Executive summary

Business overview

CanBas Co., Ltd. is a drug discovery company dedicated to research and development into anticancer agents in the field of immuno-oncology. CanBas possesses a proprietary drug discovery platform enabling in-house development of technologies and products through a combination of basic research and clinical research. As an R&D-based drug discovery company, in principle CanBas conducts early-stage (Phase 1-2) clinical trials internally, then out-licenses drug candidates to pharmaceutical companies for late-stage (Phase 2-3) programs requiring heavy expenditure.

CanBas has two major candidate compounds in its pipeline: CBP501 and CBS9106. The company describes the former as an “immune igniter,” while the latter is a reversible XPO1 inhibitor. Although the two have entirely different mechanisms of action, they share an important feature: the ability to selectively kill cancer cells with minimal impact on healthy cells (i.e., effective in reducing side effects), demonstrated both in vivo and in vitro.

CBP501 helps to improve the immunosuppressive tumor microenvironment, creating an environment in which an immune response against cancer is more likely to occur. This mechanism evidently boosts the tumor-specific effects of ICIs and platinum-based anticancer drugs. CBP501 has a notable mechanism of action whereby it selectively enhances the effect of the platinum-based anticancer agents it is combined with and induces immunogenic tumor cell death by promoting the infiltration of effector memory T cells. The company calls CBP501 an “immune igniter.”

With CBP501, which has been found to further enhance the efficacy of immune checkpoint inhibitors (ICI), CanBas seeks to extend survival or even cure end-stage (stage IV) cancer patients who have failed to respond adequately to earlier treatments (e.g., surgery, radiation therapy, and chemotherapy). The advent of ICIs has raised the survival rate for some cancers, leading to heightened expectations of a cure. CanBas conducted a Phase 1b dose expansion study (patient enrollment completed October 2020) of CBP501 and the platinum-based drug cisplatin in combination with the ICI nivolumab (product name: Opdivo, anti-PD-1 antibody), choosing as the expansion cohorts two cancer types that have proven refractory to standard ICI monotherapy (pancreatic cancer and microsatellite-stable [MSS] colorectal cancer).

 Interim analysis of the Phase 1b trial (announced January 9, 2020) showed that there were no issues with tolerability of the triple-drug combination, and CanBas noted signs of efficacy in both pancreatic cancer and colorectal cancer. The company released results from the interim analysis at the American Society of Clinical Oncology (ASCO) annual meeting (May 29–31, 2020). In the Phase 1b dose escalation study, the disease control rate was comparatively high at 41% (7/17 patients). In pancreatic cancer, overall survival (OS) was 5.0 months in the 14 evaluable patients in the dose escalation cohort and expansion cohort combined, and patient enrollment was completed. In colorectal cancer, overall survival (OS) was 14.3 months in the nine evaluable patients in the dose-escalation cohort and expansion cohort combined, and patient recruitment ended in October 2020. 

The preliminary topline efficacy data released in December 2020 indicated that the partial response observed in the dose-escalation cohort could not be obtained in the expansion cohort, but it did demonstrate positive results as a third-line therapy with disease control of 43%, and median overall survival of 5.9 months in patients with normal white blood cell counts.

The company plans to prioritize CBP501 development on the pancreatic cancer indication, and in February 2021, it released a summary of the development plan. In April 2021, the company received approval to start a Phase 2 clinical trial from the US Food and Drug Administration and in October 2021, it opened the first trial facility in the US. CanBas plans to increase the number of facilities to 20 at an early stage to conduct trials for CBP501 as a third-line treatment for pancreatic cancer. The company carried out a Phase 1b clinical trial at three facilities, but by expanding to 20 facilities and covering all patients, it hopes to accelerate patient registration and shorten the trial period. The company thinks that it now has the option to develop CBP501 on its own until just prior to approval. If the company can complete Phase 2 trials at Stage 1 and start Phase 3 trials early, it expects to submit an approval application in 2025 and launch the product between the end of 2025 and 2026. 

