Carna Biosciences 4572
カルナバイオサイエンス
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BMA 3F 1-5-5 Minatojima-Minamimachi,Chuo-ku, Kobe 650–0047
Summary
Carna Biosciences (Carna) researches and develops small molecule drug candidates to address unmet medical needs across several therapeutic areas including oncology, inflammatory diseases (rheumatoid arthritis), and neurodegenerative diseases (Alzheimer’s disease). The aim is to out-license its pipeline of drug candidates, including potential blockbuster drugs, to produce revenues by letting partners use its IP to commercialize certain drugs.
Life Sciences Tools & Services
Key dates
2015-10-02
Coverage initiation
Executive summary
Business overview
The company specializes in drug discovery research focusing on kinases, an enzyme that regulates cell signaling. It recognizes that the dysregulations of cell signaling by certain kinases cause many diseases such as cancer and rheumatoid arthritis, and so conducts drug discovery research to develop a specific inhibitor drug to normalize abnormal cell signaling, targeting these aberrant kinases. Kinase inhibitor drugs have higher efficacy and fewer adverse effects compared with conventional drugs. Kinase inhibitor drugs have lower manufacturing costs and prompt fewer hospital visits than antibody drugs, another type of molecular targeted drug, because kinases are small molecules and chemically compoundable.
Many pharmaceutical and biotechnology companies engage in kinase inhibitor research. Yet Carna is the only one that conducts research on kinase inhibitor drugs, and in its Drug Discovery Support business it also manufactures and sells kinases—needed for kinase inhibitor research—and provides profiling and screening services investigating kinase inhibitor effectiveness to pharmaceutical companies and research institutions. It is the only company worldwide that manufactures and sells kinase proteins, while also researching kinase inhibitor drugs.
The company’s business model stands out in that it uses cash from the Drug Discovery Support, a business common among North American biotech companies but rare in Japan, to invest in the Drug Discovery and Development business (R&D). A manufacturer of kinase proteins, the company boasts a top-class lineup. The key customers include many global companies such as Gilead Sciences and Pfizer, demonstrating trust in the quality of its kinase proteins and its profiling capabilities. Carna conducts research of kinase inhibitors based on its knowledge of kinases and its drug discovery technology.
On June 24, 2019, Carna entered a licensing agreement with Gilead Sciences, Inc. (based in California, US) concerning small molecule compounds Carna has in development as new immuno-oncology drugs. Carna has been engaged in a drug discovery program to develop lipid kinase inhibitors as next-generation immuno-oncology targets, and has now chosen to license out to Gilead the exclusive rights to develop and commercialize this program worldwide. In connection with this agreement, Carna received an upfront payment of USD20mn (roughly JPY2.1bn) and is eligible to receive up to an additional USD450mn (around JPY47.2bn) in potential milestone payments upon achievement of certain development and commercial milestones. Carna also will receive royalties on future net sales of drugs developed via this program. Under the collaboration, Carna will support Gilead in its development endeavors by providing Gilead with exclusive access to Carna’s proprietary lipid kinase drug discovery platform for a certain period.
A feature of Carna’s out-licensing strategy is that the company grants global rights for its drug candidates instead of rights limited to specific regions such as Japan or Asia. Few Japanese biotech companies have succeeded in concluding global license agreements; the majority grant licenses limited to specific regions such as Japan, China, Korea, Taiwan, and the East Asian region. A key point is the company’s out-licensing agreements with North American companies such as Gilead. The financial terms seemed to be at least JPY10.0bn in total (upfront and milestone payments) according to Dr. Yoshino, CEO and President of Carna.
Administration of the BTK inhibitor AS-0871 to healthy adult subjects in a Phase I study began in August 2020, after regulatory authorities and the ethics committee in the Netherlands greenlit clinical trials of AS-0871 in February 2020. The company completed administration in the single ascending dose (SAD) part of the Phase I study in 2020, and confirmed safety and tolerability of AS-0871 in all tested doses. Based on these results, in 2H FY12/21 it plans to initiate the bioavailability* (BA) part of the multiple ascending dose (MAD) aspect of the Phase I study, to evaluate the BA of a newly developed capsule formulation. The company is also developing a new tablet formulation, which it plans to compare with the capsule formulation.
Trends and outlook
FY12/20 results: Carna reported full-year consolidated sales of JPY1.1bn (-64.7% YoY), an operating loss of JPY1.1bn (versus profit of JPY977mn in FY12/19), a recurring loss of JPY1.1bn (versus profit of JPY957mn in FY12/19), and a net loss attributable to owners of the parent of JPY1.1bn (versus net income of JPY828mn in FY12/19). The large YoY drop in sales reflected an upfront payment of JPY2.1bn received in FY12/19 in connection with an out-licensing agreement with Gilead Sciences. A loss per share came to JPY90.33 and the company did not pay a dividend for FY12/20.
FY12/21 forecast: For FY12/21, the company forecasts full-year consolidated sales of JPY923mn (-18.6% YoY), an operating loss of JPY1.8bn (versus loss of JPY1.1bn in FY12/20), a recurring loss of JPY1.8bn (versus loss of JPY1.1bn in FY12/20), and a net loss attributable to owners of the parent of JPY1.8bn (versus loss of JPY1.1bn in FY12/20) for a loss per share of JPY147.19. The company expects that only the Drug Discovery Support segment will generate sales, and it projects an operating loss of JPY2.0bn (versus loss of JPY1.5bn in FY12/20) in the Drug Discovery and Development segment and an operating profit of JPY207mn (-54.7% YoY) at the Drug Discovery Support segment. The company expect total R&D expenses of JPY1.8bn.
On February 12, 2021, the company announced a medium-term management plan for three years through FY12/23. The three main points of the plan are 1) out-licensing multiple pipeline drug candidates (global out-licensing), 2) initiating in-house clinical trials to maximize the value of its pipeline drug candidates, and 3) establishing a stable revenue base in Drug Discovery Support. Carna has not published numerical targets for the final year of the plan.
