Syntara!

Michael Frazis

Syntara is somewhat unusual on the ASX for doing its own drug development in house. What are the advantages of that?

Gary Phillips, Syntara CEO

The advantages of having our model come when we get down to selling it, because at the end of the day, the final customer of our drugs is big pharmaceutical companies. At the point when we partner – and it's a question of when not if - having the inventor of the drug in the room with you gets instant credibility, and it makes everything a lot easier.

It also means we've controlled our patents tightly as well.

Often when you license something in, particularly from universities or institutions, their patent strategy has been driven by the need to publish. So when they do early pre-clinical studies, they patent before they get that first publication where they've shown the effect of their drug in a rodent model. And that starts the clock.

We haven't had to do that because we've got no need to publish. We're not driven by publishing, we’re driven by the need to get drugs commercially and through the development pipeline.

We've never patented drugs until we've actually gone into the clinic, which means that our lead asset 5505 has already completed Phase Two studies, and it's got a patent life out to 2042.

So it's still got the vast majority of its patent life is left, because we've patented it late and really protected our position there.

Michael Frazis

Yeah, it's really impressive. Particularly on the ASX, it's unusual for companies to develop drugs in-house. Often they're licensed in, or repurposed, or reformulated.

Gary Phillips, Syntara CEO

And then you've got to pay off royalty fees and license fees as well.

Syntara shareholders own 100% of the drugs that we have in the clinic. It only becomes apparent at the end stage, when the amount of life left on a patent has a huge impact on value.

The number of times I've sat there with big pharma companies and they look at you across the table and they sort of tense up and they say, how much patent is left?

They’re expecting a bad number, and are pleasantly pleasant relieved when they hear how much we’ve got. Because for them, every extra year of life on a patent adds a huge amount to the net present value of the of the asset, and allows both us and them internally to argue for a higher price.

Michael Frazis

So how does your lead asset SNT-5505 actually work?

Gary Phillips, CEO of Syntara

Myelofibrosis is a disease that’s characterized by scarring or fibrosis in the bone marrow and the production of all these aberrant cells facilitated by that fibrosis.

And fibrosis in the marrow is the same process as when you or I injure ourselves, and we end up with scar tissue.

The final stage of fibrosis is when you've got cells called fibroblasts, which live in all of our organs, including our skin and in our bone marrow.

Through injury, bad diet or genetics, these fibroblasts can become activated. And when they become activated, they release collagen fibers and an enzyme called lysyl oxidase.

This enzyme causes those collagen fibers to organize into layers, with the collagen fibers aligning themselves and the enzyme cross-linking them.

That turns a loose weave of fibers into what we would see as scar tissue, and if you've got scars on you somewhere that’s what’s happening.

If you look at a scar it's often a different color, the pigmentation of the skin is often different. It's often raised above the skin level. And if you roll it between your fingers, it feels stiffer than the surrounding tissue.

It's non-functional tissue. It doesn’t have hair follicles. It doesn't have sweat glands.

That exact same process happens in diseases like lung fibrosis and cardiac fibrosis, which is what happens after a heart attack. The muscle gets damaged and you have scar tissue left in your muscle.

In all cases you have this same process of activated fibroblasts, release of collagen, lysyl oxidase and cross-linking, creating scar tissue which is non-functional. It happens the same in the liver, the kidney, the lung.

And the bone marrow is the same. It gets scarred then doesn't work as well.

Our drug SNT-5505 inhibits lysyl oxidase and disrupts this process.

For those that are not familiar with the drug, it’s a small molecule. It’s not a biologic, it’s not a cell therapy.

We have chemists that design molecules that fit exactly onto the enzymes that they're trying to inhibit, and bind covalently to those enzymes and stop them working.

Our drug is taken by mouth, it’s two capsules a day. And the drug inhibits that enzyme lysyl oxidase by almost 100%.

If you take it twice a day, even at its lowest point between the two doses, we're still inhibiting that enzyme by more than 90%. It turns off that cross-linking, which leads to a really impactful effect on fibrosis.

We've tested the drug in many different models of different organs, and we always see fibrosis reduce. We've now shown in both skin scarring and the bone marrow scarring in myelofibrosis, that if you stay on our drugs, the area of fibrosis decreases.

