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The following questions were asked during the webinar or subsequently. Most were answered during the webinar, however the answers below may be more expansive. Questions have been edited for clarity. Where multiple questions were asked addressing similar subject matter, the questions have been amalgamated and a single answer given. The Company does not consider it appropriate to speculate on the reasons for investor buying and selling behaviour and questions related to this topic have not been addressed.

1. Why is there such strong activity in Asia in cellular immunotherapies?

For several decades, many Asian countries, and particularly China and South Korea have been strategically investing in advanced technologies to shape their future economies. Biotechnology is a key priority sector.

Previous five-year plans have set targets for the number of US FDA approved biologics manufacturing facilities to be built in China

National and provincial governments have mandated the industries that will drive the economies of major cities, with a focus on knowledge industries such as biotechnology on the east coast. This has resulted in the designation of numerous biotechnology focussed technology parks

Chinese nationals trained in western universities have been sponsored to return to China with funding to establish cutting edge laboratories.

A permissive regulatory framework to encourage rapid translation of research into clinical practice has been implemented. These Investigator Initiated Trials (IITs) mean that many of the assets that AdCella is reviewing already have some human clinical data.

Rather than repeat or copy innovations in western markets, scientists in Asian markets are encouraged to conduct work at the cutting edge of science, and cellular immunotherapies fall into this category. This research can be conducted more rapidly and at lower cost to first in human studies than could be done in western markets, something that led the SYNBV team to previously establish a small molecule contract discovery services business in China. Early successes, such as Legend Biotechnologies who invented the first, and still market leading, US FDA approved CAR-T cell product for multiple myeloma (commercialised with Johnson & Johnson), have further stimulated innovation in this field.

Finally, many of the partners AdCella is evaluating have staff who have worked either directly for US biotechnology and pharma companies working in this field (such as Kite Pharmaceuticals, Novartis, BMS) or with the China JV partners of these companies (such as Fosun-Kite, Wuxi AppTec, GraCell).

2. What parts of the technology do you expect to source from China? What kinds of cellular immunotherapies will you source? Will you develop autologous and allogeneic cellular immunotherapies?

AdCella’s initial business model is to license or acquire the intellectual property, know-how and data associated with products that have been developed by our licensing partners to the stage where they are ready to enter clinical trials in western regulated markets. In many cases they will already have human clinical data from IITs in their “home” market, substantially de-risking our investment. We will then transfer production to a contract manufacturing location most likely in Australia in order to facilitate first western regulated clinical trials, after which we will seek to on-license for further commercial development, though we will retain the option to progress further ourselves.

We will be focussed on assets in the field of cellular immunotherapies for solid cancers or non-cancer indications, rather than haematology or blood cancers. We will be platform or cell type agnostic and autologous or allogeneic agnostic (at least initially), with product selection driven by the quality of preclinical and human data, the competitive landscape around the targets, the presence of multiple modifications to the parent cells, the pipeline of the partner and the potential to integrate our i-body® platform into their future pipeline. The initial assets will not be i-body® enabled.

3. How supportive are the Chinese government in protecting your assets/IP from being copied. Do you have any "exclusivity” for a period of time?

China is a signatory to the global Patent Co-operation Treaty and in recent years has become increasingly effective at enforcing intellectual property within China. Chinese biotechnology companies are also conscious that the largest markets for their products are outside China and maintain appropriate international patent portfolios as a result.

AdCella will, in general, be seeking licenses to develop and commercialise products outside of China/Asia. Our value proposition will be very much enabling the bridge from eastern markets of origin to western regulated markets. Therefore the protection we will be most dependent on will be protection in those western markets where the patent system is robust and well understood. Further, the products will be manufactured outside China (at present there are heavy restrictions or bans on import and export of human cells into and out of China) and so, except for some raw materials (including potentially viral vectors used in modifying these cells), the supply chain will not be dependent on China.

We will of course need to conduct detailed due diligence to ensure that the data on which we are basing our licensing and investment decisions is robust and reproducible. To date we have been very impressed by many of our short list of potential partners, and due diligence is one area where our collaboration with SYNBV will significantly strengthen our skills.

4. Is there an indicative timeline for the pipeline of projects? How long will it take to see returns/revenue from this collaboration?

Under our MoU with SYNBV we have contemplated 6 months to screen the pipeline of potential assets for AdCella and secure the first licensing deals. We have the option to extend that for a further 6 months by mutual agreement to ensure we secure the correct assets.

A reasonable timeline for developing each asset through an inflection point (first human efficacy data in a western regulated market) would be three years (a year to establish manufacturing and obtain clinical trial approval and two years to run the trial) however this will vary depending in the size of the trial and the rarity of the cancer. Demonstrating efficacy under a western regulatory framework and with a western regulated/compliant supply chain will add significant value to each product, enabling on-licensing to companies focussed on late-stage commercialisation. Most larger pharma companies continue to seek assets at this stage rather than developing their own.

5. Would AdCella be spun off to become its own entity or remain under the AdAlta banner?

The present intention is that AdCella would be an AdAlta subsidiary that is jointly owned by AdAlta and SYNBV. This structure maximises our ability to raise capital from public and private sources and from our in-licensing partners. It also ensures that AdAlta’s i-body® intellectual property and AD-214 remains outside AdCella. 

Structuring AdCella this way also provides strategic flexibility in future to spin out AdCella as a separate listed entity, sell AdCella in a trade sale, or reintegrate it as a wholly owned subsidiary of AdAlta. It is too early to predict the probability of any of these outcomes. The eventual decision will be heavily influenced by the best way to optimise return for shareholders.

