Dr. Christopher Schaber is the President and CEO of Soligenix, a late stage biopharmaceutical company with a pipeline of pharmaceutical products to treat a variety of rare diseases with an unmet need. Brett Johnson speaks with Dr. Schaber to discuss Soligenix’s mature pipeline of products, their business in biodefense, and investment opportunities in the company. Brett Johnson: Dr. Christopher Schaber, President and CEO of the biopharmaceutical company, Soligenix. First off, can you just tell those who aren’t familiar with Soligenix, what is your business? Christopher Schaber: Our business, we think, is quite unique. It’s a two-segment business. We have a biotherapeutics rare disease segment focused on cancer, cancer supportive care and inflammation and we have a separate segment of our business, a vaccine/biodefense segment funded entirely by the U.S. government, focused on medical countermeasures for military and civilian use. What many folks don’t realize is the FDA defines these biodefense applications as rare diseases as well. That’s where we say we have a diverse pipeline in the rare disease setting. BJ: Can you talk a little bit about the significance of working with the government, in terms of the defense department and the opportunities that presents the company from a financing and strategic point of view? CS: For us, as you can imagine, any time you can get non-dilutive funding it’s a good thing, as you’re trying to advance your programs. And what the vaccine/biodefense business segment has afforded us to do is to really develop good technology in lock step with government financial support, whether through the Biomedical Advanced Research and Development Authority (BARDA), the National Institute of Allergy and Infectious Diseases (NIAID) or the Food and Drug Administration (FDA). What many folks may not realize is that securing these grants and contracts is a very competitive process. There are a lot of academic institutions and other companies going after the same funding. The fact we’ve had a level of success in securing these government grants and contracts, I think, validates and shows the merit of our technology. It’s not saying that every technology is going to get FDA approval, but it does show sound science that we then take and develop and, thus far, have been able to generate some very nice data in advancing these programs. Another important aspect of this government funding, it that it allows us to manage our cash burn a little more effectively, by covering overhead, covering salaries and really advancing, what I believe, is a robust pipeline with multiple shots on goal to mitigate development risk. BJ: Can you talk about what some of those shots on goal might be? CS: Sure, first off is our biotherapeutics business segment. We have three programs, either poised for a pivotal Phase 3 clinical trial or actively enrolling in a Phase 3 study. For those that may not familiar with drug development, Phase 3 is typically the last phase of development before you file for registration and potential approval with the FDA or any world health authority, like the European Medicines Agency (EMA). Where we sit today is, we have a Phase 3 program in cutaneous T-cell lymphoma (CTCL), which is a chronic cancer, a rare class of non-Hodgkin’s lymphoma, which has received FDA orphan drug and fast track designations to show that not only is it a rare disease being granted orphan designation but by granting fast track designation, it is also an area of unmet medical need allowing for potential opportunities to accelerate the program with the FDA. In the CTCL Phase 3 program, we’re developing a very novel topical therapy which we call SGX301 or synthetic hypericin, which is applied to the cancerous CTCL skin lesions and activated by safe, visible fluorescent light. We are actively enrolling patients in this pivotal Phase 3 study and expect data by the end of 2017. We also have a program, a very novel program in oral mucositis in head and neck cancer patients, with a new chemical entity referred to as SGX942 or dusquetide. Here we just recently announced positive Phase 2 data and based on these results we are now interacting with the health authorities to position the program for a Phase 3 pivotal study and believe we are very close to having that final agreement on a protocol that we could then initiate by mid-year 2017 and if all goes according to plan, we could expect data as soon as the end of 2018. Of note, with the oral mucositis program, we have a partnership with SciClone Pharmaceuticals for the Greater China market and other Asian territories. And then we have our third Phase 3 program in pediatric Crohn’s disease. This program is with another molecule, SGX203 or an oral beclomethasone dipropionate. This program has been cleared through the FDA; however, initiation of this Phase 3 study will be contingent upon additional funding sources, such as partnership. Currently, our primary focus is completing the CTCL Phase 3 study that is actively enrolling patients, as well as initiating the Phase 3 study in oral mucositis in head and neck cancer. That’s all in biotherapeutics which again has very near-term catalysts as it relates to drug development. BJ: Before we get into the other elements, can you talk a little bit about the trials? The cutaneous T-cell? How big of a trial is it and how long will that take? When do you expect some end points? CS: CTCL, which is actively enrolling in a pivotal Phase 3 study, will enroll approximately 120 subjects in the study. We expect the top line data in this study by the end of this year, 2017. BJ: What is the study for? What’s the end point? CS: The primary end point in the CTCL trial, where we are treating cancerous lesions on the skin with our SGX301 activated with fluorescent light, like you probably have above you in your office there, is a reduction of 3 representative lesions by 50% or greater with treatment. It’s