In skin, after three months, we see the amount of collagen in a scar 30% lower than on a placebo.

In the first study we did in myelofibrosis we saw that about half the patients had at least a one grade reduction in bone marrow fibrosis.

So we know the drugs do reduce fibrosis. The question we then have to answer for patients, clinicians, and for regulators is: what's the clinical benefit of reducing fibrosis?

You don't go to the doctor and say, ‘Doctor I think I've got fibrosis in my lungs’, you go and you say, “I can't walk as far, I can't climb the stairs like I used to, I don't feel like I'm breathing properly”.

You're unaware of the cause.

It’s the same with the FDA. We can't have a primary endpoint in a study which says ‘the bone marrow is less fibrotic’, the question is ‘what's the benefit to the patient? What are their symptoms? Do their spleens reduce? What happens to their blood counts?’

Those are the kind of things we're now exploring.

Michael Frazis

Right, and if you're switching off such an important enzyme, are there side effects?

Gary Phillips, Syntara CEO

It's a good question, one that we've explored with the FDA at length.

Before you take a drug into a Phase Two study, you have to do what are called toxicity studies. We look at the effect of very large doses of the drug in different models, just to check if anything goes wrong.

So we've already done that, with what we call 'six month toxicity’, and now we’ve got patients that have taken this drug for 12 months.

The one thing we can say without doubt, is that the drug is really well tolerated. We haven't seen any long-term effects of taking the drug, and it really stands out against all the other drugs in development as being one with a particularly clean tolerability and safety profile. So we're not concerned about that.

Michael Frazis

One of the exciting things for the company is that if this works in one condition, there's a number of different diseases that involve scarring or fibrosis, including some you mentioned, where it might work well.

But first I really want to talk about this trial because it looks to me like a game changing result for the company. Particularly in terms of symptom score.

So first, can you describe how that symptom score is calculated in myelofibrosis, how relevant that is to disease progression, and also the FDA?

Gary Phillips, Syntara CEO

This is what they call a patient reported outcome, so the symptoms are reported by the patients.

The FDA and other regulators really like patient reported outcomes. They're not so interested in biochemical and technical outcomes that the patient isn't aware of.

What they want to know is do patients actually improve ?

The symptom score we record in our studies is validated.

It's a questionnaire which covers seven different areas of the disease that patients fill in. It's been used for many years and has been validated by the FDA on many occasions.

The maximum score is seventy, and in seven different areas you get 10 points for each one.

The highest score is 70 which means that you've got really severe symptoms, and if you have no symptoms it's zero.

To give some idea, patients with a symptom score of over 20 are considered to have quite a high disease burden. It's rare to find patients up at 70 and much more common to find them in the 10 to 30 range. If you've got over 20 then that's considered a high disease burden for patients.

The endpoint that the FDA will require us to meet, and clinicians as well, is that the Total Symptom Score reduces by 50%. So it’s quite a high bar, you can’t reduce symptoms by 20% and say that person is a responder, you need 50%. If someone comes in with a Symptom Score of 30, you need to reduce it to 15.

That's the key endpoint, and it's likely to be the primary endpoint that the FDA would require in our Phase 3.

Michael Frazis

Right, let's talk about the trial. How many patients were there and what was the Symptom Score they came in with?

Gary Phillips, Syntara CEO

We recruited 16 patients. The last patient was recruited in August.

The study was open label. Before patients came in they had to have been on a JAK Inhibitor for at least three months on a stable dose.

The 16 patients had been on Ruxolitinib, the leading JAK-inhibitor, for over three years on average.

It’s a group of patients with a high disease burden and matching that, their average symptom score was 23, which is over the 20 mark. So we're dealing with a pretty symptomatic patient group. Many of them have gotten large spleens.

This is good because it gives us a chance to show what the drug can do. If everybody came into the study and felt well, it's hard to show benefit.

For example, if patients came in with a spleen size less than 450 mL, their spleens are near enough to normal that you can't really judge whether you’ve had an impact on them.

We had an average spleen size in the order of one and a half liters.

There's a few of them that came in under 450mL, but the majority had enlarged spleens, which has helped us to show what the drug can do.