Strengths and weaknesses
Strengths: extensive knowledge and experience with kinase drug discovery, advanced technology that enables the company to discover drug candidates from scratch, and its established network with academia in Japan. Weaknesses: staff diverted away from Drug Discovery and Development, and few of its compounds having reached the clinical trial phase. (See glossary for explanation of terms.)
Key financial data
Note: Figures may differ from company data due to differences in rounding methods.
Recent updates
First patient dosed in BA part of Phase I study of BTK inhibitor AS-1763
On December 3, 2021, Carna Biosciences, Inc. announced that the first patient has been dosed in the BA part of the Phase I study of BTK inhibitor AS-1763.
The company announced that the bioavailability (BA) part of the Phase I study of its next-generation BTK inhibitor AS-1763, currently being conducted in the Netherlands, began on December 2, 2021 (CEST).
AS-1763, discovered by the company, is a Bruton's tyrosine kinase (BTK) inhibitor that strongly and highly selectively inhibits the activity of BTK. The company is developing AS-1763 as an effective treatment for patients with blood cancer, even those who have developed resistance to ibrutinib. AS-1763 has been shown to be safe and well-tolerated, as well as having a favorable pharmacokinetic profile in the single ascending dose (SAD) part of the Phase I study conducted in healthy adult (both male and female) volunteers. In the BA part of the study, the company aims to evaluate the relative bioavailability of its newly developed formulation of AS-1763 in comparison with the simple formulation used in the SAD part.
Carna plans to conduct a Phase Ib study of AS-1763 in patients with chronic lymphocytic leukemia (CLL) and B cell lymphatic malignancies in the US in 2022. Toward submitting an Investigational New Drug (IND) application for the study, the company is preparing for a pre-IND meeting with the US Food and Drug Administration (FDA). The company said this development would have no impact on its consolidated FY12/21 earnings results.
Patent granted for BTK inhibitor AS-1763 in China
Carna Biosciences, Inc. announced that it had received a patent notice for BTK inhibitor AS-1763 in China.
The company announced that it had received a patent notice from the China National Intellectual Property Administration regarding its patent application for BTK inhibitor AS-1763 in China. A patent notice is issued when a patent is granted following examination.
AS-1763 is a highly selective, orally bioavailable, non-covalent inhibitor of both wild type and C481S-mutant Bruton’s tyrosine kinase (BTK), which Carna is developing as a next-generation BTK inhibitor indicated for blood cancers. The company has out-licensed development and marketing rights in Greater China (People’s Republic of China and Taiwan) to BioNova Pharmaceuticals and stands to receive milestone payments as development progresses and royalties once the product is launched.
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company data due to differences in rounding methods.
Note: Figures may differ from company data due to differences in rounding methods.
Note: Figures may differ from company data due to differences in rounding methods.
Q3 FY12/21 results (out November 8, 2021)
Q3 FY12/21 (January–September 2021) results
Factors behind the decline in sales: In Q3 FY12/20, the company booked an upfront payment of JPY53mn, received in connection with the out-licensing agreement with BioNova Pharmaceuticals Ltd. for the development and marketing rights of AS-1763 in Greater China.
Factors behind the decline in profit: The company booked an operating loss of JPY1.2bn, due mainly to increased R&D expenses.
Drug Discovery and Development
The company recorded no sales in Q3 FY12/21 for this segment, but booked an operating loss of JPY1.4bn, a larger loss YoY due to active investment in R&D, mainly in clinical studies.
Drug Discovery Support
Carna recorded sales of JPY637mn, driven by sales of kinase proteins and increases in sales from assay development services, profiling/screening services, and cell-based assay services. Operating profit was JPY199mn. In June 2019, Carna out-licensed exclusive global rights to develop and commercialize its immuno-oncology drug discovery program to Gilead, granting Gilead access to fundamental technology related to Carna’s proprietary lipid kinase inhibitor for a predetermined period of time. Sales arising from this agreement are included in segment sales. The breakdown of sales by region was as follows.
Full-year FY12/21 company forecast (out February 12, 2021)
Company forecast for FY12/21 (out February 12, 2021)
The company made no change to its forecast at the time of announcing Q3 FY12/21 results.
Drug Discovery and Development
The company is not counting on any sales from Drug Discovery and Development segment at this time; in FY12/20, the segment reported sales of JPY53mn. The company does not include sales from the Drug Discovery and Development business in its consolidated forecast owing to inherent difficulty in forecasting the timing and value of upfront payments for out-licensing agreements, and an uncertainty as to the timing of milestone payments received.
The company projects an operating loss in the segment of JPY2.0bn (versus loss of JPY1.5bn in FY12/20). The even larger loss expected in FY12/21 is attributable mainly to expected increases in R&D expenses in connection with clinical trials for AS-0871, AS-1763, and AS-0141 (CDC7 inhibitor), which together are expected to boost R&D expenses by 32.0% YoY, from JPY1.4bn in FY12/20 to JPY1.8bn.
Pipeline status
AS-0871 (BTK inhibitor)
The company initiated the single ascending dose (SAD) part of a Phase I study in healthy adults in the Netherlands in August 2020 and completed the trial in December 2020. It received results for the study on July 9, 2021, reporting that AS-0871 demonstrated safety and tolerability at all dose levels as well as a favorable pharmacokinetic profile. In addition, blood samples were taken to conduct a preliminary investigation into the extent to which AS-0871 suppressed inflammation and immunity. The results were such that the company expects orally administered AS-0871 to function effectively as a treatment for inflammatory and immune disorders. Based on these results, in 2H FY12/21 the company plans to initiate the bioavailability (BA) part of the multiple ascending dose (MAD) aspect of the Phase I study, to evaluate the BA of a newly developed capsule formulation. The company is also developing a new tablet formulation, which it plans to compare with the capsule formulation.
