant vaccine. Brazil’s interest stems from its desire to reduce vaccine costs and to increase safety.

TLSR: Does iBioLaunch technology face any regulatory hurdles?

BE: There aren’t any hurdles that are unique to iBioLaunch technology. Every experimental product undergoes clinical trials. Manufacturing methods are disclosed to the FDA and evaluated as part of the approval package. The manufacturing methods must produce a clean, reproducible, assayable product that is validated in terms of safety and efficacy. The same regulations apply to us that apply to E. coli fermenters, CHO (Chinese hamster ovary) cell bioreactors or other manufacturing methods.

Many people think there are hurdles because only one plant-based recombinant therapeutic has been approved猶rotalix Biotherapeutics Inc.’s (PLX:NYSE) product for Gaucher disease, which is produced in cultured carrot cells. Other plant-based therapeutic and vaccine products are still in clinical trials or in earlier stages of development. Plant-based recombinant therapeutics haven’t been in development long enough to have multiple approvals yet. We’re confident we won’t face any serious regulatory obstacles.

TLSR: How do you plan to use iBioLaunch to develop a revenue stream?

BE: Our traditional approach has been to offer iBioLaunch for license to companies that are interested in developing products, such as we’ve done with Bio-Manguinhos in Brazil. We will continue developing alliances, looking for commercial as well as technical collaborations in which the platform can be exploited across multiple product classes. Ultimately, this will generate service revenue, as well as milestone payments and/or royalties based on those products’ success.

We’re also using this platform internally to develop our fibrosis therapeutic candidate. At this point we’re not seeking a partner, but eventually we would be open to that possibility.

TLSR: Where is your fibrosis candidate now in terms of development, and what are the next milestones?

BE: IBIO-CFB03 is in late preclinical development for fibrosis. We’re developing the investigational new drug (IND) package now and are conducting toxicology studies and doing some of the necessary process validation work. We expect to start our first Phase 1 clinical trial in Q1/16. We plan to take this candidate at least through Phase 1 on our own.

Our work is done in collaboration with the Medical University of South Carolina. Caliber Biotherapeutics LLC (private), in Texas, is our manufacturing partner, and we’re also working with a private California biotech company called Novici Biotech LLC on some of the product variant work.

Initially IBIO-CFB03 will be a single product candidate, but it’s in a family that may lead to multiple products or formulations to treat various fibrotic diseases. A strategic milestone will be to define the opportunity as either a single product treating a single fibrotic disease, or as a portfolio of at least two products for more than one indication.

To better define the opportunity, we are continuing with traditional product development and working through the IND process and clinical trials. Simultaneously, we’re conducting basic and animal research with variant candidates that may broaden our reach into additional types of fibrotic diseases.

TLSR: You mentioned some collaborations. What should investors know about them?

BE: The Caliber collaboration started with a multiproduct license from iBio to Caliber. The initial focus was on an oncology product that Caliber brought to the table. We’ve also worked together to evaluate other opportunities in which our technology might be particularly valuable.

The significance of this relationship extends beyond the financial considerations of license fees and potential royalties on product sales. Caliber also has a very large, very high quality pharmaceutical manufacturing facility that is capable of taking our technology from laboratory scale through full commercial scale. It’s a high-capacity plant that can produce vaccines as well as therapeutic proteins like antibodies or our fibrosis product.

Since outlicensing our platform to Caliber, we have also become its customer. Caliber is manufacturing our product for the IND filing and the Phase 1 clinical trials for our fibrosis program. Our relationship is a little more complex and interesting than a traditional licensee relationship because we’re sharing broader opportunities as well.

TLSR: As you look to future collaborations, is there anything in particular you’d like to see?

BE: We’re especially interested in collaborations that allow us to add value beyond providing services. For example, rather than a simple contract manufacturing approach, we’re looking at situations where we can augment a product’s viability by enabling a very difficult product to be made, or by using our technology to enhance another company’s product. We want to develop a hybrid strategy between being a contract manufacturer and a development partner.

TLSR: Can you provide some examples of how your technology could help drug developers alter their products?

BE: We can help in two ways. First, we can improve yield. We can conduct gene engineering work to alter the sequence of the DNA to increase protein yield without changing the protein’s sequence, structure or performance.

We’ve done this several times in experimental settings. For a human blood-derived protein, we increased the yield by about 50% from initial levels. With an antibody product, we increased the yield by several hundred percent. In that case, we started at a pretty low point and experienced a dramatic increase on a percentage basis. In both of these cases, our partners thought they already had optimized things as much as possible. By using our technology, we were able to push yields beyond that point.

TLSR: What is the second type of change can you introduce?

BE: We can use iBioLaunch technology to select proteins for improved function. By changing the protein of interest, researchers can improve antigenicity for vaccines, or some other functional property. Often, this creates a proprietary product that hasn’t existed previously.

TLSR: Briefly, please tell investors about iBio’s growing patent portfolio.