To have a responder in spleen size, have to be able to reduce their spleen by 35%. So if they came in with a three litre spleen, you've got to be able to reduce it to two litres in order to be able to claim that as a responder.

Michael Frazis

Reading through the result now:

“At week 12, 46 % or 6 out of 13 of patients achieved over 50% reduction in the Total Symptom Score. And at week 38, 80%, which was 4 out of 5, also achieved a reduction of 50%.”

How relevant is this data? How should we interpret this?

Gary Phillips, Syntara CEO

Well, let's first talk about our drug and then we can benchmark against comparators.

When we saw that 46 % of patients at 12 weeks were getting a Total Symptom Score of 50, we were pleased, obviously.

But also, remember this is a patient-reported outcome. They're coming into a trial hoping for something good to happen.

They're taking a drug which doesn't have any bad side effects and is not making them feel worse.

So saw the data at the three month point and thought, that's exciting, but let's take that with a pinch of salt and see what happens next.

What we were really interested to see was what happened after six months and nine months.

And what we found is that the patients are still improving at six months, and again at nine months.

As you say, out of the five patients that finished nine months, four of them reached a Total Symptom Score reduction of over 50, so 80% responded. That number is starting to look more and more impressive.

If we look at all the patients at the cutoff before our ASH presentation, it includes patients at three months, at six months, and at nine months. And of these, ~62 % of them have reached the TSS 50 and count as responders.

If we look at comparative studies with other drugs in development, they would have also been used on top of a JAK-inhibitor like ruxolitinib. And they would also have been used in a suboptimal patient group, a bit like ours. And they would have been treated for six months.

The symptom score improvements that we're seeing in those trials is around 30%. Sometimes a little bit higher, but generally around 30-35%, and sometimes a bit lower down to 20.

So a figure of 62% for all the patients, up to 80% at nine months, and the fact that patients are steadily improving, is a big result.

It was unexpected to see that number of responders.

And secondly, it's quite novel. I don't think we've seen something like this before where we see a drug which is well tolerated, and where patients get better quarter after quarter.

Most of the studies in myelofibrosis have only been run for six months, and that's because the drugs are poorly tolerated and very often you'll see patients deteriorate after six months.

We took the opposite view and said our drug is well tolerated, so we want to see what happens in the longer term and we're measuring out to 12 months.

So we're eagerly awaiting to see what happens in the first half of next year when we get data from patients that are staying even longer on drug, and whether we can sustain that kind of improvement above 50%.

If we end up with study with more than 50 % of them getting that TSS 50, that would be an outstanding result.

Michael Frazis

And you're already at 62%?

Gary Phillips, Syntara CEO

Yeah, great result.

Michael Frazis

So I've got the slide in front of me that was shared on the investor presentation. There's three drugs here. It looks like, as you say, TSS50 ranges from 37%, 32%, and 26%. In yours, they're 80%.

But these other drugs have some pretty serious side effects. Are these treatment-limiting side effects? Do they have to come off the drug?

Gary Phillips, Syntara CEO

I said at the beginning there's a huge unmet need. These patients are not well controlled on JAK-inhibitors. They die and we're not extending their life. So there's a huge need for anything that will help these patients.

And in the absence of a well tolerated drug, Michael, even a poorly tolerated drug that still helps patients improve their symptoms score and their spleen size, is still a welcome addition to the armamentarium that clinicians have.

Otherwise if you're a patient, you've got nothing else.

These drugs require patients to take anti-emetics (for nausea) or anti-diarrheal medications to control some of the gastrocyte effects they have.

Several of the drugs are also myelosupressant as well, so they get quite a lot of hematological or blood type symptoms like anemias and thrombocytopenia, low platelets.

We need to see more efficacy data to see whether the results we've got are sustained to the end of this study.

But I feel very comfortable with the safety profile. It’s a lot better than what we're seeing in other drugs in the market and in development.

Regulators look at risk / benefit. They look at the risk to the patient and the benefit.

If that risk is high, if you have a lot of side effects, a lot of tolerability issues and life-threatening problems with a drug, then the benefit has got to be pretty big.

If you've got a drug that's well tolerated, the efficacy bar isn't as high either.

