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Joseph Kim:
Welcome to Clinical Research Confidential. On this show, we highlight and demystify the inner workings of this greatly misunderstood activity called clinical research. Now, why is clinical research important? Well, it’s the basis for nearly every modern remedy for sickness and a growing method to build trust and solutions meant to optimize health. But it’s not for the faint of heart. And so, on this show, you’ll hear what it really takes to succeed in the clinical research game. I’m your host, Joseph Kim, and I’ve spent over 23 years in the clinical research industry, now serving as the chief strategy officer for ProofPilot. Get ready for some adventures as we look into the underbelly of clinical research.
Joseph Kim:
And today we have on the show David Katz. He’s the founder and Chief Scientific Officer of Sparrow Pharmaceuticals. David, welcome to the show.
David Katz:
Thanks, Joe. It’s great to be here.
Joseph Kim:
So today, we’re going to talk about a very interesting angle of your pipeline, which is around developing medicines that actually help to alleviate the side effects of other long-standing medicines that are put in place to help patients with a wide variety of conditions. So we’ll get to that because that’s a very interesting thing I think people don’t think about, which is, you know, all good things cast a shadow, and to the extent that those shadows can be eliminated with a second drug, great. Certainly, we don’t want to be constantly swallowing spiders to catch flies, but sometimes you have to do what you have to do. But why don’t we start with your sort of personal history in science and medicine and research? How did you get into this business in the first place? What did you study at university, and how did you found the company of Sparrow?
David Katz:
Yeah, so I started out thinking I was going to become a pretty traditional academic scientist and got through undergraduate PhD, postdoctoral fellowship in a top laboratory. It happened that the fellow who started about four months before I did picked up the project that A, turned into some first-author cell and nature papers for him and really catapulted our mutual advisor’s career to further heights, and you know, and I didn’t, I wasn’t, I was good, but I did have luck that time. And so, at the end of my postdoc, I was looking at, I could do a second postdoc and hope that I’d get lucky this time, that I might go to a mainly teaching undergraduate institution and spend my life teaching and writing grants, and I considered that seriously, or I could try industry, and I figured I was going to hate industry because back in the 1990s, industry was thought of as the dark side.
Joseph Kim:
It still is, but keep going.
David Katz:
Much less so now, but, so I wanted to stay local. I was at the University of Chicago at the time, and so found a job at Abbott, figuring six months from now, when I hate it, I can apply for that second postdoc, and I really haven’t lost anything, and I’ve gained some experience. Well, 18 years later, I retired from AbbVie, which is what the company had become by then, and along the way just had a lot of really great experiences. I think I had maybe a little bit unusual career in industry because it did have a lot of academic elements to it. So I did published a lot of papers there, I felt I was doing really good science along the way, but I also, after 18 years, felt like I had reached the plateau of my learning curve in that organization. And my thinking process at that time really turned to, I just turned 50, which means I can retire rather than quit, and that means that the company will pay out my long-term incentives and give me some economic runway to start something entrepreneurial, and so that is where Sparrow Pharmaceuticals started. And the rationale for the company came out of mostly lunchtime discussions that a number of us as early clinical stage drug developers had, and observing in the industry a couple of trends. One, that each pharmaceutical company would focus in the really, the late 2000s and early 2010s on few progressively fewer and fewer therapeutic areas, and that swing back and forth in the pharmaceutical industry over the decades whether to focus on areas where you think you can build commercial mass or be opportunistic and follow the science more and then figure out how to commercialize what you have in, at that time, it was focused more on, well, build commercial mass. And also that, for the large pharmaceutical companies, they really had at the time more opportunities in late pre-clinical, early clinical development than they could finance and justify to their shareholders. So those two trends together meant that there were a lot of really good drug molecules that had been deprioritized for what a scientist or a clinician might say isn’t a good reason, because it had to do with the business rather than the science or the clinical merit, the program. And so we said, wouldn’t it be fun and helpful to humanity as well? Or maybe we said, it would be helpful to humanity and fun as well to form a company, acquire rights to one or more of these deprioritized molecules, then develop them to fate to the start of Phase Three, and then pitch them back to pharma and let Big Pharma do what they’re really good at, which is make drugs, sell drugs, and global operations. So the whole complexity, and I think what will be interesting to your listeners, readers, is the business of making sure that you can operate a 2000 patient study across 60 sites in 12 countries and have really pretty equal treatment of all of the participants in the study, that’s something Big Pharma is really good at because it’s hard. It takes a lot of people to do that, and so they’re really good at it. Small companies, and Sparrow’s model in that regard, in this regard is not unique, are better at being nimble and really creative with this and scientific with the earlier stages of drug development, and that’s not a core competency for pharma companies. So I think it’s really rational that over the past years, you’ve seen more and more small companies jumping into this gap and bringing forward assets and new medications to a certain stage that maybe Big Pharma would not have done as well.