AS-1763 (BTK inhibitor)
The company completed preclinical studies in 2020 and submitted a clinical trial application (CTA) to the regulatory authorities in the Netherlands in January 2021. The Dutch authorities completed their review of the company’s CTA, and on February 18, 2021, an ethics committee approved corresponding clinical trial protocols. With the approval, the company started the single ascending dose (SAD) part of a Phase I clinical study in healthy adults in the Netherlands in April 2021, completing administration in all 56 participants in July the same year. Currently the company is analyzing the results from the SAD part of the study, and in 2021 it will commence the BA part of the MAD aspect of the study. It plans to use the results as basis for a Phase Ib oral dose escalation study in the US from 2022 in patients with chronic lymphocytic leukemia and B cell lymphoma, and has begun preparing for a pre-IND (Investigational New Drug Application) meeting with the FDA, prior to filing the IND necessary to commence clinical trials.
The company hopes to expedite the study by using data from trials conducted in China by licensee BioNova, which holds the development and marketing rights for Greater China. Carna is poised to receive up to USD205mn (about JPY21.5bn) from BioNova as development of AS-1763 hits various milestones in Greater China. In addition, it will receive up to double-digit tiered royalty payments on AS-1763 sales in Greater China.
AS-0141 (CDC7 inhibitor)
Carna submitted a clinical trial notification to the Pharmaceuticals and Medical Devices Agency (PMDA) for a Phase I clinical study of AS-0141 in patients with solid cancer to be conducted in Japan, and the PMDA completed its review in February 2021. In June 2021 the company initiated a Phase I study in patients with unresectable, advanced, recurrent, or metastatic solid tumors. Objectives of the study include assessing the safety and maximum tolerable dose of AS-0141, as well as determining a recommended Phase II dose. According to Carna, no dose-limiting toxicity (DLT) has been observed so far, which has allowed dose escalation to Cohort 3 (dose level 3).
During FY12/21, Carna also aims to advance at least one program now in the discovery phase to the preclinical phase.
Drug Discovery Support
For FY12/21, the company projects full-year segment sales of JPY923mn (-14.6% YoY), reflecting its cautious stance in the face of the ongoing uncertainly surrounding the impact of CODIV-19 infections on its business. The forecast assumes an average annual forex rate of JPY105.0/USD (versus JPY109.3/USD in FY12/20), with 76.0% of total sales coming from overseas.
In the individual fields in the segment, the company expects protein sales to come in at JPY291mn (up JPY15mn YoY), sales from assay development services at JPY183mn (down JPY250mn YoY), sales from profiling/screening services at JPY218mn (down JPY12mn YoY), sales from cell-based assay at JPY136mn (up JPY90mn YoY), sales of third-party goods related to its cell-based assay services at JPY73mn (up JPY6mn YoY), and sales from other services at JPY19mn (down JPY4mn YoY).
The company projects a segment operating profit of JPY207mn, down 54.7% YoY. The company plans R&D expenses of JPY171mn to support development of new products and services, and quality enhancements of existing products and services.
The segment sales forecast includes sales generated for a set period in connection with the exclusive access granted to Gilead of Carna’s proprietary lipid kinase inhibitors discovery platform. In addition to added sales to Gilead in North America, the company also anticipates a growing order flow from start-up biotech companies.
Six products, including high-demand mutant kinase biotinylated kinases, have been newly added to the line-up of kinase protein products, and four EGFR mutant targets were added to the profiling service. Carna plans further additions to its proprietary lineup.
The company also will ramp up marketing activities from 2H with a view to further growing its service using NanoBRET technology (from Promega Corporation) for intracellular evaluation of the effectiveness of kinase inhibitors. Recognizing that most of its clients are doing cancer-related research, the company looks to further expand its sales from services provided to researchers in the fields of immune-mediated inflammatory disorders, central nervous system disorders, and other diseases.
Fund-raising
In July 2021, the company announced the acquisition and cancellation of the series 18 share subscription rights with exercise price adjustment provisions (third-party allocation). The number of rights to be acquired and cancelled was 373, and the acquisition price was JPY3mn (JPY8,258 per share subscription right). The outstanding share subscription rights were not exercised as the company’s share price was trading below the minimum exercise price of JPY1,683. The company applied the funds raised to the cost of preclinical studies and clinical trials for its BTK inhibitors AS-0871 and AS-1763 and pipeline drug discovery.
On the same day it announced the cancellation of the series 18 share subscription rights, the company announced a resolution to issue the series 19 share subscription rights and enter a third-party allocation agreement with the allottee. The company said that the funds raised would be used on expenses for clinical trials for two BTK inhibitors (AS-0871 and AS-1763) and its CDC7 inhibitor (AS-0141), pipeline drug discovery, and in-licensing. The amount to be raised is approximately JPY3.6bn (net proceeds) and the number of dilutive shares 2,487,300. The company said it would deploy the funds raised over two years from January 2022 until December 2023 toward clinical trials of compounds under development (JPY2.2bn) and pipeline drug discovery and in-licensing (JPY1.4bn).
The allottee, Cantor Fitzgerald Securities Japan Co., Ltd., plans to sell the shares acquired by exercising the subscription rights to overseas institutional investors, but will not sell these shares in the market unless Carna permits it to do so. In this manner, Carna hopes to raise the necessary funds while mitigating the impact on the share price and attracting investment from overseas.
Historical performance vs. estimates
Notes: Figures may differ from company data due to differences in rounding methods.
The company did not release initial forecasts for FY12/14–FY12/16.
To date, differences between actual performance and initial company estimates have depended on whether the company booked sales from licensing agreements at the Drug Discovery and Development business, and have also been attributable to the difficulty of projecting performance at the Drug Discovery Support Business. At the start of the fiscal year, it is challenging to forecast sales associated with licensing agreements, even though such sales are limited to upfront or milestone payments, as the company has yet to bring a product to market. Sales at the Drug Discovery Support business are affected by progress in clients’ R&D, where in many cases the lead time to delivery is short.