And if you've got a drug which is well tolerated and is also very efficacious then you should be welcomed with open arms.

Yes, it's interim data, and yes we've got to wait and see more, but what we've seen thus far is very encouraging.

Michael Frazis

And these other drugs, do they use a different mechanism of action?

Gary Phillips, Syntara CEO

Yeah there's a few different mechanisms that are being trialed.

But in general, lot of the other mechanisms tend to be myelosuppressants, so they end up hammering down on these aberrant cells that are produced by the different pathways.

Our drug is just very different. It's working via this mechanism of stopping the cross-linking of collagen and is therefore not a dangerous drug to be using and, hopefully in the end will bring real benefits to patients.

Michael Frazis

So when you think about competition, if the other drugs have different mechanisms, could they potentially be complementary to yours and not compete directly anyway?

Gary Phillips, Syntara CEO

Well, there's a limit to how many drugs these patients want to take. I think certainly we're well positioned to be added on to a JAK-inhibitor. But you're right our drug works at the very last stage of fibrosis. There's nothing underneath our drug.

There's lots of inflammatory pathways that lead to fibrosis that several of these drugs are attacking.

But if you work at the very last stage, then in theory you should work on top of everything.

So we should improve whatever drug the patient is on.

Michael Frais

The most impressive part was the 80% response rate after 38 weeks. How many patients are still in the trial and how many dropped out? Why did they drop out? Are you able to give more colour on that?

Gary Phillips, Syntara CEO

The unfortunate thing about running these studies in a sick patient group is that many patients drop out. think there were some other large studies that were presented at the ASH with 60% dropout rates.

It's a feature of oncology and cancer trials, that if patients come in at an advanced stage like our patient group, then some of those patients will not respond quickly enough to progress in the trial.

And if their disease starts to progress, the clinician is put in a difficult situation and needs to think about what's best for the patient.

You might move from trying to improve their bone marrow microenvironment, which our drug targets, to end stage palliative care.

We've had four patients drop out in the data set that we presented at ASH, and there have been another three patients that have dropped out since as well.

The clinicians I've spoken to say that the dropouts we've got are pretty standard for this particular disease, for this particular patient group, and none of those dropouts have been drug related.

We haven't seen patients drop out because of an adverse effect of the drug itself, it’s been disease progression.

And if you think about the mechanism that we have, we are correcting a problem in the bone marrow.

Once you've cleared some of that fibrosis out of the bone marrow, it still has to repopulate itself and start producing cells again to have an effect. And that's not a quick process.

We know that, and part of the reason that we're running this study for 12 months is because we don't think our drug will have an immediate impact in the first three months.

But it's well tolerated , and will do something about the underlying disease, so you want to be taking it for a long time. We’re considering introducing it earlier in the disease.

By the time patients have advanced quite a long way through, they don't have much time left. And maybe the patients who drop out haven’t had enough time for the drug to work on their bone marrow.

When it comes to our next study, we’re thinking hard about what kind of patients we want.

It will still be on top of a JAK-inhibitor. And it will still be in patients who are suboptimal. But it may be patients who might be not quite as sick coming in.

We might take a much broader range as well, both very sick patients, but maybe some who are healthier as well.

Once we're confident that we're seeing a 12 month impact from the drug, then we don't need to worry quite so much about having patients who are much sicker, as this study was all about trying to find the signal, trying to show that the drug worked. Once we know it does, then we can take a larger number of patients with a broader background.

Michael Frazis

When we first started talking, Syntara's market cap was very low, at 20, 30 million AUD. But the return opportunity is quite large and I feel like Australian investors have anchored to that lower valuation.

Recent transactions in the space have been quite substantial, in the billions. Are you able to run through recent relevant comparables at your stage of development?

Gary Phillips, Syntara CEO

You know, we are just reflecting on that valuation, Mike. When you look at us and you look at our register, more than 50% is specialist healthcare funds who are great when you need capital.

But they don’t generally don't buy on market, and they don't move market price.

Many of them have been with us for a number of years and they've got their position set.

But they haven't moved the price and the value has stayed historically low for quite a while.

Now we’re at the point where we're generating data and making people wake up. Some of those funds on our register were investors in other myelofibrosis companies.