a six-week treatment. We treat with SGX301 or placebo twice a week for six weeks and measure the result at eight weeks. BJ: How big of a problem or issue is this? How big of a market would you be able to serve if this were to go well? CS: It is a problem. There is no cure for CTCL so you treat the lesions but, often times they come back. Depending on the patient, they can come back once a year or they can come back multiple times a year, three, four, five, six times a year. So it’s a long-term problem for the patient. The good thing, I guess, with this particular cancer in its early stages, which is known as mycosis fungoides, is that the patient can live with it for many years. You have patients that will live beyond 10 years with this particular disease with proper treatment. The current number of patients living in the U.S. with the disease is about twenty thousand and then you have new cases each year. There’s close to three thousand new cases each year as well. Our focus is that early stage patient population. Our treatment is a front line or first line treatment for these patients when they’re newly diagnosed or have very early stage disease. Currently, there’s nothing approved for front line therapy for CTCL. If all goes according to plan with our Phase 3 study, we could potentially be the first FDA-approved photodynamic therapy. We will see. BJ: Do you have any sense about what the cost of the treatment might end up being? CS: At this point, we don’t. As you would imagine, we are still going through a lot of our commercial exercises. A lot will be driven by the outcome of our Phase 3 study, depending on what we see and to the extent we see it, that is, how effective will the drug be at reducing the lesions, can it reduce hospitalizations, can it reduce the number of times patients may go in for additional treatments during the course of a year or so. We are waiting on that Phase 3 study to really define what the cost could be. BJ: How about the oral mucositis Phase 3 study? Can you talk a little bit about that? CS: Of course, here we are looking at oral mucositis that occurs in head and neck cancer patients. In head or neck cancer patients, they receive high doses of radiation and chemotherapy. If you would imagine it being centered in the head and neck area, the incidence of severe oral mucositis is extremely high, in excess of 75%. When I say severe oral mucositis, this is that the ulcerations in the mouth and throat are so bad that the patients can no longer eat and/or drink. So as you can imagine, if you’ve ever had a canker sore in your mouth, you know how painful that is. That is nothing comparable to this disease. It is a thousand times worse with oral mucositis! For these patients, the pain gets so severe that they can no longer tolerate radiation and chemotherapy so there’s a lot of treatment breaks. And sometimes the patients just say, “Stop treatment. I give up. The pain is too severe.” Obviously, that’s not a good outcome for head and neck cancer patients so we look to, at the time the patient starts the radiation and chemo, give our drug, SGX942 or dusquetide. It’s a short, 4-minute IV infusion given twice a week over about seven weeks when the patients are getting their radiation. Similar to what we have demonstrated in our recent Phase 2 study, we’re looking to reduce the duration of their severe oral mucositis and potentially other key end points that would be associated with the oral mucositis like the incidence of severe oral mucositis and infection rates. As you would imagine, when you have open ulcers in your mouth, there’s quite a bit of infection. We’ve seen SGX942 have some impact on that infection. We have even shown some data that we’ve been able to have better tumor responses, more “complete responses”, in the Phase 2 study, as well as better survival out to 12 month follow up, that is 12 months after completing their radiation and chemo treatment. We are pleased with the positive Phase 2 data and we will be looking to hopefully replicate it in a Phase 3 pivotal study. BJ: How big a study will that be and how long will that go? CS: We haven’t openly discussed the size of the study because we are still finalizing the protocol with the FDA but I would say it would be in the approximate 200 subject range and in that range, we would hope to initiate the study this year, 2017, and get top line data as soon as the end of 2018. So again, this is an area of unmet medical need, there is nothing approved for oral mucositis in head and neck cancer. There is no drug approved here so we would, if all goes according to plan, we could be the first. BJ How many people deal with head and neck cancer in the United States, for example? CS: It’s approximately 90,000 in the U.S., with quite a bit more outside of the U.S. So it’s a pretty good sized rare disease market and because it’s an area of unmet medical need we received FDA fast track designation here as well. BJ: What’s the significance of fast track here? CS: With fast track, it potentially allows for more frequent interactions with the FDA during development. It also has the potential to allow for priority review at the end when you file your new drug application (NDA) which typically means that it would be an approximate six-month review cycle, a little bit shorter review cycle by the FDA at the end of the day. BJ: Do you want to shift over now to the other part of your business? I guess that would be in the defense area. CS: Sure, the vaccine/biodefense business segment is funded entirely by the government so we don’t spend any of the monies we may raise in the open market here. Those monies we raise go to the biotherapeutics business segment, like the programs in CTCL and oral mucositis. In the vaccine/biodefense we have several technologies. A heat stable ricin vaccine, called RiVax™, that’s shown some very good results to date. Those not familiar with biodefense, obviously