Drug Discovery pipeline
Overview of major pipeline
Molecular targeted drug R&D is active
R&D of molecular targeted candidates, including low molecular weight kinase inhibitors, is active worldwide. The US Food and Drug Administration (FDA) approved 48 molecular targeted drugs in fiscal 2019, down from 59 in fiscal 2018 but still high. Of these, more than 60% were small molecular targeted drugs, thus confirming molecular targeted candidates, including the small molecule kinase inhibitor drugs in Carna’s pipeline, are still a hot R&D theme. As a result, molecular targeted drugs also accounted for more than 20% of new drug candidates that were awarded Breakthrough Therapy designation and the number has been rising in recent years. A wave of effective new drugs has been approved especially in the oncology field, where there have been successive approvals of immune checkpoint inhibitors, label expansions, and a surge in clinical trials evaluating combinations such as immune checkpoint inhibitors and kinase inhibitor drugs. Thus, expectations are high of an innovative new oncology drug resulting from R&D of molecular targeted candidates.
Out-licensed to Gilead Sciences
Rights to new immuno-oncology drug discovery platform
In June 2019, Carna entered into an agreement under which licensed out to US-based Gilead Sciences, Inc. the exclusive rights to develop and commercialize Carna’s immuno-oncology drug discovery program worldwide. In connection with this agreement, Carna booked an upfront payment of USD20mn (about JPY2.1bn) in Q2 FY12/19.
The company will receive up to USD450mn (about JPY47.2bn) more in milestone payments at key stages of progress in development and marketing as well as royalties based on sales after products go on the market. As well, the company will grant exclusive access to Carna’s proprietary fundamental lipid kinase inhibitors discovery technology for a certain period for a fee to support Gilead’s development in the above program.
AS-0141 (CDC7 inhibitor)
AS-0141 is a low molecular weight kinase inhibitor, potent and selective inhibitor of cell division cycle 7 (CDC7) kinase, and available for oral administration. It was originally discovered by Carna that has shown strong inhibitory action against cell replication in various types of cancer in testing involving tumors transplanted from various type of human subjects to test animals.
On June 25, 2020, Carna announced termination of the out-licensing agreement* reached with Sierra Oncology on May 26, 2016 and that it had reacquired worldwide rights to develop, manufacture, and commercialize CDC7 inhibitor AS-0141. Sierra Oncology opted to terminate the agreement after deciding to concentrate its resources on Phase III trials of momelotinib. Sierra Oncology had filed the investigational new drug (IND) application for AS-0141 in the US in Q3 2018. Carna received the full preclinical study data set** and the active pharmaceutical ingredient/investigational drug produced by Sierra, and will commence clinical trials in Japan in light of the COVID-19 situation in the US. It has formulated a new clinical development strategy using scientific evidence to increase the probability of success, based on careful analysis of clinical data for competitors’ CDC7 inhibitors.
Carna had submitted a notification to the Pharmaceuticals and Medical Devices Agency (PMDA) of its plans to initiate a Phase I clinical study of AS-0141 in patients with solid tumors, a first-in-human (FIH) trial that will be the first in which AS-0141 is administered to humans. The PMDA completed its review in February 2021. In June 2021 the company initiated a Phase I study in Japan in patients with unresectable, advanced, recurrent, or metastatic solid tumors. Objectives of the study include assessing the safety and maximum tolerable dose of AS-0141, as well as determining a recommended Phase II dose.
CDC7 kinase inhibitor
CDC7 (cell division cycle 7) is a type of serine/threonine kinase that plays an important role in controlling the initiation of chromosome replication in the cell cycle. Owing to the irregular cell cycle regulation in cancer cells, inhibition of CDC7 triggers incomplete DNA replication that causes chromosome destabilization and induces apoptosis of the cancer cells. In contrast, cell cycle regulation is not problematic in normal cells so inhibition of CDC7 does not lead to apoptosis. This has prompted expectations of CDC7 inhibitors becoming therapeutic agents with few side effects. It has been reported in recent years that CDC7 is overexpressed in various types of cancer, further raising expectations that CDC7 inhibitors have the potential to become a new therapeutic option.
BTK inhibitor
Carna has two BTK inhibitor drug candidates in clinical trials or in preparation for clinical trials.
BTK (Brutonalent bond type BT) is known to play an important role in the signal transduction of B cells*1, which make antigens, and macrophages*2, which recognize antigens. Autoimmune disorders like rheumatoid arthritis are considered to be caused by the inflammation as a result of irregular immune responses to the self-organization. As the BTK inhibitor directly inhibits the signaling of macrophages and B cells activated during the inflammation, it is expected to be a new treatment for rheumatoid arthritis with a quite different mechanism of action from existing drugs.
BTK is recognized as an important therapeutic target for hematological malignancies. Ibrutinib, the first BTK inhibitor to be approved in the world, was launched in 2013 to treat leukemia and has been proven to be highly effective. Sales totaled USD5.6bn in 2019 and USD8.4bn in 2020. In 2017, AstraZeneca launched leukemia treatment acalabrutinib, which posted sales of USD160mn in 2019 and USD520mn in 2020.
Ibrutinib inhibits the enzyme activity of BTK by covalently binding to the C481S (481st cysteine) residue. Recent studies have shown that some leukemia patients with C481S mutation are resistant to ibrutinib therapy. Development of a non-covalent BTK inhibitor is required to treat C481S mutation, which may also be resistant to the second-generation covalent inhibitors being developed. Ibrutinib is also known to inhibit kinases other than BTK, with reported side effects attributed to this kinase selectivity. AS-1763 is a non-covalent inhibitor of wild type and C481S-mutant BTK with highly specific kinase selectivity, and thus a promising candidate for the next-generation BTK inhibitor.
Eli Lilly acquired Loxo Oncology for about USD8bn (around JPY870bn at the time) in January 2019 to obtain its pipeline of kinase inhibitors, including LOXO-305 (non-covalent BTK inhibitor). ArQule, which is developing non-covalent BTK inhibitor ARQ531, was acquired by Merck in December 2019 for about USD2.7bn (around JPY290bn at the time). These acquisitions support Carna’s bullish view of the market value for non-covalent BTK inhibitors.