Of the companies who developed assets to Phase three, all three exited well. One for $1.7 billion, another for $1.9 billion and the last one at $2.9 billion, and that’s all US dollars.

Some of our investors were also investors in those, so they look at us and our market cap, and know what commercial success looks like. They understand we have a great opportunity and value will come to the company, and the data we’ve got is a great step on that track.

Hopefully you’ll see us hitting goals in valuation, and when you see that the commercial prize for getting Phase 3 data is eye-wateringly big deals, there’s obviously a huge opportunity.

The last one of those deals, the $2.9 billion one, was for a drug that had completed Phase Three and was due to be filed with the FDA this year.

But it looks like it has a safety issue which is going to delay it potentially by years, and Novartis, the company that bought it, announced a few weeks ago they were writing $800 million off the value of the asset.

I think you were right earlier on, you could actually use our drug on top of it, but it would mean that you had a of a JAK-inhibitor first, then you would have had that drug and then our drug.

So that safety delay is obviously bad news for patients, but it opens up the field as well.

There's one other drug ahead of us that's just started Phase 3 studies, and that one looks like it's in that bracket of drugs that cause a 30% improvement in spleen size and symptom score but also has a pretty poor tolerability record as well.

We’re not scared of the competition that lies ahead of us.

We see an opportunity we need to aggressively prosecute, and that's why we came to the capital raise to raise the money to set ourselves up for getting agreement with the FDA on our next study, which is the pivotal moment.

Michael Frazis

One of those drugs only a couple of weeks ago raised US$150 million on a US$500 million valuation, so around a billion Aussie dollars post money. And that was on Phase 2 data which doesn’t look as good. If you compare that to the Australian market cap, that’s substantially more than a 5x return from where we are now.

Now that we’ve come to it let’s talk about capital raising. There was a $15 million raised, twice over subscribed, why didn’t you take the $30m?

Gary Phillips, Syntara CEO

Well, the thinking was we need a twelve-month runway past the time we get feedback from the FDA on our Phase Three trial design in the middle of next year.

You can look greedy and take everything that’s on the table, but then you end up diluting people that have been really supportive of the company for a long time. So we wanted to be respectful to our shareholders.

We’ll be running a parallel track where we go to the FDA and develop the Phase 3 trial design, which should be mid next year, and that piece of paper, that email, will be the kickoff point for either a capital raise to support the Phase 3 study, a partnering deal, or a blend of both.

We talked about one company going into Phase Three, that’s going to cost them more than a hundred million US dollars.

We don’t think we’ll need to do a study of that size, but you’re still taking of well North of $50 million, and this raise wasn’t going to cover that.

We just wanted the runway to get the data, plan the trial, and give us the time to make a decision and get the right outcome for our shareholders.

Michael Frazis

The part I found most interesting in the trial was that there was a clear improvement with time, and now that so many patients have already responded, to some extent the result is de-risked.

You could argue this data release was the major-derisking event for the company. How many patients do you think you’ll need in the Phase 3?

Gary Phillips, Syntara CEO

It was a major de-risking event. When we go to the FDA, they will want us to tell them what we plan to do.

The study will likely be what is called a Phase 2c/3 study, with an adaptive design. It’s the fastest way to get approved.

For the sake of argument, let’s say we need 300 patients, which is not a bad approximation. In layman’s terms we need a less than 5% chance that the trial result is due to luck, a p-value of under 0.05.

The better your result, the bigger the treatment effect, the more clear your efficacy is, then the smaller number of patients you need to prove statistical benefit.

If your effect size is small, you need a lot of patients to say it wasn’t by chance.

We've got quite large effect in Total Symptom Score, which will be the primary endpoint of a clinical study for myelofibrosis. So we don’t need as many patients to show statistical significance.

But the FDA also requires a minimum number of patients to have been exposed to the drug to be sure it’s safe.

So the size of the study is more likely to be driven by the minimum safety standard that the FDA needs, rather than the efficacy measure.

We've got close to 50 patients who've been exposed to the drug already. We probably need at least another 200 or more.

On fund-raising, we have healthcare specialist institutions on our register who are capable of writing cheques large enough to fund the Phase 3. They’re not interested in small raises, they want to write large cheques in something they really believe in.