if you’re dealing with a ricin toxin, you can’t expose humans to the toxin and then treat them, right? That would be rather unethical so the way it works with biodefense, the health authorities use what is known as the “animal rule”. You do your efficacy studies in animals and you show safety of your drug in human clinical studies. Typically, it’s healthy volunteers. With our ricin vaccine, what we have been able to show to date is that we can vaccinate and 100% protect non-human primates with our vaccine compared to placebo. In addition, we’ve done two Phase 1 clinical studies that have demonstrated that the vaccine itself is safe in humans. We continue to work in advancing RiVax™ and luckily to date we have been able to generate some really good data which allowed us to receive a government contract from NIAID of up to $24.7 million to develop this program. As part of that funding, we are not only doing additional animal studies to show the efficacy of the vaccine and additional human studies to show the safety, but it also allows us to scale up the manufacturing of the vaccine. Therefore, if we are fortunate enough at the end of the day, to get FDA approval and get a procurement contract from the government for stockpiling, which is the end goal here, we’ll be able to manufacture large enough quantities for those that need it. Another side note to add here is recently, at the end of December 2016, President Obama signed a bill into law that now allows the potential for biodefense vouchers. So, if you’re familiar with the voucher program, then you know that what this allows is if you are fortunate enough to get FDA approval, the government gives you a voucher that provides for an accelerated review. That six-month review cycle I spoke of. The interesting thing with that voucher is that you can potentially sell it to another company. Similar vouchers such as for pediatric rare disease drug development, have sold in excess of $300 million. It’s another added aspect of the biodefense program that allows investors and analysts to better quantify a potential value at the end of the day. Obviously with biodefense, you’re waiting for a catastrophic event that may or may not ever occur so you don’t really know what the market opportunity may be; however, with the voucher program, you now can say, “I know that the market potential is at least $200 or 300 million because of this voucher, if the drug gets FDA approved”. BJ: Interesting. Do you have a sense about how big of a contract the government might award if something is approved? How much of this stuff would they need in the event of a catastrophe? CS: Brett, that’s a good question. That’s always the question. I think that when you look at certain vaccines that are out there, like anthrax, where you would treat the masses. That procurement contract received by Emergent BioSolutions I believe was very large, approximately a billion dollars. What we are publicly saying for RiVax™ right now because we don’t know, obviously, the end results of our study, we don’t know what the government will do, we feel that it’s reasonable it could be an approximate $200 million procurement contract to potentially support the military and first responders. It could be larger. It could be smaller, but we currently feel that an estimate of $200 million is reasonable. BJ: I would assume there would be some pretty good margins on that. Is that safe to say? CS: When you’re dealing with the government, you’re not making the same kind of margins you would be making commercializing a drug in, say, oncology. Margins will be good but not as significant as you could potentially get with an oncology product for example. BJ: Can you talk about another one of your defense projects, such as your GI acute radiation project? CS: That would be our OrbeShield® drug candidate. We are now shifting away from the vaccine where you are dosing up front and protecting against a particular toxin to a therapeutic. This is drug that is given after you’ve been exposed to radiation or lethal dose radiation. Here we are focused on the sub syndrome that is gastrointestinal (GI). Radiation can affect many things when you’re exposed to it. It can affect your skin, your lungs, your bone marrow and your GI tract. As I noted, we are focusing on the sub syndrome of GI and here we’ve been able to receive approximately $18 million from BARDA and NIAID to advance this therapeutic. We’ve generated very nice early data showing survival in an animal model. We continue to move this program in lock step with government funding. BJ: Why don’t we shift over to the most recent announcement you’ve made on hypericin for psoriasis? What’s that all about? CS: It was a European patent that recently issued. As you know from speaking to other companies, nothing is more important than protecting and advancing your intellectual property at the end of the day. That’s what gives you that exclusivity in certain areas to develop your molecule. One thing that we focus on is not only on the applications which we are actively developing, but applications where we can potentially develop in the future. Synthetic hypericin is the molecule currently in our Phase 3 study for CTCL, but we are always looking at other potential indications to develop. The interesting thing about psoriasis is that it’s very similar to CTCL in that it is a T-cell mediated disease. The difference is that with CTCL it’s a cancer and with psoriasis it’s more of an autoimmune disease. It’s a non-cancerous lesion or plaque that forms on the skin. The mechanism of action of synthetic hypericin however would be very much the same. The difference is where CTCL is an orphan disease; psoriasis is a very large market opportunity where roughly about 2% of the U.S. population has it. The market is quite large. It’s a multibillion dollar market opportunity. I think it’s an intriguing area. Whether or not we ever develop it ourselves