Kellner’s billion-dollar roulette. It will soon be revealed whether PPF has a treatment for cancer
The first part of the interview
Petr Kellner has been playing biotech roulette for ten years. At least, this is how Radek Špíšek, professor of immunology and the head of SOTIO from the PPF Group, describes the company’s activities. The chances of winning, i.e., finding a new treatment for cancer, are still uncertain.
SOTIO, Kellner’s company developing a new treatment for cancer, celebrated its tenth anniversary this year. Over time, the wealthiest Czech has invested billions of Czech crowns in pharmaceutical research with an uncertain result. Radek Špíšek, CEO of SOTIO, likens oncology research to high-risk roulette.
“If it succeeds, it will yield high appreciation. If not, all the funds invested in research are gone. Nothing can be salvaged,” Špíšek says in an interview with Seznam Zprávy. According to him, though, whether or not Kellner’s bet on biotechnology will succeed could be revealed at the end of this year.
Verdict by the end of the year
SOTIO was established ten years ago to fund the development of a Czech vaccine called DCVAC. The therapy is tailored for each patient from dendritic cells, taken from their own blood. The method originated at the Institute of Immunology of the Motol University Hospital at the turn of the millennium, and SOTIO undertook to pay for the transformation of the experiment into a standard treatment in 2010. This meant that SOTIO would lead DCVAC through the “valley of death” – the clinical tests required to approve every treatment.
With Kellner’s money, SOTIO is developing three variants of DCVAC – for prostate, ovarian, and lung cancer. Of them, DCVAC for prostate cancer is at the most advanced stage of development. It is currently in the third and final phase of clinical trials that any new treatment in the Western world must pass before market launch. The clinical study, with the vaccine administered to 1,182 patients from 22 countries in Europe and the USA, has been ongoing since 2014. The last patient was enrolled three years ago. At SOTIO, however, they still do not know what the result of the study will be.
“The trial is blinded for us, the patients and the physicians,” explains Špíšek. “Final results will be available soon, though, maybe as soon as at the turn of the year,” he promises.
Does that mean that after more than ten years of research, there is still the same uncertainty regarding DCVAC? Not exactly; in the meantime, SOTIO is conducting other, less extensive clinical studies with DCVAC, the results of which are available. “We have results from ovarian cancer treatment tests that look very promising. We see that the treatment helps patients to increase life expectancy compared with patients in the control group,” he describes.
However, the aforementioned open-label studies, in which approximately 250 patients in the Czech Republic, Poland and Germany are treated with DCVAC, have only been phase II clinical trials so far. That is not enough for bringing the treatment into clinical practice. Every treatment must complete the mandatory phase III clinical trial, in which hundreds to thousands of patients are treated with the drug. The investor pays for the production and distribution of the treatment and for the analysis. If the treatment fails during the tests, the money invested will be wasted.
This is also why SOTIO management is trying to distribute the risk across other projects. “We’re gradually trying to throw more balls into the roulette wheel where the DCVAC ball spins,” Špíšek laughs. A total of five balls are spinning in Kellner’s biotech roulette. A sixth one was added recently.
A month ago, SOTIO gave itself a gift worth more than a quarter billion Czech crowns for its tenth birthday: the company acquired a new cancer treatment development project, which was launched by Unum Therapeutics in the USA.
The deal is a good example how things work in the industry. Both parties valued Unum’s assets at $ 11.5 million. So far, SOTIO has only paid a part. “The price for taking over the project and developing it further – that is, funding it further – was eight million dollars,” says Špíšek. “It may seem like a huge sum of money, but in the field of oncology research these are small numbers,” he adds.
For a sum of 183 million Czech crowns, SOTIO has acquired the rights to develop a treatment which, like DCVAC, is intended to significantly boost immune response to cancer. In addition to a promising development project, SOTIO has also acquired a part of the American development team along with its laboratories and offices in Cambridge, Massachusetts, USA, where Kellner’s company wants to build an American development base.
A supplementary payment of three-and-a-half million for a total of $ 11.5 million represents a success-dependent future milestone payment. SOTIO will only pay the sum if the hopes placed in the project are at least partially confirmed.