But you don't want to dilute too much at this stage. They'll want to see the approved trial design by the FDA.

That's the critical thing for both institutional investors and companies who are interested in acquiring us.

Michael Frazis

Given the de-risking we talked about, the opportunity to invest $50 million odd for a two to three billion dollar outcome in a short period of time is one of the better investment opportunities out there, right?

Gary Phillips, Syntara CEO

Yeah, you know there always a lot of competition for capital. There's a lot of opportunities out there and we're competing with them.

You can't underestimate the value of having a result like we've just got from the interim data.

It still needs to play out with the longer-term data that shows that this drug is working. It's a small number of patients, right? And people will say, know, don't you need more patients?

But sometimes in oncology you don't.

You see companies announce the total number of patients that went into complete remission, and it doesn't have to be all the patients going to remission for a drug to be valuable, it can be just some of the patients.

If you can cure some patients then, that's valuable.

When we look at myelofibrosis and we look at the patients in our study, the clinicians look at our database and are excited.

There was one patient that had been on our drug for nine months. They had already been on Ruxolitinib for more than five years.

So survival is typically five years right? By then they were on the lowest dose of ruxolitinib. They had an enlarged spleen, and their symptom score was elevated.

At nine months on our drug, that patient had passed the Total Symptom Score reduction point of 50%, their spleen had reduced by 35% and their bloods had improved.

Now clinicians would look at that and say, I’ve got a patient like that, three, four, five years on ruxolitinib, and there’s nothing I can do for them. I’m just managing the dose of ruxolitinib delicately, so I don’t trash their blood scores anymore.

And you’re telling me after nine months on this drug, they’re actually improving? That’s impressive.

It was nice getting the percentages and the high numbers and whatever, but it was great hearing those individual stories of people looking at that and saying I've got patients like that and I can't do anything for them and that result is really impressive.

Michael Frazis

When it comes to those funding decisions, it's early stage, as you say, it's a small trial, as you say, but it looks like the data is market leading at the moment. So that's really compelling.

Gary Phillips, Syntara CEO

We always want more data, and we've got 12 month data coming up in March.

The end of March is probably the next time that we talk to the market about what we're doing.

That'll be when we've got enough data to be able to give an update that's meaningful.

And once we've got that, we also think it will be enough to characterise the drug and design that Phase 3 study, and tell the FDA not only what the primary endpoint will be, which we're pretty sure will be TSS 50, the symptom score, but also what the secondary is.

The secondary could be spleen size but it could be bloods, it could be a number of different endpoints.

Michael Frazis

From my perspective I think this is the most interesting point to invest in the company. As you know, we invested in your prior capital raises, and were there before the data, but this is the moment where the interim data is out, a raise has been done so you’re cashed up, and the price hasn’t moved materially.

In the Australian market, there's a number of funds that fill up every raise. They're prestigious, everyone likes them on the register, but generally they sell pretty fast. They’re certainly not healthcare specialists.

Maybe for that reason, there hasn't been a big uplift on day one, but this is the major de-risking point.

The Syntara investment case is better now than it ever was in terms of data, risk, and return.

But because there was a raise and high shareholder churn, the price is actually lower than it was before the trial. I don't think that's going to last.

Gary Phillips, Syntara CEO

I think when you look back over the last 12 months, I mean, we had a share price of one and a half cents in January.

Michael Frazis

I remember as a shareholder!

Gary Phillips, Syntara CEO

I'm not surprised at the volumes that we've seen in the last couple of days because you know there are investors that after a year can take four times their money right and they're happy.

And there’s others that take a longer-term view.

Michael Frazis

Now you've taken quite a lot of that risk off the table.

You know my opinion on cap raises, I suggest make it clear that only those who hold the whole way through will be looked after.

Otherwise, you create that toxic dynamic on the Australian market where people sell into raises or even short the stock, knowing they’ll get filled.

Everybody knows who has to raise, how much, and when.

But the raises that go best are the ones where stock only goes to people that are there through the journey, and it’s clear that if you sell in anticipation of a raise, you’re not going to get filled.