BE: We have 20 issued U.S. patents, 42 issued in other countries, and 7 patent applications pending in the U.S., with 20 pending in other countries. The portfolio includes patents on both products and processes or methods. Our most recently issued patents were for a monoclonal antibody targeting the influenza virus, and for compositions and methods to increase the potency and durability of vaccines.

TLSR: The stock chart between early 2011 and now shows a high of $5.50/share in 2011, versus where iBio stands now, at about $0.73/share. What’s behind that decline?

BE: It’s not so much declining as it is bouncing. When we became a public company in 2008, about the time of the Lehman Brothers collapse, the stock was trading at about $0.20/share. The 2011 peak in stock price roughly coincided with the ramp-up to FDA approval of Protalix’s carrot cell-based enzyme, taliglucerase alfa, to treat Gaucher disease. At the time, there was a lot of speculation about what that meant for companies with comparable technologies. Since then, Protalix Biotherapeutics stock also has fallen about 80% to about $1.50/share. More recently, in October 2014, when concerns about Ebola outbreaks were rampant, our stock spiked to $3.21/share.

iBio’s stock is very volatile. It has been very thinly traded prior to the past year or so. Our volume of trading has increased significantly in the past few quarters.

TLSR: When you became a public company in 2008, the IPO window was closing. How did you do it?

BE: We haven’t had an IPO. We became public in 2008 as a tax-free dividend to the existing shareholders of a pre-existing company. We first listed on the bulletin board (OTC), and then qualified for the American Stock Exchange (AMEX), which was acquired by the New York Stock Exchange (NYSE).

TLSR: How did the recession affect corporate visibility?

BE: It’s taken a while to become noticed. When we became public, nobody was interested in small, newly public biotech companies. Therefore, we didn’t do much in the way of investor relations the first few years. We were well funded, so we just kept working and gradually began to raise our visibility.

TLSR: How are you funded, and what is your cash burn?

BE: We have enough cash to operate for a year or a year-and-a-half at current expenditure rates and based on current plans. We also have an “at the market” arrangement with Aspire Capital, which is more positive from our perspective than a traditional equity line of credit. Aspire Capital has made a $15 million ($15M) commitment, and we expect to draw down on it as needed at rates related to the market price. We previously had a $10M arrangement that we fully drew down. We haven’t used investment bankers for public financings for a while because this has been a sufficient source of capital for our current, relatively low, burn rate.

We hope we’ll have greater visibility as we begin clinical trials of IBIO-CFB03 based on the performance of the product and clinical results in Phase 1. Eventually, we will need to look at access to capital and the strategic implications of various partnering options. But we have the luxury of time before we need to make those decisions.

TLSR: What should investors expect from iBio in the coming year?

BE: We plan to start the fibrosis clinical trial in early 2016, and expect positive news from that. Phase 1 is heavily oriented to safety, but we expect to start with a healthy volunteer cohort, followed by patients in a second cohort, so we may see indications of efficacy via surrogate endpoints even in Phase 1. Entering into the clinic will increase our visibility and, we believe, also increase our value.

I also expect to announce additional partnering agreements. These probably will be small, but some could have fairly exciting products tied to them. Those deals won’t pay off financially to a significant degree in the next year, but could set the stage for a better market understanding of the value of our technology platform.

We also have a small subsidiary in Brazil that is actively marketing our technology and product opportunities to the private sector and to multiple government agencies. iBio’s Brazilian subsidiary, through the alliance with Bio-Manguinhos, accounts for most of the revenue on our income statement. It’s very hard to predict timelines there, given Brazilian politics, but I’m very optimistic about that market in the long run. Brazil could be a source of good news in 2016.

We’re also actively engaged in a business development alliance with Kanematsu Chemicals Corp. in Japan, which has the potential to lead to further activities in that country. If we do anything in Asia, it will likely be with Japan first.

TLSR: Is there anything else investors should know about iBio?

BE: The fact that we’re relatively unknown represents an opportunity. It doesn’t take a lot of positive news to generate serious, price-moving interest in the company. Stock prices respond well to progress, so I’m optimistic about the next year. Our news should be good.

TLSR: Thank you very much.

Robert L. Erwin is president of iBio Inc. He previously led Large Scale Biology Corp. from its founding in 1988 through 2003, including a successful initial public offering in 2000, and continued as non-executive chairman until 2006. Mr. Erwin served as chairman of Icon Genetics AG from 1999 until its acquisition by a subsidiary of Bayer AG in 2006. He is currently chairman of Novici Biotech, a private biotechnology company, and a director of Oryn Therapeutics LLC. Mr. Erwin’s nonprofit work focuses on applying scientific advances to clinical medicine, especially in the field of oncology. He is cofounder and president of the Marti Nelson Cancer Foundation and a former member of the Cancer Policy Forum of the Institute of Medicine. Mr. Erwin received his bachelor’s degree with honors in zoology, and a master’s degree in genetics, from Louisiana State University.

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