Interest in our cancer treatments is growing among large companies. More’s the pity that Petr Kellner didn’t get to see it, says Sotio’s CEO Špíšek
Author: Marek Miler, published on May 7th 2021
More than ten years ago, when scientist and immunologist Radek Špíšek accepted an offer to go into business and be involved in the inception of Sotio, he was plagued by doubts. Sometimes he couldn’t even sleep at night. Biotechnology and the development of innovative cancer drugs make for extremely expensive and risky ventures with uncertain outcomes. What’s more, Špíšek was unsure whether a business like this was possible in Prague at all because, unlike Boston, it lacked experts and know-how. Not even the fact that the wealthiest Czech – Petr Kellner, owner of the PPF financial group – was behind the whole idea was a help.
Over the years, Špíšek’s misgivings proved partially right: research programs and trials have been more costly, time-consuming and risky than the founders originally anticipated.
But now the company is starting to enjoy some success. It has operations in the US and China and has managed to advance several of its treatments to the clinical trial phase with patients. The results so far look promising.
“Fingers crossed, this could be a major year for us,” says Špíšek in an interview with HN. According to the CEO, some of Sotio’s treatment programs are already attracting interest from investors, and cooperation with Big Pharma and preparations for a possible IPO are also on the table. “These are situations in which Petr Kellner felt right at home and in which he excelled. And I’m terribly sad he won’t be there for it.”
HN: In a past interview, you said how stressed you were that Sotio was “burning through money” in numerous research programs and that, at any moment, any of them could turn out to be a dead end, meaning that billions of crowns would end up being wasted. Are you sleeping any better now?
Because I’m a physician and a scientist, and because I know the details of our programs, I can imagine a scenario where any of our programs produces a bad result overnight. And for those programs it would immediately be curtains. I have been haunted by this for the eleven years that Sotio has been around. Having said that, I can breathe a little more freely now I can see that we’re doing a number of things very well and we’ve managed to move forward to a very advanced stage with some programs. By having a diverse portfolio of programs, we’re hopeful that one day one of those programs will pan out.
HN: So in Sotio’s first few years, the fact that the richest man in the Czech Republic was behind you was no help?
Unlike standard biotech companies, such as those in the US, Sotio was not created by us scientists coming up with an idea and approaching investors. It came about when Professor Bartůňková and I were approached directly by Mr. Kellner, who told us that PPF was determined to embark on an ambitious biotechnology project in the Czech Republic. Right from the get go we felt a great burden of responsibility that PPF would be plowing enormous resources into medical research and clinical development in oncology. That’s an extremely risky business. But, over a year of preparatory talks, Petr Kellner told us: “We know what we’re getting into, don’t worry. We know it all costs a lot of money, and it’s not your concern to address that risk.”
HN: How many research programs have been canned so far?
Three so far.
HN: So Kellner was well aware it might not work...
Definitely. In terms of diversifying PPF’s portfolio, this is a very risky area. If successful, it can yield sky-high returns, but the risk is substantial and the probability of success is relatively low.
HN: But you have pointed out that there is no ecosystem for such research in the Czech Republic, there are no experts, there’s no experience...
It was obvious from the start that this would set Sotio apart from all those other biotech companies abroad. PPF approached this in the same way as it did when it was building, say, Home Credit. The aim was to build a large biotechnology company on a greenfield site that would build up a portfolio of cancer research programs. The dream was and is that one of these programs will succeed, become a drug, reach the market, and Sotio will become a pharmaceutical company. That is absolutely unique. There comes a stage where traditional biotech companies arrange to have their development work taken over by pharmaceutical companies, which have much greater financial and human resources. But Petr Kellner’s vision from day one was – perhaps a little naively – to cover the whole process from start to finish.
HN: And today?
We’re more realistic about what we can achieve. We can see that, even backed by PPF’s enormous financial power, it was naive to think that we could go it alone.
HN: Sotio’s portfolio of programs continues to expand. What are your options?
One possibility is acquisitions, such as the purchase of France’s Cytune Pharma and, last year, the BOXR platform (Editor’s note: acquired by Sotio for USD 11.5 million last year by buying labs in the US. The method is based on the genetic modification of patients’ immune system cells, which then fight against the individual’s cancer cells). Sometimes it works out better and is more elegant not to buy the whole company, but to try to obtain licenses for the technologies we like.