Clinical trials in the first patients testing Unum’s technology should launch next year; for the time being, Americans have been testing it in laboratories only, especially in mice. Before the treatment hits the market, Kellner will pay billions of dollars for more experiments and the individual stages of clinical trials. Such are the standard costs of the said process.
The Swiss and the French
Along the same lines, SOTIO acquired projects from other foreign companies in previous years. In 2015, Kellner’s company began investing in the development of an anticancer drug based on interleukin IL-15, originating from the laboratories of the French company Cytune Pharma, over which SOTIO gained full control last year.
“It involves the development of another therapy that affects the immune response to cancer cells,” explains Špíšek. With SOTIO’s money, laboratory experiments have successfully advanced into clinical trials. “They take place at the world’s four most prestigious institutions, where new substances promising for oncology are tested,” says the head of the company.
SOTIO also started cooperation with NBE-Therapeutics of Switzerland. In this case, the technology concerned combines a tumour-targeted antibody with a potent cytotoxic agent, thus allowing the direct delivery to tumour cells.
“The benefit of this approach is that you can test chemotherapies that are normally not administered to patients because they are too toxic. Applied intravenously, they would disperse in the body and cause too many adverse side effects. When combined with an antibody, though, just a few molecules of chemotherapeutics can be administered. The effect is provided by the antibody delivering the chemotherapeutics straight to the tumour site,” Špíšek describes the basis of the Swiss technology. This technology is also still at a laboratory research stage, and SOTIO wants to get it into hospitals.
A race against time
Kellner’s research is not all about whether or not the various methods tested are efficient in cancer treatment. His researchers are running a race against time. Various teams around the world work on similar types of therapies as SOTIO’s. The success of one of its competitors, i.e., an earlier launch of a treatment on the market or a lower price, could lay SOTIO’s ambitions to rest. As could finding out that the tested treatment is not efficient enough or has adverse side effects.
“Obviously, that would be good for patients and bad for us,” says Špíšek. “Several treatments that have completed successful clinical trials appeared in the very field we are working over the course of last year. They proved effective, have been marketed and are available for the treatment of cancer. In some cases, they are substances from a similar group or using approaches similar to what we are testing at SOTIO,” he adds.
However, competitor success does not necessarily mean the red light for various projects at SOTIO. “It can be viewed from two different perspectives,” explains the head of SOTIO. “I’m usually more of a sceptic, but I take the treatments that complete clinical trials and are out in the market more as a proof that our methods are correct.”
Further acquisitions possible
Does PPF Group intend to raise its stakes and, in addition to six projects today, start financing more, one of which may turn into a successful treatment or into a failure in a few years? “This is up to the shareholders of PPF Group,” Špíšek shrugs. “I am part of the discussions, but not the one who makes the decisions. But, as far as I’m concerned, we definitely have that ambition. Throughout SOTIO’s existence, we have been working to increase the number of programmes,” he adds.
This is just how roulette works: the more bets, the better the chances of one of them winning. So, it is quite possible that SOTIO will expand its reach. That is, if its owner is willing to boost oncology research and development with more money, which can bring success or disappear forever.
Kellner’s oncology roulette
1. DCVAC (personalised vaccine made from each patient’s own blood cells). The project initiated by immunologists from the Motol University Hospital, which became the reason for founding SOTIO, was taken over by PPF SOTIO in 2010.
- DCVAC/PCa (for the treatment of prostate cancer). The final phase III clinical trial has been in progress since 2014; the results are to be known at the turn of the year.
- DCVAC/OvCA (for the treatment of ovarian cancer). Currently being investigated in a Phase II clinical trial.
- DCVAC/LuCa (for treatment of lung carcinoma). Currently being investigated in a Phase I/II clinical trial.
2. SO-C101 (IL-15 superagonist, enhances the immune response to tumour growth). A project of the French company Cytune Pharma, which has been part of SOTIO since 2018. Currently being investigated in a Phase I clinical trial.
3. ADC – antibody-drug conjugates allow the delivery of potent chemotherapies in a tumour cell-targeted manner. A project of the Swiss company NBE-Therapeutics; SOTIO funds the development. Currently being investigated in laboratory tests.
4. BOXR Platform (personalised therapy made from patients’ own white blood cells). SOTIO bought the project from the American company Unum Therapeutics. Currently being investigated in laboratory tests.