Major competing non-covalent BTK inhibitor candidates in clinical trials
Fenebrutinib (GDC-0853)
Developer: Roche/Genentech
Clinical trial: Phase III (multiple sclerosis)
Potential competing candidate to AS-0871. As of end-July 2021, there were no non-covalent BTK inhibitors in development that target chronic spontaneous urticaria.
ARQ531
Developer: Merck (ArQule)
Clinical trial: Phase II
Potential competing candidate to AS-1763.
LOXO-305
Developer: Loxo Oncology/Eli Lilly
Clinical trial: Phase III
Potential competing candidate to AS-1763.
Out-licensed to Johnson & Johnson, only to be later returned
In the past, the company granted a license for the BTK inhibitor program (exclusive development and sales rights in the world) to Janssen Biotech, Inc., a US subsidiary of the pharmaceuticals division of Johnson & Johnson (J&J), but Janssen returned the rights to Carna later for a strategic reason (see By the way: The license was granted in June 2015 and terminated in August 2016). After the out-licensed rights were returned from Janssen, Carna continued with the development, and in May 2017, published the program on the list of its discovery pipeline in the preclinical studies phase.
Due to a developmental challenge posed by the low solubility of the inhibitor that made its safe evaluation in toxicity tests difficult, Janssen decided that commercializing AS-871 would take more time than it had expected. However, the solubility sharply improved with the help of various formulation technologies, enabling researchers to conduct toxicity tests.
AS-0871(non-covalent BTK inhibitor)
Created by Carna, AS-0871 is a non-covalent BTK inhibitor. With AS-0871 having demonstrated an extremely high degree of selectivity versus BTK, Carna is moving ahead with development work on AS-0871 based drugs to treat inflammatory and immune disorders.
Phase I started in August 2020
After completion of preclinical studies in accordance with GLP standards, the clinical trial application (CTA) for AS-0871 was submitted to the Netherland authorities in December 2019; the Netherland authorities and an ethics committee then approved clinical trials in February 2020. Accordingly, AS-0871 became the first Carna drug to enter in-house clinical trials in the Netherlands. Originally, the company expected the European Phase I trial to begin in Q1 FY12/20, but fallout from the COVID-19 pandemic delayed the timing. On August 25, 2020, administration to healthy adults was initiated in the Netherlands. The Phase I trial will evaluate safety, tolerability, pharmacokinetics, and secondary pharmacodynamics.
In the single ascending dose (SAD) study, a total of 53 healthy adults were evaluated in a placebo-controlled, randomized, double-blind, orally administered trial. AS-0871 was shown to be safe and well-tolerated at all dose levels tested from 5mg to 900mg. There were no serious adverse events reported at all dose levels, and the adverse events reported were all mild and transient. The investigators also analyzed pharmacodynamic effects for evaluation of the extent to which AS-0871 suppresses inflammation and immunity, and concluded that administration of AS-0871 at 100mg or above resulted in strong inhibition of B-cell and basophil activation. As AS-0871 achieved the therapeutic plasma levels sufficient to inhibit B cells and basophils activation, Carna expects orally administered AS-0871 to function effectively as a treatment for inflammatory and immune disorders. Based on these results released in July 2021, the company is now preparing to initiate the multiple ascending dose (MAD) part of the Phase I study using a new formulation starting in 2H FY12/21.
Carna aims to complete the MAD part of the study in 1H 2022, after which it plans to find a partner for out-licensing or joint-development. In Phase II, the company looks to conduct a small, short-term trial in chronic spontaneous urticaria, before expanding therapeutic targets to include other autoimmune diseases such as rheumatoid arthritis, systemic lupus erythematosus, and multiple sclerosis.
Highly selective low molecular weight kinase inhibitor
The BTK inhibitor AS-0871 is a drug candidate for treating autoimmune disorders such as rheumatoid arthritis and allergies. Although BTK inhibitors indicated for blood cancers exist as brand-name drugs, there are none on the market indicated for this disease area.
BTK inhibitor Ibrutinib has already been commercialized as a treatment for hematological malignancies. However, it is a covalent small molecular compound that does not separate after bonding with BTK, so kinase selectivity is a problem. Therefore, it is difficult to develop ibrutinib as a drug for treating immune-mediated inflammatory disorders such as rheumatoid arthritis and allergies for safety reasons. Most of the BTK inhibitors being developed by other companies are also covalent compounds.
Carna’s BTK inhibitor (AS-871), which forms a non-covalent bond, gives the reversibility that the compound (AS-0871) and kinase (BTK) bond can separate as time passes, enabling doctors to control the effects of the drug by adjusting dosage cycles. The drug’s effect is sustained, because the pace of separation is slow. It also guarantees a high grade of safety because of its high selectivity to kinases (it only binds with BTK and one other kinase).
Accordingly, it is expected to be a new option for the treatment of patients with allergy and autoimmune diseases like rheumatoid arthritis, chronic spontaneous urticaria, and systemic lupus erythematosus (SLE). A mouse model with collagen-induced arthritis demonstrated a good treatment effect for oral administration that the arthritis score fell to less than half.
Carna is developing AS-0871 as a treatment for inflammatory and immune disorders because of its high kinase selectivity. AS-0871 is a non-covalent small molecular compound and can separate from BTK even after they bind (see below figures). Since it also has high kinase selectivity (see below figures), it has been developed as a drug for treating immune-mediated inflammatory disorders such as rheumatoid arthritis and allergies.
Thus, there is a high level of interest in AS-0871 among pharmaceutical companies, which likely are awaiting the outcome of Carna’s clinical studies. According to Carna, although there are competing BTK inhibitors that target immune-mediated inflammatory disorders, AS-871 has the edge in its high selectivity and being a non-covalent inhibitor that detaches slowly from the target kinase.