With regard to CBS9106, in December 2014 CanBas inked a license agreement giving Stemline Therapeutics, Inc. (unlisted) exclusive rights to develop and commercialize the compound worldwide (initially, the agreement excluded Japan, China, Taiwan, and South Korea, but in August 2018 it was amended to remove these exceptions). Under this agreement, CanBas is paid technical advisory fees amounting to roughly JPY110mn annually, extending through June 25, 2021. Stemline completed a Phase 1 clinical trial of CBS9106 (generic name: felezonexor, Stemline development code: SL-801) in February 2022. CanBas will receive milestone payments from Stemline if CBS9106 advances to a pivotal study*. Longer-term, the company will also receive royalty income on sales once it is commercialized. 

As is evident from the differences in market capitalization, Japanese biotech companies are at a disadvantage to their overseas peers (especially US biotech companies) when it comes to efficiently raising funds via the stock market. If a biotech company is to independently pursue development, approval, launch, and marketing without relying on alliances with pharmaceutical companies, it is best served by establishing a route for efficient fund-raising that ensures investors (especially institutional investors) have a thorough and appropriate understanding of the company’s value.

In September 2021, CanBas issued Series 17 share subscription rights and Series 4 unsecured convertible bonds via third-party allocation. The company will raise about JPY2.0bn through Series 17 rights, which it plans to allocate to Phase 2 and Phase 3 clinical trials for CBP501, basic research, and SG&A expenses. As of end-November 2021, there were 51,368 unexercised share subscription rights (corresponding to 5,136,800 shares) in Series 17 rights. Series 4 bonds are not a new fundraising measure, but the roughly JPY750mn raised will be deployed to purchase and cancel the unconverted portion of Series 3 convertible bonds issued in October 2019, so are effectively refinancing.

CanBas opted for listing on the Growth Market following the April 2022 reorganization of the Tokyo Stock Exchange, but management is striving to bring its market capitalization in compliance with the new listing standards. As of end-FY06/21, CanBas did not meet the listing maintenance standards. To dispel or alleviate concerns over dilution, the company cancelled 342,516 unexercised shares of the Series 15 stock acquisition rights in December 2021 and redeemed and retired some Series 4 convertible bonds (JPY384mn, 1,360,533 shares) in January 2022. 

Trends and outlook

The company is yet to bring a product to market, still at the stage of investment in R&D pertaining to CBP501 and other investigational anticancer compounds. For full-year FY06/21, CanBas reported operating revenue (solely technical advisory fees based on the licensing agreement with Stemline Therapeutics for CBS9106) of JPY108mn (-JPY2mn or 1.0% YoY), an operating loss of JPY547mn (-JPY19mn YoY), a recurring loss of JPY555mn (-JPY18mn YoY), and a net loss of JPY531mn (-JPY41mn YoY). R&D expenses totaled JPY430mn (-JPY11mn YoY) and SG&A expenses were JPY226mn (-JPY8mn YoY).

CanBas has not announced full-year FY06/22 forecasts due to the difficulty of making reasonable forecasts at this stage. The company is aggressively seeking out alliances for CBP501 and other investigational compounds. If these activities result in licensing agreements, the company may receive upfront payments and the counterparties may pay part of the R&D expenses. R&D expenses may also vary significantly in FY06/22 depending on the progress of CBP501, currently undergoing Phase 2 clinical trial. The company says it will promptly make disclosure once it becomes possible to make reasonable forecasts.    

Strengths and weaknesses

Shared Research believes that CanBas’ strengths lie in (1) an anticancer drug pipeline with few side effects; (2) an efficient operation spearheaded by a highly experienced management team and elite group of researchers; and (3) license agreement and alliance with Stemline Therapeutics for pipeline product CBS9106.

Its weaknesses appear to be that: (1) both core pipeline products (CBP501 and CBS9106) have yet to obtain approval; (2) weak financial condition, with net assets of JPY64mn (Q2 FY06/21); and (3) thus far the company has relied largely upon the issue of share subscription rights for fund-raising.

Key financial data

Recent updates

Progress of patient enrollment in Phase 2 study of CBP501 (preliminary figures)

CanBas Co., Ltd. announced preliminary figures for the progress of patient enrollment in the Phase 2 study of CBP501.

CanBas announced that it had enrolled 18 patients, or half of the planned 36 to be enrolled in Stage 1, by May 12, 2022 for the Phase 2 study on CBP501 currently underway in the US. (Note that CanBas is using ITT [intention-to-treat] analysis for this trial, which means that enrollment numbers do not decrease even when patients do not continue treatment.)