HN: This was the case with NBE-Therapeutics, which was sold for EUR 1.18 billion last year. PPF held a stake of around 26%. That must have been the first time you made money in biotech, right?
Technically, the profit was made not by Sotio, but by PPF, which held the stake in NBE because it had been involved in their programs from the start. Since you were asking about the stress, the November sale of NBE was a happy end for me personally. Thanks to one of our investment decisions, PPF exited NBE with a 20-fold return. At the same time, we received independent market valuations for two programs that we are developing further at Sotio.
HN: How much has PPF invested in Sotio over the past 11 years? I heard a ballpark figure of 11 billion crowns. Is that possible?
Quite a few billion, but not more than ten billion.
HN: Sotio was a pet project for the owner of PPF. He was never one to boast about good works, but he was eager to show that the company could come up with an effective cure for some forms of cancer. Is that something that will remain now that he’s gone...?
That’s what he was saying from the moment we first met. He enjoyed greenfield projects. Building something up to a final state and not selling it before it was done. Sotio was close to his heart and he enjoyed it immensely. But, honestly, I got to know him as a person who enjoyed everything he did. He would come to our meetings and talk to me about things like an immunology textbook he had read and the types of white blood cells. I thought that was incredible.
HN: Do you think his interest in Sotio was also related to his own illness?
I can’t comment on that. It never came up in our discussions. Rather, our talks revolved around the fact that I had spent three years in the US at a university founded by the Rockefeller Family Fund, one of the top universities in biological research and the discovery of new drugs. I sensed that this was what he was excited about – he liked the idea of leaving something behind in such an important field.
HN: What does Petr Kellner’s death mean for you? Will it be harder to defend your work to other PPF managers and shareholders?
The fact that the current head of PPF, Ladislav Bartoníček, was in charge of Sotio for four years means that he’s deeply invested in this company as well. I see that as a guarantee that we will continue what we agreed on. Mr. Bartoníček has said as much himself.
But I can imagine that the decision-making process might become more complicated. Especially with the ad hoc stuff. PPF’s advantage has always been that it has been quick at making decisions. When we realized that we had discovered an interesting company in Switzerland, NBE, and that we needed to make a decision within days whether to invest 10 million francs in it, it basically took one four-minute phone call with Petr Kellner. It’s no mean advantage that we were able to get in touch with the decision-maker so quickly. I expect decision-making in the future to be more formal.
But for me, the loss is personal. It’s not our paymaster who’s gone, but a guy who had a great sense of humor and who I enjoyed spending time with. He was very actively involved in the running of Sotio. All of us here agree that we miss him as someone who, in a way, we thought of as a friend. The worst feeling is the void of the phone not ringing, not receiving any messages from him asking what’s new.
HN: Let’s touch on the funding again. Will PPF continue down the same path?
With a number of programs that have made it to clinical trials and are starting to get visibility around the world and garner interest, we spent the last year in intense and super interesting discussions with Mr. Kellner and Mr. Bartoníček on what to do next.
HN: What were those talks mainly focused on?
Whether we are willing to share our development with a large pharmaceutical company, for example, and whether we would like to go public with any of our programs. We went from a “we’ll develop and pay for everything ourselves” scenario to a “let’s go for an IPO” scenario. Sometime in late December and early January, we crystalized how we wanted to take Sotio forward.
HN: What was the result of your talks?
We agreed that Sotio’s best position was to leverage what we already do well: acquire quality scientific programs and develop them to the clinical trial stage. Build Sotio as a Western-style biotech company, which is quite a leap from the original “we’re in the Czech Republic, we’ll do it the Czech way, and we’ll do everything on our own” scenario. We decided not to turn a blind eye to the fact that the industry’s hubs are on the east and west coasts of the US and a little bit in Switzerland. In short, we need to boost Sotio’s presence in the US, to have people there.
HN: In Cambridge, a suburb of Boston in the US, you already have laboratories, a BOXR program and about 40 people. Is this where you’re going to strengthen your American presence?
Yes. It’s a big change of mindset for us. When I told Petr Kellner in 2009 that we had to be in Boston, that nobody in this business knows where the Czech Republic is and they confuse us with Chechnya, he always said: “No, we are from Prague and we will do it in Prague.” But later he understood that it wasn’t going to work unless we had clinical developers in America and were part of that community. We are now ready to talk to Big Pharma about collaboration on our programs that are in the clinical trial phase.