AS-1763 (BTK inhibitor)
AS-1763 is a next-generation BTK inhibitor aimed at treating ibrutinib-resistant hematological malignancies. Preclinical studies needed to begin clinical trials were completed in 2020 and the documentation needed for a clinical trial application (CTA) was submitted to the regulatory authorities in the Netherlands in January 2021, with the authorities and an ethics committee then approving clinical trials in February 2021. Carna believes this could pave the way for AS-1763 to be used to treat not only blood cancers, but also auto-immune diseases.
Greater China rights out-licensed to BioNova Pharmaceuticals
Carna changed its development strategy for AS-1763, a next-generation BTK inhibitor to treat patients with ibrutinib-resistant blood cancers, because competition to recruit patients for clinical trials of anticancer drugs has intensified in the US. Specifically, having filed a clinical trial application (CTA) and won clearance to conduct its own clinical trials of AS-0871 in Europe, the company changed its plan for clinical trials in the US to Europe so it can start its own Phase I trials sooner. In March 2020, Carna also turned its attention to China, where it is easier to recruit patients, and concluded in March 2020 a license agreement with Chinese company BioNova Pharmaceuticals Ltd. that confers development and marketing rights in Greater China (People’s Republic of China and Taiwan). Under the agreement, BioNova will conduct clinical trials in China. Carna believes that it can accelerate clinical trials of AS-1763 by gathering and using BioNova’s clinical trial data as well as maximize the value of AS-1763 at the earliest opportunity. In addition to the upfront payment already received, Carna is poised to receive up to USD205mn (about JPY21.5bn) from BioNova as development of AS-1763 hits various milestones in Greater China. In addition, it will receive up to double-digit tiered royalty payments on AS-1763 sales in Greater China.
Clinical trials in the Netherlands
In May 2018, Carna concluded an agreement with Germany-based Evotec AG, and it has since conducted preclinical studies using Evotec’s INDiGO platform, completing the GLP studies required to initiate Phase I trials. In May 2020, the company revised its development strategy regarding US clinical trials for anticancer agents in consideration of fierce competition to recruit patients. Specifically, the company established the foundation for in-house clinical trials in Europe through the CTA application of AS-0871, so it revised its US IND filing plans and submitted the European CTA (in the Netherlands) in January 2021. In February 2021, the Netherlands’ Ethics Committee approved the CTA, based on which the company started the single ascending dose (SAD) part of a Phase I clinical study in healthy adults in the Netherlands in April 2021. In the SAD study, a total of 56 healthy adults are being evaluated in a placebo-controlled, randomized, double-blind, orally administered trial. The primary objectives are to assess the safety and tolerability of AS-1763 as well as to measure its pharmacokinetics and pharmacodynamics. After completion of this SAD study, Carna plans to initiate a Phase I oral dose escalation study in the US from 2022, for which it is now laying the groundwork. Licensee BioNova will conduct clinical trials in China, and the company hopes to use data accumulated from BioNova’s Chinese clinical trials to expedite the AS-1763 trial.
Next-generation BTK inhibitor for Ibrutinib-resistant hematological malignancy
The BTK inhibitor AS-1763 was being developed by Carna as a backup compound to AS-0871. It was added to the company’s pipeline table in November 2017 as a compound at the preclinical studies phase following rapid progress with R&D as a drug candidate indicated for blood cancers.
AS-1763, discovered by Carna, was found to be effective not only against wild type BTK, but also mutant BTK. Carna is therefore developing the compound as a next-generation BTK inhibitor to treat patients with ibrutinib-resistant blood cancers. Like AS-0871, AS-1763 is a highly selective, non-covalent, reversible BTK inhibitor, which could potentially be used as a treatment for immune-mediated inflammatory diseases such as rheumatoid arthritis and allergies.
AS-1763 is a highly selective, orally bioavailable, non-covalent inhibitor of both wild type and C481S-mutant Bruton’s tyrosine kinase (BTK). BTK is known to play an important role in transmitting B cell receptor (BCR) signals that are involved in the division and proliferation of B cells, and is recognized as an important target for blood cancer therapies. AS-1763 is being developed as the next-generation BTK inhibitor indicated for blood cancers. The first approved BTK inhibitor is ibrutinib. It is a highly effective treatment for B cell tumors, including chronic lymphocytic leukemia (CLL). According to EvaluatePharma’s “World Preview 2019, Outlook to 2022,” global sales of BTK inhibitors are estimated at USD9.5bn in 2024, and we assume significant market size in the blood cancers disease area.
In the presentation material released with the FY12/18 earnings announcement, Carna described AS-1763 as a non-covalent small molecular compound like AS-0871. The company also published data comparing BTK inhibition activity and kinase selectivity of CB-1763 to those of ibrutinib, which indicated better outcomes for AS-1763 in terms of effectiveness against C481S-mutant BTK and kinase selectivity (see below figures). As such, Carna’s AS-1763 is also promising as a treatment for blood cancers resistant to ibrutinib therapy and will thus be closely watched by pharmaceutical companies.
Joint research program with Sumitomo Dainippon Pharma
In March 2018, Carna and Sumitomo Dainippon Pharma Co., Ltd. signed an agreement on joint research and development with the aim of discovering innovative treatments for psychiatric and neurological disorders. The joint research efforts are said to be progressing smoothly. Under the agreement, Carna will own the exclusive global right for clinical development and sales for any kinase inhibitor discovered for treating any disease other than cancer. The agreement also calls for Sumitomo Dainippon Pharma to provide up to JPY80mn in payments to Carna, this including both an upfront payment and milestone payments. Carna also will receive up to JPY10.6bn more in milestone payments at key stages of progress in development and marketing, as well as royalties based on sales after products go on the market.
Drug Discovery Pipeline
Source: Shared Research based on company data
Combination therapy for cancer
In the cancer field, the current main focus of drug development is not to extend life but to achieve a cure. Combination therapy is attracting considerable attention as a means of curing cancer. Two examples include the combination between Ono Pharmaceutical’s (TSE-1: 4528) anti-PD-1 antibody and immune checkpoint inhibitor, Opdivo (generic name: nivolumab), and Bristol-Myers Squibb’s Yervoy (ipilimumab), as well as the combination between Eisai’s (TSE-1: 4523) oral kinase inhibitor, Lenvima (lenvatinib), and Merck’s anti-PD-1 antibody Keytruda (pembrolizumab).