The company had expected to reach this target between May and June 2022, and this was achieved slightly ahead of schedule. The primary endpoint of the trial is the rate of three-month progression-free survival, so the trial results of each patient will be determined in a little more than three months after enrollment. The company expects this to have a positive impact on the alliance activities it is currently pursuing with several potential partners, as it will be able to provide more information and improve the accuracy of its forecasts.

The investigational anti-cancer agent and "immune igniter" CBP501 is the most advanced of the company’s pipeline drugs under development. While there are no disclosure requirements, such as timely disclosure, for progress in clinical trials, CanBas believes it is important to disclose any information that would significantly affect investment decisions, and to that end on the first business day of every month it provides an update on trial progress as of the end of the preceding month (US local time).

Monthly progress in Phase 2 study of CBP50

CanBas Co., Ltd. announced monthly progress in the Phase 2 study of CBP501.

CanBas announced the addition of new clinical research sites and progress to date in patient enrollment for the Phase 2 study on CBP501 being conducted in the US. (Note that CanBas is using ITT [intention-to-treat] analysis for this trial, which means that enrollment numbers do not decrease even when patients do not continue treatment.)

The investigational anti-cancer agent and "immune igniter" CBP501 is the most advanced of the company’s pipeline drugs under development. While there are no disclosure requirements, such as timely disclosure, for progress in clinical trials, CanBas believes it is important to disclose any information that would significantly affect investment decisions, and to that end on the first business day of every month it provides an update on trial progress as of the end of the preceding month (US local time).

Company extends joint research agreement with the University of Tokyo

On April 4, 2022, CanBas Co., Ltd. announced the extension of its joint research agreement with the University of Tokyo, as detailed below.

The company announced that it had agreed to a three-year extension of its joint research agreement with the University of Tokyo Hospital. Under the agreement that has been in place since FY03/16, researchers have used the mouse model of pancreatic cancer developed by Professor Hideaki Ijichi of the University of Tokyo Hospital; known for closely mimicking human pancreatic cancer, this mouse model has allowed researchers to evaluate the efficacy of various anti-cancer candidate compounds developed by CanBas under its own R&D program. Joint research efforts use the mouse model of pancreatic cancer mainly to confirm the efficacy and safety of various candidate compounds in both monotherapy and combination therapy.

The company's anti-cancer candidate compounds such as CBP501, CBP-A08, and CBT005 have been shown to help improve the immuno-suppressive tumor microenvironment, and CanBas believes that these compounds may be effective against refractory pancreatic cancers when used in combination with other treatments. While general animal testing of anti-cancer compounds in this manner is not always possible due to the inherent limitations of transplanted cancer cells in mice, the mouse model of pancreatic cancer developed by University of Tokyo Hospital researchers comes very close to replicating the natural onset of pancreatic cancer in humans. Over the six years it has been conducting joint research with the University of Tokyo Hospital, the company has verified the usefulness of these tests and is now in the process of running efficacy tests for its new compound, CBT005.

Several other drug candidate compounds have already been proposed by the hospital, and the company expects that additional research will be conducted that may lead to an expansion of its development portfolio. The company also expects that using candidate compounds with different mechanisms of action from CBP501 as materials for basic research may lead to the development of new combination therapies. While there will be some additional costs arising from this extension over the next three years, the company said the impact of these costs on its near-term financial results are expected to be minimal while the research could lead to meaningful contributions to its profitability and enterprise value over the medium to long term.

Monthly progress in Phase 2 study of CBP50

CanBas Co., Ltd. announced monthly progress in the Phase 2 study of CBP501.

CanBas announced the addition of new clinical research sites and progress to date in patient enrollment for the Phase 2 study on CBP501 being conducted in the US. (Note that CanBas is using ITT [intention-to-treat] analysis for this trial, which means that enrollment numbers do not decrease even when patients do not continue treatment.)

The investigational anti-cancer agent and "immune igniter" CBP501 is the most advanced of the company’s pipeline drugs under development. While there are no disclosure requirements, such as timely disclosure, for progress in clinical trials, CanBas believes it is important to disclose any information that would significantly affect investment decisions, and to that end on the first business day of every month it provides an update on trial progress as of the end of the preceding month (US local time).