HN: What happens next?
Now we really want to systematically build a launch pad in Boston with people from the clinical development community and from the business development community who have experience of other biotech and pharmaceutical companies. These people have contacts, unlike us; if someone from PPF calls another company, they’re hardly likely to get their foot in the door. We also need to find people who have, for instance, experience of equity underwriting on Nasdaq, who know how the processes work and how such a firm needs to be set up. People who know investment bankers, potential investors, and are able to broker deals with them.
HN: So the idea of going public is not dead?
It’s definitely not dead and buried. But nor is it as if we said to ourselves, “Let’s float the company.” But what we do want to do is build the company in a way that is compatible with such a plan.
HN: What specifically would go public?
The idea is that if we decide to go down the stock exchange route, either the whole of Sotio or individual platforms can be floated. That would give us access to equity and, perhaps more importantly, people in the industry would start to take notice and we could show that we exist and that we do things well. This message is difficult to convey from Prague.
If we have anything of value to investors on the stock exchange, we basically want to be able to do an IPO within a year. But that means having the right people in the US, having a year of talks to get across who and what our company and our programs are to investors. We have to work our way through all that first.
HN: What is the most promising Sotio program so far?
At the moment, it’s easily our project based on interleukin 15, a molecule that stimulates the immune system to kill cancer cells. It also combines well with established oncology drugs. We took this program over at a very early stage five years ago by acquiring the French company Cytune, and since then we have brought it to clinical trials. These are ongoing in France, Spain, the US and, as of this month, the Czech Republic. About 50 people have already received the treatment in Phase I. Phase I has been completed and we will start testing it in Phase II for certain cancers. There are about three other companies in the world developing a similar substance. One of them, Synthorx, was bought by Sanofi for USD 2.5 billion at the end of 2019. So, interleukin 15 is regarded as an incredibly promising approach. In the next phase, we are going to test its use in treating skin cancer and kidney cancer.
HN: How happy are you with the dendritic-cell program?
This is our oldest program, the one on which Sotio was built. Many people at Sotio would tell you that our biggest achievement is that we have already completed Phase III clinical trials with the prostate cancer product. This was a huge project with the testing of almost 1,200 patients worldwide. We will publish the results in perhaps three or four months.
HN: Would you want to finish the project yourselves?
Seeing as this is the first program that Sotio was built on, we always had the ambition to see it through to the end ourselves. For example, we have software that manages production and logistics around the world. We don’t think there is a company anywhere that can handle the logistics of these cell therapies better than us.
HN: Let’s say you’re optimistic and assuming everything goes well, how far is Sotio from bringing a cure for some forms of cancer to the market?
The timeline is clear for the prostate treatment. Optimistically speaking, we’re about two years away from launch. If that doesn’t work out, the next candidates are our two interleukin 15-based programs. Here, the process could be much faster; these are different treatments we’re talking about. In those cases, we’re looking at another four years or so. Then there are our other two programs that use dendritic cells – for ovarian and lung cancer – which have also gone through Phase II very successfully. However, dendritic cell treatment is more complex and very costly. The substance has to be tailored-made for each patient from their own blood. In contrast, we can make the same vial of interleukin 15 for everyone and patients receive it by injection at an outpatient clinic. We are now wondering, with PPF, whether it makes economic sense to do a Phase III trial for ovarian cancer, which will take another four years and cost tens of millions of dollars. This is one of those areas where the pandemic has been an extra factor making things much more difficult. In order to make the products, we need half a liter of the patient’s blood, which must arrive from the US or wherever within 30 hours, while the cells are still alive. With the current state of air travel, this is often an impossible task.
HN: So now you’re getting into the most nerve-wracking phase of some of the programs...
Fingers crossed, this could be a major year for us. Other plans include the start of clinical trials with SOT102, for gastric and pancreatic cancer. For me, this is an extremely interesting program because these diseases are terrible, there is almost no treatment for them, and many companies are looking for a treatment. We have been having very exciting results with this molecule in preclinical experiments in mice. Then there is the first clinical trials with CAR-T cells based on BOXR technology, which could start early next year.
When our programs got to the point where Big Pharma started to take an interest in them, certain business negotiations on possible cooperation were opened. And it was obvious that Petr Kellner was truly enthusiastic about the task at hand. These were situations in which he felt right at home and in which he excelled. And I’m terribly sad he won’t be there for it.