As drugs targeting kinases can be expected to demonstrate greater efficacy when used in combination with products such as Opdivo or Keytruda, Carna’s pipeline contains a number of drug candidates linked to cancer therapy. Pipeline products identified as cancer therapies have been shown to work well in the context of combination therapy, and Carna believes some have huge potential as potential cures for cancer.
Strategy and outlook
Basic policy
Drug Discovery Vision 2030
Under its Drug Discovery Vision 2030 initiative, Carna aims to become a leading company that continually discovers innovative drugs with a focus on diseases that do not yet have effective treatments such as cancer and immune-mediated inflammatory disease. Now that the company has established the ability to conduct clinical trials on its own, it aims to maximize the business value by expanding in-house clinical trial development pipelines in priority drug discovery programs. The company looks to accelerate research at an early stage, even for drug discovery programs in the exploratory phase, through research collaboration.
Drug Discovery Vision 2030
Start in-house R&D (2010–2015)
Built in-house R&D structure
Created drug discovery pipeline
Put drug discovery capabilities into action (2016–2020)
Out-licensed multiple pipelines
Commenced in-house clinical trials
Maximize pipeline value (2021–2025)
Obtained proof of concept (POC) in human subjects (proof of drug candidate efficacy and safety in humans)
Stabilized business through milestone payments
Create sustained profits (2026–2030)
Receive milestone payments and royalty income from multiple pipelines
Medium-term business plan (FY12/21–FY12/23; released February 12, 2021)
On February 12, 2021, the company announced a three-year plan extending through FY12/23, but did not disclose numerical targets for the final year of the plan (i.e., FY12/23).
In the Drug Discovery and Development business, Carna focuses on research aimed at developing innovative new drugs for treating diseases where the unmet medical needs are high and effective treatments have yet to be developed (especially cancers and auto-immune disorders).
In the Drug Discovery Support business, the company continues to direct its marketing activities towards providing pharmaceutical companies with products and services to support creation of new kinase inhibitors.
Core strategies under medium-term business plan
The three main points of the plan are out-licensing multiple pipeline drug candidates (global out-licensing), initiating in-house clinical trials to maximize the value of its pipeline drug candidates, and realizing a stable revenue base in Drug Discovery Support.
Core strategies by segment
Drug Discovery and Development
In the Drug Discovery and Development segment, plans call for 1) out-licensing drug discover pipeline to major drug companies; 2) creating a more efficient development structure that will allow it to run multiple clinical trials on its own; 3) establishing R&D themes in early stages; and 4) create a next-generation drug discovery pipeline.
Drug Discovery Support
In the Drug Discovery Support segment, plans call for 1) expanding sales of proprietary development products and services, especially in North America and Asia; and 2) expanding sales of new products and services.
Out-licensing multiple drug pipelines
Aggressive information exchange with many pharmaceutical companies
With the results of multiple R&D activities, the company is taking measures to out-license these and other pipeline drugs in the optimization phase by actively providing information and entering into talks with many pharmaceutical companies at the BIO International Convention (held regularly in North America, Europe, Japan, and elsewhere) and other networking opportunities.
Launch in-house clinical trials to maximize out-licensing value of drug discovery pipeline
Shifting focus from clinical trial strategy to building infrastructure for in-house trials
Carna had not yet produced a drug candidate that made it to the in-house clinical trial phase, but this changed from August 2020 when BTK inhibitor AS-0871 began clinical trials, representing the first Carna drug candidate to reach the clinical trial stage and marking the dawn of a new era for the company’s drug discovery business.
Building infrastructure for clinical development
Carna’s drug discovery business has attained a level of research technology sufficient to be able to continuously turn out new drug candidates. Previously, the company only out-licensed drugs in the preclinical study phase. In order to enhance the out-licensing value of its drug pipelines, however, the company considers it important to confirm that drug candidates are effective and safe for humans. Accordingly, the company looks to conduct up to Phase II clinical trials in-house before out-licensing a candidate in the oncology field and conduct in-house trials up to Phase I in other fields. It therefore has started building the infrastructure needed to conduct in-house clinical trials*.
To that end, in July 2018 the company set up a clinical development department in its R&D division. In February 2019, the company also set up a clinical development office in South San Francisco, to serve as a base for clinical studies in the US. These measures will enable Carna to control the entire process, from formulating clinical trial strategy to conducting clinical trials.
Business
Description
Carna Biosciences (Carna) researches and develops drug candidates to address unmet medical needs across several therapeutic areas such as oncology and immune-mediated inflammatory diseases (rheumatoid arthritis). The company targets sales from out-licensing its pipeline of various drug candidates, including blockbuster drugs to large pharmaceutical companies, based on agreements that grant worldwide rights.
The company’s research and development of kinase inhibitor drugs focus on oncology and immune-mediated inflammatory diseases. The current drug candidates in its pipeline mainly target cancers.
The following factors differentiate Carna in the anticancer drug market:
Extensive knowledge as the world’s only biotechnology company involved in both kinase inhibitor research as well as kinase manufacturing and sales.
A track record of out-licensing drug candidates to major pharmaceutical companies (granting worldwide rights) and a promising drug candidate development pipeline.
Creation of a proprietary pipeline using an in-house chemical synthesis team, in addition to strong ties with universities.
Business segments: Drug Discovery Support, and Drug Discovery and Development. Drug Discovery Support provides other pharmaceutical companies and research institutions with products and services needed for new drug development and research, while Drug Discovery and Development develops the company’s proprietary kinase inhibitors.
Note: Figures may differ from company data due to differences in rounding methods.