Similarly, if you short the stock coming into a raise, you’re not going to be filled, and if you do anyway, you’re going to have to cover by buying in the open market afterwards.

Messaging there can be helpful, and these are the raises where prices actually go up afterwards.

But you know my opinion on those things already so I won’t belabor the point!

Gary Phillips, Syntara CEO

There have been points in our journey when we've had a register that's strong enough to do that, at other points when you're at a low and you're trying to raise the money and you need the cash and you haven't got the data and then you have to accept money that's short-term investors.

Michael Frazis

Fair. Could we briefly go through your other programs? Because myelofibrosis is the exciting one, but there's some other really interesting stuff you're doing.

You're one of the few companies, bizarrely for your market cap, that has multiple drugs in the clinic.

And there's a chance your main program is traded away and the company remains with the other assets.

Gary Phillips, Syntara CEO

The priority is clearly myelofibrosis but we have an eye on the value of the asset more broadly.

One of the ways of doing that is to expand the number of indications that that drug can be shown to be treating.

Now, companies that are interested in myelofibrosis are generally looking at hematology. When we talk to companies interested in us, we talk to the group that's dealing with hematology. So we're working on another indication, myelodysplastic syndrome, which is another blood cancer.

We have very strong pre-clinical data in a Nature publication that came out of a university group in Germany, showing that if you add 5505 on top of the standard of care you get a very quick uplift in the amount of red blood cell production.

This disease is probably three times the market size of myelofibrosis. The unmet need is, if anything, greater. It is really poorly treated at the moment. So there's a huge opportunity there.

We have two studies starting in that indication in the first half of next year. Both of them are funded by non-dilutive cash, one by the Australian government, one by the German Cancer Fund. So it's a great deal for Syntara shareholders.

They're both 1C2 studies. So you start off with what we call a dose escalation, where the drugs are given in two different doses on top of the standard of care, and then the trial expands into the Phase 2, where you've chosen the dose and you treat the patients for six months.

And we should have data from both of those studies by the end of 2025, so 12 months from now.

One of them is in low risk MDS, the other one's in high risk.

So 12 months from now, some suggestion of efficacy in those two diseases will, I think, more than double the value of the drug to a big pharma company.

Because if I came with an indication that this drug, as well as treating myelofibrosis, also does something in migraines, that's completely irrelevant. It doesn't add to the value at all.

But if you come with a related indication in the same disease area and a plausible bit of data that shows you got there, then when we eventually sell the asset, we will get value for everything they can make in myelofibrosis, but we’ll also get the same milestones in a second disease.

You almost double the size of the value of the deal.

I’ve personally done one of these deals before, a few years ago to Boehringer.

In the negotiation, we got value for at least two indications, and that's what we're aiming to do here. So those studies are particularly important.

We've got another drug with the same mechanism in lysyl oxidase inhibition, which is relevant in the skin as well.

We've been working with Professor Fiona Wood over in Perth. She's a plastic surgeon of great repute, and the physician behind developing spray on skin, which eventually became Avita, a successful company.

Fiona came to us after we started publishing our work in lysyl oxidase and said, you know, this enzyme is really important in skin scarring and I've got very little I can use at the moment. I use laser therapy, I use repeat surgery to remove scar tissue, to try and get it to heal better, and we use silicone sheeting and pressure bandages.

There's almost no pharmacological treatments in the market or in development for reducing scarring. If you go to your local pharmacy, you'll find bottles of 100 % silicone, that you have to rub into the scar regularly. And none of these things are particularly effective.

We've already done one study for three months with a cream, and we can show a 30% collagen reduction in three months compared to placebo.

So we know, I know, that this drug works in skin scarring.

And I know that skin scarring is a huge commercial opportunity. It's a different set of companies, companies with aesthetics divisions, people that sell Botox.

I'm talking to plastic surgeons in America, Europe, Japan, across Asia. In Asia keloid scarring is becoming a huge market.

This is very different from hematology in blood cancers. But I think if we can get the right clinical study, we've got a couple ongoing, which are run by Professor Wood over in Perth.

We're also thinking about what else we could do to really efficiently find a proof of concept that we can reduce scarring.