Joseph Kim:
Yeah, let me go back to something you said earlier, which I think we glossed over because maybe you and I understand this just inherently, but some of our listeners may not, which is, there’s always these molecules on the shelf that any pharma company, they just can’t they can’t develop, right? Because there’s just not enough money to do that sort of thing because drug development is expensive, whether you’re a small company or a big company. So every company I’ve worked at, and I’ve worked at three different pharma companies, it’s always the same. There’s more to prosecute than they can actually do. Now, when you say that small companies like yours are also nimble, it’s also still very expensive for you to develop said molecule, even though it’s early stage. Is that correct?
David Katz:
It’s not cheap, it’s not easy, but there are alternative sources of capital. So we’re funded by venture capital, their outlook is very different because they’re expecting to monetize their investment on an exit. The investors in large pharmaceutical companies are expecting to monetize their investment based on growth in the sales of the portfolio. And so what their companies are investing, are interest, what those investors are interested in, and therefore, what the CEOs of Big Pharma companies have to be interested in is how do I grow the sales and how do I keep bringing new things on to fill that sales pipeline. And so there’s a lot of focus on commercial operations and on things that are maybe no more than a year or two from actually being on the market. And the rest of it is essential to keep building that pipeline in future years, but it’s really difficult to focus a lot of resources on it. And as you said, it’s expensive, and so it’s a really hard, I’m glad I’m not in the top management of a big pharmaceutical company because that sort of portfolio balancing isn’t the sort of problem I’m really interested in. But it’s a challenge, and you can only do so much because you can only commit so much of the profits from all those sales to early research that really isn’t valued by your shareholders.
Joseph Kim:
Yeah, and there’s so much risk in there. And so, the Big Pharma company can de-risk their development portfolio by letting you do some of the early work. And, of course, they’ll pay a multiple when you’ve proven something works or doesn’t. They won’t pay if it doesn’t work, but if it does work, they’ll pay that multiple when it happens, and so it’s a nice economic model that kind of works on both stages. Well, let’s talk about the science here, because I think the science is very interesting. And so, in some of our earlier conversations and emails, there was a story about prednisone, which back in the day was hailed as a miracle drug where people would be able to get up out of their chairs and walk for the first time. And, but we quickly learned that as people took that more frequently, there were some terrible side effects for which there were not, and correct me if I’m wrong, not good remedies, so the alternative was to limit your use of these sorts of steroids. How am I getting that story right, and how does your molecule fit into that paradigm?
David Katz:
Yeah, so actually, it’ll be, this September, it’ll be 75 years since Prednisone, as the first steroid medication was used at the, was used for patients at the Mayo Clinic to treat rheumatoid arthritis. And, at first, it was a miracle drug, the first patient went from being bedridden to be able to get up and go out and go shopping. But then, not all that long afterwards, she became a bloated psychotic who refused to take the drugs anymore because she felt that it was even worse than the disease. And that’s been the situation, for 75 years, has been we have to limit the dose of the steroids because they’re, although they’re great at controlling diseases across the range of rheumatology and other fields. So everything rheumatoid arthritis, asthma, inflammatory bowel disease, transplanted organ rejection, Polymyalgia Rheumatica, which is the disease we’re working on right now, I’ll tell you more about that a little later. The efficacy is great, but you have to limit the dose to limit the side effects. And people have tried for now almost 75 years to separate the good from bad effects of steroids. In fact, Kendall, who was the chemist who first isolated Prednisone back in the 1940s, spent the last two decades of his life trying to do that and actually dropped dead shortly after he had a heart attack during a meeting with Merck Chemists to discuss how are we going to do this? And there’s been limited success. So steroids are delivered locally by a lot of different routes. So the inhaled steroids are one of the biggest examples of that, topical steroids, steroids used directly in the eye. Also where you limit the systemic side effects by delivering the drug locally, but otherwise, there hasn’t been a way to make a safer steroid. And if you use enough, the steroids, by even by these local methods, you start to see a lot of side effects. Even with the limitation of use of steroids and the development of new targeted biologic therapies to treat autoimmune diseases by the pharmaceutical companies, which has been a huge effort for about 40 years now, there’s still millions upon millions of steroid prescriptions written every year. Millions of patients still rely on chronic use of steroids to control their diseases. And steroids are responsible for out 10% of all adverse drug adverse events that are reported to the FDA and also about 10% of all drug adverse events that result in hospitalization.
Joseph Kim:
Yeah.