The second part of the interview
Neither COVID nor cancer: Alzheimer’s is the greatest threat to mankind today
Biotechnology company Sotio from PPF Group considers an alliance with a strong strategic partner: One that would bring in new capital and experience in marketing new treatments, head of Sotio Radek Špíšek explains in an interview.
Sotio, a biotech company owned by the wealthiest Czech Petr Kellner, acquired a new cancer treatment development programme from Unum Therapeutics in the US. As a result, scientists in four countries are now working on six programmes seeking new cancer treatment under Sotio’s umbrella.
The development of DCVAC, the Czech anti-tumour vaccine, which is the earliest project pursued by Kellner’s firm, is going through the third and final clinical trial stage. The time of determining whether it will break through to the global market is coming soon. (We published an article on Sotio’s development projects on Thursday.)
Sotio is now on the radar of major foreign companies and funds investing in biotechnology. Entering the US market will draw even more attention to Kellner’s company.
PPF is currently exploring how to share the costs of further development with a strong industry partner. Sotio is considering an alliance with an investor who would bring in new capital and experience in marketing new treatments. “It is really beneficial to discuss this with people from pharmaceutical companies and scientists from investment funds. This is definitely a great area of interest for Sotio now,” says the head of Kellner’s biotech firm, Radek Špíšek.
In the second part of the interview, the CEO of Sotio describes the impact of the coronavirus pandemic on biotech investments, comments on the development of the Czech COVID-19 vaccine and compares the dangerousness of cancer and other diseases with the current threat of the new coronavirus.
One month ago, you announced that you had acquired the development of a new cancer treatment in the US from Unum, and that you would build your American research centre on the premises of its labs in Cambridge near Boston. Why do you need a footing in the USA?
Everything that is important in biotech research is happening in the United States. That’s where all the important investor, physician and scientist networks are. When Sotio started, there was a deliberate decision to build Sotio in Prague in the Czech Republic. We recently managed to advance several development programmes from the lab to the clinical trial stage, and we need Sotio to become known around the world. We need to connect to the right networks of people, to top-tier scientists. That’s difficult to do from Prague. This is one of the reasons why the Unum acquisition makes sense to us.
Unum has large laboratories in Cambridge near the Massachusetts Institute of Technology, and it has scientists who joined us at Sotio. We want to use the foundation of the infrastructure that we acquired along with Unum to increase our presence in the United States. We perceive this as a serious attempt at tapping the American market.
You have been testing DCVAC, a Czech cancer vaccine, at US clinics. For the time being, the way you do it is that you fly white blood cells from the blood sampled in a patient in the US to Prague, make the treatment here and then return it to the clinic in the US where it is administered to the patient. Will you produce the DCVAC intended for American patients in Cambridge, now that you have the facilities there? It would simplify your logistics and reduce your costs, I guess…
No, we’ve had a team of people in America for eight years now, and their task is to make sure the cells reach the right destination at the right time. With the new laboratory in Cambridge, we have taken on board a few people who are good scientists and know the US environment, and around them, we can build something that has, shall we say, greater expert content than the group we’ve had in Boston to date. When it comes to production though, it works the opposite way. We can offer our Unum colleagues excellence at producing the required cells here in Prague. We help them to bring what they invent in the laboratories to production in Prague. Our plan is to provide the production capabilities for Unum here in our Prague labs.
How do you acquire a research company on the other side of the globe during a coronavirus pandemic?
We held talks with Unum for two or three months; all their staff including the management team were working from home the whole time due to the coronavirus restrictions in the US. We were not allowed to go there, and are still not; business trips to the US are still very restricted. So, actually, any knowledge of Unum I have is virtual, from documents sent electronically. And from dozens of video conferences with the employees and the management.
Are you concerned that you may have assessed the deal incorrectly, doing it remotely? You were discussing the acquisition of assets valued at a quarter billion crowns in a virtual way…
We decided to make the acquisition happen. At this point, we are familiarising ourselves with the actual state of the programme. So far, it looks like the Unum product could go into clinical trials late next year. But… of course, I expect that there will be something that we were unable to discover in this virtual manner.