Because then we've got a huge asset on our hands and it may be something, to your earlier point, that’s run separately from the oncology program, right? If you've got proof of concept, you could even spin it into a second company jointly owned by Syntara shareholders with a dedicated team of its own.

So that's really quite exciting. It's at an early stage and we haven't spent much money on it.

We're thinking carefully about what step we might make.

We'll probably make some announcements in the first half of next year about what we're going to do next, because I think it really is a commercial goldmine if we can get it right.

And the last study that we have is another phase two asset. And this one's for neuroinflammation. It's a drug which crosses the blood-brain barrier.

It hits two different enzymes involved in inflammation in the brain. We're treating patients who have a very bad sleep disorder where they act out their dreams, called iRDB, isolated REM sleep behavior disorder. It was featured on Channel 9 a couple of weeks ago. We had the lead clinician in Sydney talking about it to a news reporter.

They're recruiting the study in Sydney and in Oxford, where we're treating these patients for their sleep disorder where they act out their dreams very violently.

90% of these patients go on to develop Parkinson's.

When we found that the drug went across the blood brain barrier and had this anti-neuro-inflammatory effect, well, we're not a CNS company. So we showed it to neurologists and said, look, we think there's an opportunity in Parkinsons here.

We went to some of the big philanthropic funds in the world, the Michael J. Fox Foundation, Parkinson's UK, and an organisation in Australia called Shake It Up as well.

These organisations sit together once a year and review all of the science in Parkinson's and decide what needs to be funded, what's the highest priority and then who's going to do it to try not to overlap and compete with each other.

Our study got a really high rating and Parkinson's UK gave us five million dollars to do this study. It's 25 % recruited, should be fully recruited by the middle of next year, with data by the end of next year showing: a) does it improve these patients' sleep quality? At the moment, they're only treated with melatonin and sedatives, so there's a commercial opportunity in sleep. And b) do we reduce inflammation in their brain?

We're giving them brain scans at the beginning and after three months of the study. There's an opportunity to show that this drug can slow the progression to Parkinson's, again, which would be game-changing.

So we're working in three or four different diseases, they're all really high unmet need there where patients are really in need of new treatments, and we think we've got potential breakthroughs in all of them.

It's going to be a really exciting year ahead with lots of news.

The other thing that’s worth mentioning is the news flow from all these studies. In my dreams they're all positive, right? But you don't need everything to be positive to turn this company into a really great investment opportunity.

Michael Frazis

Especially at these valuation levels, with that many programs in the clinic, and now the extra cash as well.

Gary Phillips, Syntara CEO

As I said, a lot of these studies are funded by non-dilutive cash. So the cap raise that we've done, the bulk is going into preparing SNT-5505 for the phase 2/3 study to come.

We have to focus in order for us not to be slowed down and to keep things on the critical path.

For example, we are in the final stages of the tablet formulation and production for the Phase 3. We’re doing it now, because once you've made it, you've then got to put it on stability for 12 months before you can start using it. If we wait until we get an approval by the FDA, then we'll add another six months onto the timeline. And as I said at the beginning, every month is critical for the value of the asset once you eventually trade it.

We can use that cash to make sure that this drug stays absolutely with foot flat to the floor on the accelerator whilst we're doing everything outside of the clinical stuff in the background.

Michael Frazis

So you’re formulating a tablet for SNT-5505?

Gary Phillips, Syntara CEO

It's currently used as a capsule in the Phase 2 studies but we think the final commercial form will be a tablet and therefore the formulation you need to use in the phase three clinical trials should be a tablet as well.

You don't want to be changing the formulation after you've done the Phase 3. You need to go into the last study with the formulation that you want.

Capsules are fine, but tablets are better as you can make them in larger quantities. They're cheaper to make. And also we can put more milligrams of product into a tablet so patients have to take less tablets to get the dose that they want as well.

And that of course helps compliance and you've got to start thinking about all these things. You've got to be three steps ahead of this.

Michael Frazis

Absolutely. Okay, why don't we wrap up there? Thanks so much, Gary. It's been great to be a shareholder and I'm sure you have a much broader, very supportive shareholder base now as well. So congratulations on the week.

Gary Phillips, Syntara CEO

Thanks Michael. Thanks for supporting us as well. I really appreciate it and it's really good to chat.