Today I’m speaking with Dr. Philip Toleikis, B.A., M.Sc., Ph.D. and President and CEO of Sernova Corp.
Sernova Corp. (TSX: V.SVA, Stock Forum) is a clinical stage company developing a natural and immune-protected environment for delivering therapeutic cells to patients with chronic diseases such as diabetes. Due to the enormous unmet medical need and market potential, Sernova’s first product focus is on treating insulin-dependent diabetes.
The Standard of Care for patients with insulin-dependent diabetes is monitoring and injecting insulin multiple times a day. Worldwide expenditures on insulin are estimated to be over U.S. $15 billion annually, and growing, while a patient track record of missing dosages and serious side effects result in U.S. $150 billion a year in hospital costs in North America alone.
Sernova’s Cell Pouch System™ is a versatile, scalable, first-in-class medical device, made entirely of FDA approved materials, that provides a natural “organ-like” environment for therapeutic cells, such as islets which control sugar levels that insulin-dependent diabetic patients are normally not able to do. The Cell Pouch System™, being thin and typically smaller than a business card, fits easily under the skin with virtually no visibility.
Think of the Cell Pouch System™ as a potential natural insulin producing pump with the added benefit of fine-tuned glucose control with no need to replenish the insulin. When placed under the skin and filled with islets it develops endocrine pancreas-like characteristics taking over normal glucose control. A key feature of the device is its ability to develop tissue matrix and natural microvessels, thought to be essential for the long-term survival and function of these therapeutic cells.
Rick: Philip can you tell us about yourself, your background?
Philip: I have a strong business and product development background. Having earned advanced degrees from the University of Michigan (MSc.) and the University of British Columbia (Ph.D.), after which I completed postdoctoral research, I worked with a series of successful therapeutic, medical device and combination product development companies.
Rick: Your Ph.D. was….
Philip: I completed my graduate training in the diabetes field focused on the cardiovascular side effects. I then went on and completed postdoctoral training at the British Columbia Cancer Agency which focused on bringing therapeutic products to the cancer patient. I strategically broadened my experience in various diseases in preparation for a career in the medical industry.
Rick: You were involved very early on with an amazing story that relates directly to what we are going to talk about today.
Philip: In 1996, while at the BC Cancer Agency, I was hired by a start-up company called Angiotech Pharmaceuticals. During my tenure at Angiotech, between 1996 and 2006, the company developed the paclitaxel eluting coronary stent and other drug-device combination products. The stent, a small metal tubular cage that props open narrowed blood vessels in the heart typically shut down in 6-9 months due to a scarring process called restenosis. Angiotech studied the mechanism of restenosis and coated the appropriate drug on the stent which alleviated this twenty year old problem, turning a $500 million market into a $4-5 billion a year market with the co-exclusive licensing of the technology to Boston Scientific and Cook. In fact, it was the biggest medical device launch ever.
Rick: That’s extreme value added. What happened next?
Philip: At Angiotech, we wrote a considerable number of patents and conducted resultant product development activities on multiple products. The business, management and product development experience there was second to none. We worked in “dog-years” as the company grew in leaps and bounds. Being a part of that incredible success story had prepared me well for the future.
When I left Angiotech as Vice President of Pharmacology and Drug Screening in 2006, the company had a $1.7 billion market cap and had earned close to $200 million per year in revenues.
Rick: What came next for you?
Philip: I set up my own consulting business and during the ensuing three years consulted for multiple companies. At the same time, I was looking for the next blockbuster product opportunity. Serendipitously, I met a Director of Sernova while collaborating on a project and he was charged with finding a new CEO. He felt my background at Angiotech was a perfect fit.
Rick: You could not have asked for a better situation given your areas of expertise and previous experience.
Philip: My expertise and interest is in finding ways to improve existing products that have the potential to become significant in huge markets with the correct improvements.
For the coronary stent, we improved the function of the device and in turn increased the market by about 10 times. I saw a much bigger opportunity for Sernova.
Sernova is working in the very promising field of regenerative medicine and cell therapy. It is considered the next wave of therapeutics beyond drugs and many big pharma companies are starting to get on the bandwagon because of its multibillion dollar opportunities. Sernova had patents in a technology that could eliminate the need for toxic anti-rejection drugs in patients when placed locally with donor transplanted therapeutic cells to treat diabetes, and multiple other chronic diseases. They were beginning to work on a medical device to contain the therapeutic cells – a key part of the technology.
In the case of therapeutic cells for diabetes, it’s the islets that measure sugar levels in the blood and release insulin to control those levels. In diabetic patients these cells have been damaged or destroyed. The current standard of care for islet transplantation, the Edmonton Protocol, is a method in which donor islets are delivered to a blood vessel in the liver called the portal vein and then patients are given anti-rejection drugs to prevent destruction of those cells by the immune system.
This technique can result in the early death of at least 50% of the islets, a result of being bathed in blood. Thus, patients usually require the islets from between 2-4 donors. Early on the Edmonton Protocol showed a success rate of 40% at one year and 10% at five years. Fortunately, more recent improved antirejection drug regimens such as the one that will be used in the clinical study with Sernova’s Cell Pouch™ have improved long-term insulin independence rates. This in combination with an improved environment of the Cell Pouch™ is expected to increase long term islet survival.
Currently, only a very small number of select patients with insulin-dependent diabetes, of the nine million or so in North America, can be treated with this procedure. These are typically patients with insulin-unawareness, a condition in which patients can die following an insulin injection due to a severe drop in sugar levels. Islet transplantation with its capability to control glucose naturally can alleviate this condition.
Sernova bet that if a product could be developed to improve the safety, efficacy and efficiency of islet transplantation, there was the potential to treat millions of patients a year with the possibility of bringing in billions of dollars in revenue. It was a relatively simple but elegant concept, similar to the drug-eluting stent but with much bigger market potential and the possibility to expand through additional cell therapy treatments.
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