Issue of exercise instructions for all remaining series 13 share acquisition rights (paid options)

On March 22, 2022, CanBas Co., Ltd. announced the issue of exercise instructions for all remaining series 13 share acquisition rights (paid options).

Based on the terms of issue of the company's series 13 share acquisition rights, if the price of company shares falls below 60% of the exercise price during the exercise period of 10 years, rights holders must exercise their rights per the company's instructions by the end of the designated exercise period. The exercise price per share based on the exercise instructions is the same as that under the previous exercise instructions (issued August 12, 2021), at JPY377, which is equivalent to 60% of the initially designated exercise price of JPY628. The exercise period is from March 22 to 29, 2022. The closing price of the company's shares on March 22, 2022 was JPY179. CanBas said that its directors' purchase of the company shares at an exercise price substantially higher than the recent market price indicates management's determination to increase enterprise value over the medium to long term. 

The exercise instructions are for all remaining series 13 share acquisition rights covering 46,500 shares. The company will be able to raise about JPY1.7bn from the exercise of the share acquisition rights. The company said that the issue of exercise instructions and subsequent exercise of the share acquisition rights based on the instructions will not have any direct impact on its earnings. 

Monthly progress in Phase 2 study of CBP501

CanBas Co., Ltd. announced monthly progress in the Phase 2 study of CBP501.

CanBas announced the addition of new clinical research sites and progress to date in patient enrollment for the Phase 2 study on CBP501 being conducted in the US. (Note that CanBas is using ITT [intention-to-treat] analysis for this trial, which means that enrollment numbers do not decrease even when patients do not continue treatment.)

The investigational anti-cancer agent and "immune igniter" CBP501 is the most advanced of the company’s pipeline drugs under development. While there are no disclosure requirements, such as timely disclosure, for progress in clinical trials, CanBas believes it is important to disclose any information that would significantly affect investment decisions, and to that end has said that on the first business day of every month it will provide an update on trial progress as of the end of the preceding month (US local time).

Trends and outlook

Quarterly trends and results

1H FY06/22 results (out February 10, 2022) 

Summary

1H FY06/22 (July–December 2021) results

• Operating revenue: JPY0mn (JPY55mn in 1H FY06/21: technical advisory fees from Stemline)
• Operating loss: JPY356mn (JPY329mn loss in 1H FY06/21)
• Recurring loss: JPY359mn (JPY330mn loss in 1H FY06/21)
  
• Net loss: JPY360mn (JPY310mn loss in 1H FY06/21)
  

• R&D expenses: JPY231mn (-14.1% YoY)
• SG&A expenses: JPY125mn (+8.6% YoY)
  

No operating revenue was booked in 1H FY06/22 and operating expenses (R&D + SG&A expenses) totaled JPY356mn (-7.3% YoY). Operating losses narrowed YoY because R&D expenses declined JPY38mn from the previous year. This was mainly because CanBas had conducted Phase 1b for CBP-501 in the previous year, and in Q2 FY06/22 patient recruitment for the CBP501 Phase 2 trial fell slightly behind schedule. The company recorded foreign exchange gains of JPY2.3mn as non-operating income. Under non-operating expenses, it booked interest expenses of JPY3.8mn in regard to the issuance of unsecured convertible bonds, and share issuance cost of JPY1.7mn in regard to the exercise of share acquisition rights. The net loss widened due to an absence of a JPY20mn gain on insurance claims booked in the previous year. 

Pipeline program update

CBP501 (anticancer agent)

An anti-cancer agent (“immune igniter”) obtained from the company’s proprietary screening method (drug target discovery), CBP501 is in the most advanced stage of the company’s pipelines under development. The company has completed Phase 2 clinical studies in non-squamous non-small-cell lung cancer and malignant pleural mesothelioma. Detailed data analysis of these studies has revealed a diverse mechanism of action of the compound related to cancer immunity, tumor microenvironment, and cancer stem cells.