Carna specializes in drug discovery research focusing on kinases, an enzyme that regulates cell signaling. Recognizing that the dysregulations of cell signaling by certain kinases cause many diseases including cancer and rheumatoid arthritis, in its Drug Discovery and Development business Carna conducts drug discovery research to develop a specific inhibitor drug targeting such aberrant kinases to normalize abnormal cell signaling. Kinase inhibitor drugs have higher efficacy and fewer adverse effects compared with conventional drugs.
Manufacturing costs for kinase inhibitor drugs are lower compared with antibody drugs, so the selling price is lower.
What is drug discovery research?
Drug discovery research is an early phase of the drug development process. Drug candidates are selected for preclinical studies after confirming the efficacy of the treatment (recovery and mitigation), as well as any adverse effects, targeting proteins such as genes and kinases assumed to be related to the disease. Carna focuses on drug discovery research of kinases to develop orally available small molecule drugs.
After confirming a specific kinase as a likely drug discovery target at the basic research phase—generally at universities or other academic institutions—HTS (high-throughput screening, or selection of hit compounds that modulate the target molecule from the large compound library) is implemented in the case of small molecule drugs. Then, hit compounds that have cleared certain standards are extracted. Typically, two or three hit compounds are selected from thousands of drug-like compounds.
Research is then conducted starting from these hit compounds to generate lead compounds having more drug-like structures suitable for drug development. Lead compounds are optimized through pharmacological tests to assess efficacy in test tubes and therapeutic effects on disease model animals, as well as through toxicity tests. At this phase, pharmacokinetic studies are conducted to assess properties such as oral absorption, stability within the body, and accumulation. This helps improve not only the effects on the target, but also the medicinal characteristics. Next, the compounds to be further investigated in preclinical studies are nominated.
What is kinase?
A kinase is a key enzyme regulating cell signaling. There are receptor proteins on the cell surface, which like antennas exchange signals between cells. Kinases play the role of transmitter to deliver signals from outside of the cells to inside of the cells to regulate gene expressions in the nucleus. The body is made up of about 60tn cells—mostly proteins—in which there are 518 types of protein kinases. Kinases that add phosphate groups* to these proteins are called protein kinases. Kinases that attach phosphate groups to lipids are called lipid kinases. Kinases in cells are generally interconverted between a phosphorylated state (phosphate groups attached) and unphosphorylated state (phosphate groups not attached). Carna uses the term kinase protein, as the kinase itself is the protein catalyst.
In normal cells, kinases regulate cell proliferation, differentiation, and apoptosis (cell death) by attaching phosphate groups to proteins and lipids depending on upstream signals (stimuli). In abnormal cells such as cancer cells, kinases are over-activated without external stimuli, and keep attaching phosphate groups to proteins, which leads to excessive transmission of signals and aberrant cell proliferation. This dysfunction of kinase activity promotes the aggressive proliferation of cancer cells.
What is a kinase inhibitor drug?
A kinase inhibitor drug is a type of molecular targeted drug (drugs that help suppress specific disease-causing molecules). Among molecular targeted drugs approved for sale are oral forms of small molecule kinase inhibitor drugs—on which Carna conducts drug discovery research and development—and intravenous forms of macromolecular antibodies.Drug prices of macromolecular antibodies are high, as production typically involves cell cultivation and production within cells. This requires costly equipment and complicated processes. Patients are shouldered with burden including having to visit hospitals for injections. In comparison, for small molecule kinase inhibitor drugs, patients with a prescription can take the medicine orally, and chemical synthesis allows for inexpensive production, holding down drug prices. Further, kinase inhibitor drugs selectively bind to aberrant kinases inside cells to suppress enzyme activity, so there are fewer adverse effects compared with conventional anticancer drugs.
Business model
Over half of the company’s overall sales have been allocated to researching and developing new drugs in the Drug Discovery and Development business. Such investments were main reasons why the company continued posting operating losses every year from its founding until FY12/14. Still, the company generates stable cash flow in the Drug Discovery Support business by manufacturing and selling kinase proteins needed for kinase inhibitor research, and providing profiling and screening services to pharmaceutical companies and research institutions. The company allocates cash flow from Drug Discovery Support to Drug Discovery and Development, targeting large future returns from out-licensing drug candidates.
Drug Discovery and Development
Drug Discovery and Development earnings
In FY12/19, the business posted sales of JPY2.1bn and operating profit of JPY577mn, due to the upfront payment received for out-licensing its drug discovery program to Gilead Sciences, Inc. In FY12/20, the business had sales of JPY53mn, comprising an upfront payment received in connection with the out-licensing agreement with BioNova for development and marketing rights of AS-1763 in Greater China, and an operating loss of JPY1.5bn.
Note that in FY12/15, the segment booked sales of JPY615mn for a milestone payment from an out-licensed compound and posted its first operating profit of JPY60mn.
Out-licensing
In Drug Discovery and Development, Carna conducts drug discovery research using its drug discovery technologies. The company out-licenses drug candidates to pharmaceutical companies and receives upfront and milestone payments. Carna receives tiered royalties on the net sales of commercialized out-licensed products.
Drug development process
Preclinical studies: determines whether a drug candidate should proceed to clinical trials involving administration on human subjects
Phase I clinical trials (Phase I): drug administered to a few healthy volunteers or mainly to cancer patients if the drug is for treating cancer
Early Phase II clinical trials (Phase IIa): investigation of effects on diseases and clinical conditions when administered to a few consenting patients
Late Phase II clinical trials (Phase IIb): compares effects when using different dosages and administration methods to a few consenting patients
Phase III clinical trials (Phase III): drug administered to hundreds to thousands of patients to compare with existing medicines; conduct detailed investigations of effects and side effects
Sales following final testing
Note: Area enclosed by the dotted line indicates Carna’s target areas
Compensation for out-licensed drug candidates tends to increase as R&D progresses, demonstrating a higher likelihood that the in-licensing company can bring a new drug to market. In the oncology field, where it is possible to demonstrate efficacy at a fairly early stage, it looks to conduct up to Phase II clinical trials in-house before out-licensing a candidate. In other fields it looks to conduct in-house trials up to Phase I or even preclinical studies, with a view to earlier out-licensing.