David Katz:
It’s a real problem. And the vision is to create a steroid that has the same efficacy as today’s steroid but is safer. And our approach to that is based on modulation of the metabolism of the steroids, and particularly on recognition that steroids within cells are the important steroids, both for the efficacy of the steroid drugs, for the physiological roles of cortisol, which is our endogenous steroids, as well as for the toxicity. And we see that all of the receptors for the steroids exist inside the cell, and so the steroid has to be there. Thinking about the steroids as drugs, there is an enzymatic pathway in the body which interconverts active steroids with an inactive form. So thinking about the endogenous steroids, cortisol is active, and cortisone is inactive, but the drugs, prednisolone is active, prednisone is inactive. And the target of our drug is a molecule called HSD-1, which converts the inner form, cortisone or prednisone, to the active form, cortisol or prednisolone, inside the cells, and it does so in tissues such as liver, and fat, and bone, the wall of the blood vessel, the eye, the skin, the brain, where normal levels of cortisol, physiological effects, and increased levels of cortisol, or administration of the steroid medicine such as prednisolone, can have toxic effects in the same cell because those intracellular levels go up. We lower those levels, and the reason that this intracellular enzyme is so important is that the active steroids are very highly protein-bound in the bloodstream, and that means that they can’t readily cross into cells. And so, only a small amount of our total cortisol gets into our cells, the rest of it just floats around in our body. But the inactive forms are less protein-bound, and so they more easily enter cells, and there they can be converted by our target HSD-1 into active steroids. And so, our mechanism, blocking HSD-1, provides a means to fine-tune the amount of steroid that’s inside of a cell. So that’s really our scientific approach.
Joseph Kim:
That’s fascinating. So you’re able to throttle up and down the active steroid that’s available to actually do what it’s supposed to do. How did you pick the disease to go into? Because as you mentioned earlier, there’s a wide variety of diseases that rely on steroid use to help alleviate symptoms. How did you pick what did you decide to go for in the first place?
David Katz:
Yeah, so Polymyalgia Rheumatica is the most common autoimmune disease of the elderly, and it’s the second most common autoimmune disease overall after rheumatoid arthritis, and partly, it was following the market. So if you look at which patients rely on long-term corticosteroid use for treatment of, for control of a disease, the biggest population is in Polymyalgia Rheumatica because something like 60 or 70% of patients with Polymyalgia Rheumatica need steroids for a year or longer to get their disease under control, so it’s a large market as well. There are no currently other therapies that are approved for the treatment of Polymyalgia Rheumatica. And third, the demographics of the population are, put them, particularly in need of a safer steroid because the typical patient with Polymyalgia Rheumatica is our mothers. So the median age of onset is 73, many of the patients are in their late 70s, 80s, even 90s, and about two-thirds of them are women. And if you or I break a bone, we might be out of commission for a few weeks or months before we’re fully back to doing all the physical activities that we do, and so we spend even more time sitting in our desks as we do working. But if an 80-year-old woman breaks a hip, that’s a life-changing event from which she may well never recover. And so the impact of glucocorticoid, the steroid side effects can be more severe in that population, and they also have a higher prevalence of comorbidities such as diabetes or hypertension, or glaucoma that make the use of steroids, which can exacerbate those conditions, all the harder. So it was really an alignment of several factors that led us to Polymyalgia Rheumatica. That said, once we, if we prove the concept clinically in Polymyalgia Rheumatica, there’s little reason to think that it wouldn’t work for any other disease for which steroids are used to benefit patients.
Joseph Kim:
Yeah, it’s a sort of a land-and-expand for sure. Tell me, how difficult is it to conduct research in that age group? Pediatrics are really hard. What’s really easy between 18 and 65, like, pretty easy, but when you get beyond 65, there are a variety of challenges there with that age group, particularly if they’re women. What have you seen in the clinic or operationally that makes it hard to do research with these folks?
David Katz:
First of all, I’m not sure any clinical research is easy, particularly not any anymore. Certainly, you need to, initially, take a more cautious approach. So typically, a drug in the first clinical trial or trials would be tested in healthy adults, generally between the ages of maybe 18 and 55 or so. And then, slowly, you would expand out your population to include first, relatively healthy elderly, and then elderly with specific diseases. We benefited when we licensed this drug from Astellas that they had already done, they had already conceded three Phase One trials and a Phase Two trial in patients with diabetic peripheral neuropathy. So there were already a lot of safety data, not only in healthy younger adults but also healthy older adults and a population that was relatively older and pretty ill as well. And so that gave us the background not to have any real hurdles to start in the population with Polymyalgia Rheumatica, of course, limiting the trial to some extent by saying if you have these other diseases, you can’t enter the trial, and that’s not only to protect patients but also to protect the integrity of the trial. So generally, if you think about another condition, co-morbid condition, and you really ask one couple of questions. So first, you ask, do, is there a rational argument that this drug can be administered safely to patients with that disease? And then second, you think about, is the disease likely to change in a way that’s going to interfere with what data you collect in the clinical trial? So if you have someone who, doesn’t matter what it is, but you know, that you expect, you’re doing, say, a 12-week clinical trial, and it’s very likely that because of an unrelated condition, they’re going to need a substantial change in their medical care or perhaps have a high risk of hospitalization or death or needing surgery or new medications within those 12 weeks; those are people who initially you don’t want in the clinical trials, and they have to get included later as you move into Phase Three.