or develop with a partner, we will see. It would obviously be downstream of CTCL quite a bit, but we have been able to show positive data in psoriasis in a Phase 2 study. We were able to reduce the psoriasis lesions by over 50%, that threshold for approvability is what we are currently using in our pivotal Phase 3 study in CTCL. BJ: You received the patent and now the issue is trying to get a CE mark on that and take that to the clinical trials? CS: Well, that would potentially be further downstream. As already noted, we got the EU patent issued and have completed a Phase 2 pilot study in psoriasis, which is published. As psoriasis trials are much larger and much more expensive, we will continue to focus on the rare disease space, our CTCL program. In the future, if we were to move forward in psoriasis, we would be looking at early stage psoriasis, not the more severe stages. We would treat early with synthetic hypericin, prior to the use of the systemic therapies, like the biologics, that typically have a much more caustic safety profile associated with them. BJ: Can you tell us a little about the history of the company, its evolution and how you got involved? CS: Sure. The company when I joined, essentially had one product that was in clinical phase development and I was tasked with expanding and advancing the pipeline. My background has been building out pipelines, with a focus in the rare diseases, areas of unmet medical need, very novel therapies. I joined the company in 2006, so I’ve been with the company over ten years now and the pipeline you see in front of you today is the product of that hard work by the team here at Soligenix. We have built out a diversified pipeline of multiple late stage assets. I think we’ve done a reasonable job at advancing some promising technology and positioning the company, hopefully, for some success at the end of the day. BJ: Can you tell me a little bit about who is behind the company, as far as investors are involved? CS: Our largest investors currently are Third Security, which is an affiliated fund of RJ Kirk, who is very well known in the life science industry, and has been referred to as the biotech billionaire. RJ is a brilliant gentleman and he and Third Security have been an investor since 2013. We also have SciClone Pharmaceuticals with our recent partnership I spoke of from last September. In addition, we have Sigma Tau Pharmaceuticals, which is a private Italian company that has been in our stock since about 2010. These folks are all good fundamental investors. They are focused on the outcome of the programs. They are following the drug development path and we, recently with the NASDAQ up listing, have added a few additional quality funds, some good fundamental folks that are looking at the pipeline and see merit in the Phase 3 programs and waiting on the outcomes. As a company, you always want to have a good mix of institutional and retail investors. Ideally, having those fundamental players that understand your story and that are going to be with you for a while are always good investors to have. We feel fortunate to have some of those folks, but are always looking to add to that group. BJ: What is your strategic view for the company? Where do you hope to be in two, four, six years? CS: What I always say is, we will continue to advance the programs that will potentially build value for our shareholders. For us, what we have been focused on is development in the rare disease setting and maybe, ultimately commercializing some of these areas as well. One that we are actively evaluating is the potential to commercialize CTCL in the U.S., if we are fortunate enough to receive FDA approval; however, we also remain very opportunistic with regard to partnership. As you would imagine, with multiple Phase 3 assets we are having discussions with a number of interested parties that are inquiring about partnership. Just last September, we had a similar discussion with SciClone Pharmaceuticals regarding SGX942 in oral mucositis that resulted in our two companies signing collaboration for the greater China market. As part of that collaboration SciClone made a $3 million equity investment in the company at a 35% premium to market. At the end of the day, they’re responsible for development of the SGX942 in those regions as well as for launch and commercialization, with Soligenix receiving a royalty assuming SGX942 is successfully approved. BJ: In terms for investors who are looking at the stock today, why do you think now is a good time to be in Soligenix? CS: I think the good thing is we have multiple shots on goal to potentially mitigate risk. A majority of these shots on goal are late stage, Phase 3 programs. As you know, drug development takes many, many years…8, 10, 12 years. But where we sit today, and as I hopefully clearly expressed, we have a time horizon with some very important Phase 3 data points as soon as the end of 2017 and the end of 2018. A potential investor has those near-term catalysts on the horizon and then another nice aspect is that there is a little bit of non-dilutive government funding that allows us to finance our biodefense business segment, which is always important. We also recently up listed from the bulletin board to NASDAQ, which now allows for more eyes on the company. We feel that prior to the up listing and even today, there’s a bit of a disconnect between our stock price and our pipeline maturity. We are hoping to correct that by getting our story out to an expanded audience in 2017. We currently feel the company is undervalued and that there is nice potential upside with Soligenix and that is what we are diligently working towards. That is what we feel a shareholder could potentially benefit by investing today. ____________________________________________ This interview has been edited and condensed. OneMedMarket has neither a financial relationship nor holds stock in Soligenix.