6. Can you please discuss the difference between cellular immunotherapy and CAR-T therapy?

Cellular immunotherapy describes the entire field in which AdCella presently intends to operate. This involves the use of human immune cells as a living drug to treat disease where there are no simpler, more traditional modalities such as small molecules or antibodies available (most commonly cancer, but also increasingly autoimmune disease and infectious diseases). The advantages of this approach over older chemotherapy and immunotherapy approaches are that the treatment harnesses the full complexity of the body’s immune response rather than just a single component, and the drugs are living and therefore potentially durable offering the potential for a single dose to be curative. The disadvantage is the complexity of the technology and the need, in many cases to make each product specifically for each patient from that patient’s own cells which makes for complex and expansive manufacturing, logistics and treatment protocols.

The field of cellular immunotherapy can be divided into a number of different segments based on the cells used and how they are modified.

The immune system comprises multiple different cell types that can be used in cellular immunotherapies.

Most commonly used today are T cells, which are highly specialised cells adapted to a specific target. They have a highly specific response and expand well in both manufacturing and in a patient. They tend to be very specific to an individual patient and so cannot be used as an off-the-shelf product without very careful matching of donor and patient.

The next most common immune cell used is a Natural Killer (NK) cell. If T cells are the special forces of the immune system, NK cells are the front-line soldiers. Their response to infection or cancer is much more general. This means that they tend to be less potent than T cells. They also expand less effectively during manufacturing. However they have the advantage that they are more likely to be suitable for off-the-shelf use since there is less need to match patient and donor.

There are numerous other rarer cell types that are also being investigated as cellular immunotherapy candidates. 

Cellular immunotherapy products can also be created by modifying them in different ways.

At the simplest level, immune cells are collected, isolated from other cells, expanded and activated in a laboratory and given back to the patient minimally modified but in higher more potent doses. Historically these approaches have typically had limited potency. Examples include:

Tumor infiltrating lymphocytes, or TILs, which are isolated from tumor biopsies where there have been insufficient to affect tumor growth but which when expanded in the laboratory may increase the likelihood that enough of these cells can be administered to shrink the tumor.

Virus specific T cells (VSTs) that exist in most people in response to a viral infection that is usually asymptomatic but in some patients can trigger cancers and so exposing a patient’s immune cells to virus proteins in the lab can boost numbers of these VSTs to fight the virally induced cancer.

On the other hand, immune cells can be genetically modified to add additional functions.

The most well known modification is to add a Chimeric Antigen Receptor or CAR. This is an artificial component comprising a binder to a specific molecule found on the surface of cancer (a role that i-bodies are well suited to), with the binder then attached to signalling molecules that activate the killing mechanism of the cell when the binder engages the tumor. This creates a very effective on/off switch for the immune cell and high specificity. CARs can be added to most immune cells with CAR-T and CAR-NK cells being most common. These are the most potent cellular immunotherapies known to date, but they are also the most expensive and complex to manufacture and can have serious adverse side effects.

Other modifications are designed to overcome various limitations of unmodified cells or CAR cells, and include: dual or bi-specific CARs to improve selectivity (another good application for i-bodies); secreted molecules to overcome tumour induced immune suppression (also an application for i-bodies); and safety components so that the cell therapy can be stopped or killed if required.

Finally, cellular immunotherapies can be autologous (a patient’s own cells are used) or allogeneic (a donor’s cells are used to produce “off-the-shelf” products for multiple patients). Allogeneic therapies offer the potential for lower cost, faster treatment cycles and more traditional manufacturing, but often require either very careful patient and donor matching or special immune cell subtypes needing much greater/longer expansion (both of which negate the “off-the-shelf” cost benefits) or very complex genetic modification or use of stem cells (which carry safety risks). Most therapies today are autologous as a result though the first allogeneic T cell products have been approved in the past year. In future, the ability to engineer a patient’s own immune cells (in vivo cellular immunotherapy) without removing them, using viral vector or mRNA technology is likely to remove the need for allogeneic therapy.

7. How does AdAlta intend to finance their side of the deal for the pipeline?

The nature of our business is to invest to progress a portfolio of assets through key development stages that increase their value, generating once off (but hopefully large) returns on these assets in return. We appreciate that we are investing shareholder funds and do not take these for granted, raising new capital only after satisfying ourselves that there is potential for an attractive return on shareholder funds and that we have a reasonable chance of obtaining meaningful new data supporting the attractiveness of our products and technology to licensing partners with the capital raised.

AdCella has been deliberately structured to maximise financing flexibility while generating an attractive return on investment for shareholders.

We are able to accept public (via AdAlta) or private (via SYNBV or third parties) investment to finance AdCella. SYNBV’s entry into this collaboration with AdAlta is validation of the attractiveness of the business case and the ability to raise capital (in fact they had already been exploring AdCella's "east to west" bridging business model for small molecules). We have also received positive responses to the opportunity from several international life sciences investors.

AdAlta has a clear strategy to realise the value in our lead asset AD‑214 and discussions to achieve this are progressing satisfactorily. Depending on the timing, nature and size of any transaction, AdAlta may be able to redeploy capital into AdCella. Proceeds of other (generally smaller) i-body® platform licensing deals may also be able to be deployed to AdCella. We have a track record of using grant and R&D Tax Incentive financing to leverage our equity capital.

We have been exploring and building a pipeline of potential assets for AdCella over the past 12-18 months, so meeting our commitments to conduct due diligence under the MoU with SYNBV will not materially change our underlying expenditure even after the costs of the recently completed Phase I clinical study of AD-214 are removed. AdAlta will provide management services to AdCella in return for fees or equity and will have a substantial founder shareholding in AdCella.

AdAlta (ASX:1AD) - SYNthesis BioVentures Partnership Webinar Q&A