Will Sotio invest in other similar projects in the world? You have made acquisitions in France and in Switzerland…
This is the kind of decisions that PPF Group’s shareholders make. I am involved in the discussions, but I don’t make decisions. With that said, we have the ambition to add more programmes. We are trying to find more projects of interest.
You acquire projects at the laboratory trial stage. Of those, just a very low percentage passes clinical trials and makes it to the market. Doesn’t it make sense to invest in more advanced stages of the development?
It is not easy. There are many financial groups and companies around the world trying to find something in the world’s labs that looks promising and allows you to believe that it could turn into a medicine in the future. There are many such investors, mostly in the US. Then there is the world of big pharmaceutical companies that have the need to constantly seek new things.
Our ambition is to seek programmes related to oncology at various stages of the development, at the laboratory, early clinical and advanced clinical trial stages. We have not been very successful. When something looks promising in clinical trials, it is usually a programme that is out of our reach.
Is it because someone stronger grabs them?
Yes, stronger players grab them; mostly big pharmaceutical companies. And the amounts that go into those transactions are two to three orders higher than the eight million dollars we paid for Unum. As a result, we end up reviewing hundreds of programmes at the lab trial stage annually. Out of those, there are, say, one, two, maybe five that we like every year. And, every year, we agree that Sotio will take over the research into those substances with one or two of those projects.
An investor for Sotio?
How about the Czech DCVAC vaccine, which you have been testing clinically for years, claiming that the trials are promising? Are any of the big pharmaceutical players interested in it?
That’s an interesting question that accounts for a large portion of my job these days. It’s not just DCVAC. When development programmes approach or reach the clinical stage, then – if the scientific method is right and if the trials are done at respected clinics – comes one of the exciting parts of biotech development: discussions with potential partners for cooperation in clinical development and for sharing clinical trial costs. That’s where we have been at for about a year and a half. These discussions are ongoing.
Is PPF willing to allow another investor into its research? Or get rid of some projects altogether and sell them?
I can’t speak for PPF, but I think that my opinion is not far removed from the official opinion. Sotio has been in existence for ten years. We all can see the reality of clinical development, the enormous costs. And I think it is very rational, at the point when the substance has gone through the extremely difficult period of transition from lab trials to clinical trials and when it gets on the radar for the big pharmaceutical companies… I think it is very rational to think about…
About monetising the project? So, would you sell the rights and know-how for the production of the Czech DCVAC vaccine to a foreign investor?
Not exactly monetising, but thinking about sharing the development costs with someone. Of course, our preference would always be to keep the rights to the treatment that are proportional to our investment. But I am a great proponent of the idea that, once we have something attractive that the world outside is interested in, we should talk about it and think about ways of sharing it somehow.
It is not all about the financial costs. We simply know that we do not possess all the know-how, all the expertise to conduct all the required studies with the substance. It is extremely useful to discuss this with people from pharmaceutical companies for example. Or with scientists from investment funds who come up with ideas that we had not thought of before and that open up new avenues for development. This is definitely a great area of interest to Sotio now.
COVID vs. cancer
This year, the whole world jumped on the development of vaccines or treatments for COVID-19. Do COVID projects sap investment capital from your industry, that is, oncology research?
A great question. From early March, I watched in shock how radical the measures adopted to counter the coronavirus infection were all over the world and how devastating they were for the economic environment everywhere. There were many discussions that the biotech sector would be one of the first to be hit by the crisis and that new investments in something as risky as biotech research can be seen as non-essential. However, all debates with investment banks in the world led to the realisation that this would not affect biotechnology significantly because, in the long-term perspective, the development of new treatments will always continue; investors will always be interested in it.
I find it very surprising that the biotech sector has been going through a huge boom over the last six months. Many biotech companies are going public, investors trust them, and the prices of biotech companies are rising. I keep wondering when it will stop…
Isn’t this the case of coronavirus-related research only?
No, I’m talking specifically about oncology.
Do you think it is realistic to find a sufficiently efficient and safe COVID treatment quickly?
Well, that makes me really angry, of course. March and April were the golden times when any small biotech company in the world would announce: ‘We have just invented a new approach to tackling a COVID vaccine’. And its shares would skyrocket. Now, I think, everybody perceives the issue rationally and the hasty shifts have stopped.
Coronavirus complicates research
So you cannot say that COVID complicates the development of oncology treatments?