Joseph Kim:
Yeah, let me ask you a specific question around, for research with the elderly. Oftentimes, people will say, as you get into older populations, they’re not comfortable with technology. Is there any patient-facing technology in your trials now? And have you seen that to be true, or are you not using much?
David Katz:
They do have tablets that they use to fill out patient-reported outcomes, and we haven’t had any issues with those at all, so not in terms of the patients using them.
Joseph Kim:
Yeah, that’s funny, because when I was in my 20s, I think when the iPhone first came out, and we had that same argument. People older won’t use technology, people in their 50s. Now I’m in my 50s, and I resent the fact that anyone has ever said that.
David Katz:
Yeah, but you … built for it.
Joseph Kim:
Yeah, it’s the lighting. No, but seriously, it’s good to know that you’re able to deploy things like tablets to the elderly population, and they seem quite comfortable with it. That’s hopeful.
David Katz:
Yeah, in this trial, they’re doing that at the clinical site, so there are always staff there to help them. The next jump is to send them home with a device in the next trial so that they can do all this at home.
Joseph Kim:
Sure. So tell me, what’s next for Sparrow? What are you looking forward to in the next sort of six months? A year? And, yeah, how lucky do you feel?
David Katz:
Yeah, so actually, we’ll get our first Phase Two data readout in about four weeks, so that’s pretty exciting. This trial that we’re doing in patients with Polymyalgia Rheumatica is a cohort design, so we’ll get more data approximately every four months. And then we also have two Phase Two trials running in patients with endogenous steroid access. So one in patients with Cushing’s syndrome and one in patients with autonomous cortisol secretion. Both of those are conditions in which patients have a generally benign tumor that either secretes cortisol or secretes another hormone that causes excess cortisol to be secreted, and so they have a syndrome that’s very much like all of the side effects of the steroid medicine. So they can be diabetic, they can be osteoporotic, they can be hypertensive, hyperlipidemic, they can get glaucoma, depression, sleep disorders, memory disorders, skin problems, muscle atrophy, so all of those things happen to these patients as well. Those trials, we should have, we expect to have Phase Two data probably around the end of 2023. But really, it’s going to be an exciting year. Potentially, we could have as many as three positive Phase Two trials. … As many as, there’s also the, it being research, there could be as few as and I won’t mention that number.
Joseph Kim:
Let’s not talk about that, for sure. The, you’ve been a lucky person, I think. Despite you saying you haven’t had much luck in your early career, I think you finding this market and finding molecules that are deprioritized such that you can take care of them and shepherd them through this process is a testament both to your luck and your tenacity and your brain power. Would you start any new trials like?
David Katz:
I’m wearing red, which is, you know, of course, for luck.
Joseph Kim:
Yeah.
David Katz:
And I wear that a lot.
Joseph Kim:
Do you think you’ll start, if there’s success, will you start to develop new kinds of molecules? This could get addicting. Are you one-and-done?
David Katz:
So, I don’t know.
Joseph Kim:
Yeah.
David Katz:
We’ll see how long this plays out. If we continue, this might, we might continue developing the drug for another couple of years beyond these trials, and whether I want to personally start another company, I don’t know, I’ll see when I get there.
Joseph Kim:
Yeah, David, it’s been fascinating, A, learning about a lot of different molecular pathways for steroids in the inactive form. So personally, I thank you for that lesson, but also on behalf of the general public, I think what you’re trying to fix and solve is definitely a huge unmet need for a lot of people that are important to everyone in our lives. These are our moms and grandmoms and to have them live a better life I think is a very personal, it’s going to have a very personal impact to a lot of people. Kudos to you for focusing on this patient cohort. I think they often go under, overlooked.
David Katz:
Thanks. Ultimately, it’s really all about patients. That’s the ultimate source of gratification is when people’s health gets better.
Joseph Kim:
My mother’s right in this age group that you’re talking about, and while I don’t want anything bad to happen to her, should anything happen where she needs to access use of steroids or hopefully your drugs on the market by then, and I can shake your hand.
David Katz:
All right.
Joseph Kim:
Thank you for coming on the show, David. Have a great rest of the day, and we’ll talk again soon.
David Katz:
Yeah, great discussion, and thank you. Bye bye.
Joseph Kim:
Bye.
Joseph Kim:
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