The restrictions around COVID definitely complicated clinical research. There were many hospitals mainly in the US where we conducted clinical trials. We need patients to be in hospitals so that we can involve them in trials. That became very complicated. Every week, every month and every patient matter to us because the trials are extremely costly. So that was a stressful period.
And as far as our DCVAC and logistics are concerned, we were of course never prepared for air traffic dropping by 70, 80 or 90 per cent at certain points in time. When you need to send white blood cells from an American transfusion station to a lab in Holešovice within 30 hours, well, that was impossible at certain times.
Chances of a Czech COVID vaccine
What do you think of the Czech COVID vaccine research led by Professor Věra Adámková? Does it stand any chance?
I am Professor in immunology; I do not hesitate to comment on the coronavirus crisis when among friends. But I promised myself not to speak about it just now as I was entering your studio. With that said, the development of new vaccines requires paramount expertise that, unfortunately, has faded in the Czech Republic over the last twenty years. And it’s an extremely costly affair. And another huge part of the problem comes when the project is successful. I mean the issues in marketing the vaccine and commercialising the product. I don’t know the scientific concept behind the Czech vaccine, but I think that developing a COVID vaccine is the domain of major players, big pharmaceutical companies that specialise in this. And, honestly, I’m not sure at all if it will work. I’m curious.
What is the bigger danger for mankind in your opinion – cancer, or COVID and coronavirus infections?
I think that the human immune system is able to beat the coronavirus infection without problems if aided by rational preventive measures. There are many respiratory viruses among the population. The problem with the current coronavirus infection is that it is new to us; our immune system does not know it. Sadly, the virus must go through the population in a controlled manner to avoid congestion in healthcare facilities.
So should we fear it less than we should fear cancer?
Mankind always faces health threats that affect the average expectancy in any era. When I was little, cardiovascular events, strokes and heart attacks were the worst nightmare. The average expectancy was somewhere between 60 and 70 years. The current standard of care for patients after cardiovascular events is incredible – the average expectancy has risen towards 80 years even in the Czech Republic. In turn, cancer is the civilisation disease now. Even here, though, you can see a tremendous progress in the treatment success rate over the last thirty years.
If I had to answer that question, the greatest threat for the upcoming period will be diseases such as Alzheimer’s, as more and more people will live long enough to suffer from those given the current average life expectancy. It’s going to be a huge problem. You can also see it in biotechnology investors. The firms that have promising candidates for the treatment of Alzheimer’s disease are the most popular among biotech investors today.
So is it Alzheimer’s rather than COVID that will sap capital from the biotech investment market?
I am convinced that mankind will manage COVID. Healthy people’s immune systems should not have a problem tackling the virus. Once the population becomes immune to the virus, it will be similar to other viruses that give you a sore throat when your children bring a respiratory infection back home from school.
In turn, diseases such as Alzheimer’s, which are a consequence of the aging of human population and to which there is no cure at all, are sure to present the cardinal challenge for medical research.
Professor of immunology, head of Sotio.
Graduated from Charles University in medicine.
2000-2002: worked at the Institut de Biologie of Université de Nantes, France.
2005-2007: worked on the team of Ralph Steinman, Nobel Prize winner for Medicine and Physiology, at the Center for Immunology and Immune Diseases, Rockefeller University, New York.
He participated in the beginning of research into cancer vaccines made from dendritic blood cells at the Institute of Immunology of the Second Faculty of Medicine, Charles University and at the Institute’s clinic in the Motol University Hospital.
Petr Kellner started financing the development of the vaccines in 2010 and Špíšek became the head of research in his newly founded private firm Sotio.
He has been the CEO of Sotio since 2018.
Key project for Kellner’s Sotio.
The vaccine for the treatment of prostate, lung and ovarian cancer is produced from dendritic cells collected from the blood of individual patients.
Clinical trials have been ongoing for years; the DCVAC variant intended for the treatment of prostate cancer has progressed to the most advanced, third stage of trials since 2014.
According to Špíšek, the results of this crucial clinical trial will be known early next year.
Unum Therapeutics development
BOXR treatment platform.
A means of oncology immunotherapy.
Tailor-made for each patient from their own blood (using T lymphocytes).
In the laboratory research stage.