CanBas is conducting a new clinical trial (Phase 1b) concerning CBP501's use in combination with cytotoxic anticancer agent cisplatin and immune checkpoint inhibiting antibody nivolumab, based on previous trial data indicating that the use of CBP501 in combination with immuno-oncology agents could enhance efficacy. The company is in the final stage of the trial, having completed dosing for the second half of the study, which is the expansion cohort stage (target: pancreatic cancer and colorectal cancer). While the company expects the final report from the trial at any moment, it has now initiated a Phase 2 clinical trial. In October 2021, the company opened a new trial site for Phase 2 study in pancreatic cancer. As of end-February 2022, it had enrolled seven patients and had a total of 15 open trial sites. It is conducting final screening for three prospective trial subjects. The company aims to expand the number of sites to 20 by end-FY06/22 to accelerate patient enrollment. 

If Phase 2 patient enrollment progresses smoothly, CanBas looks to have enrolled a total of 18 patients by Apr–May and believes it could get an initial impression of the trial by this summer. Nine trial subjects are planned for each of the treatment groups in stage 1 for a total of 36 patients. An interim analysis is planned once stage 1 had been completed. 

CBS9106 (anticancer agent)

CBS9106, also obtained from the company’s proprietary screening method, is a reversible CRM1 (XP01) inhibitor. In December 2014, the company licensed exclusive worldwide development, manufacturing, and commercialization rights to Stemline in the US. Alliance partner Stemline completed a Phase 1 study in patients with advanced solid tumors to evaluate safety of CBS9106 in February 2022. Stemline views the Phase 1 safety and efficacy data positively and plans to conduct trials of combination therapies next. It is currently considering potential combination drug candidates and target cancer indications. FY06/21 marked the end of technical advisory fees, but the company expects to receive milestone revenue as clinical trials progress, as well as royalties after the drug is launched.

Basic research

In addition to these two pipeline drugs, the company is engaged in exploratory research aimed at discovering new candidate compounds and expanding the development pipeline. Basic research is being done on candidate compounds such as CBP-A08, CBT005 (for which antitumor efficacy data was obtained in mouse studies), and IDO/TDO inhibitors (currently undergoing optimization through joint research with the University of Shizuoka). CanBas is considering advancing CBT005 to preclinical studies based on internal studies that confirm efficacy. 

FY06/22 company forecasts

FY06/22 forecasts have not been disclosed

CanBas has yet to bring any products to market, and remains at the stage of investment in R&D pertaining to CBP501 and other investigational anticancer compounds.

The company is stepping up efforts for an alliance after the launch of the Phase 2 study of CBP501. If these activities result in licensing agreements, alliance partners may pay part of the company’s R&D expenses, or the company may receive upfront payments for new alliances. Furthermore, for the Phase 2 trial on CBP501 that will account for a large proportion of R&D expenses in FY06/22. It is therefore possible that operating expenses could change significantly depending on progress in this clinical trial. For such reasons, the company has not announced its full-year FY06/22 forecasts, citing the difficulty of making reasonable earnings forecasts at this stage. The company plans to announce its forecasts as soon as it has a clearer earnings outlook.

For CBS9106, the company aims to support the development into the next phase of trials by proposing combination therapies, looking to generate milestone revenue at an early stage from the out-licensed drug. When the next clinical trial starts depends on the study design, but management anticipates preparation will take 6–12 months. For projects immediately before the preclinical stage, the company is looking for revenue from forming early alliances and joint research as well as acquiring lead compounds through projects at the basic research stage.

The company believes development of CBP501 has reached a point where the company could opt for independent development through approval without an out-licensing agreement. CanBas looks to complete Stage 1 of Phase 2 by end-2022 and with an early start to Phase 3, expects to submit an approval application in 2025 followed by commercialization in late-2025 or 2026. The company said there was virtually no impact from the COVID-19 pandemic.

Medium-term outlook

Characteristics of drug discovery biotech company

CanBas does not disclose a medium-term business plan or specific numerical objectives, as it has yet to bring any products to market, and remains at the stage of upfront investment in R&D pertaining to CBP501 and other investigational anticancer compounds. For its operating revenue in FY06/22, CanBas does not expect any technical advisory revenue for CBS9106 as the license agreement with Stemline Therapeutics has expired; there is no prospect of any revenues for now. This is by no means uncommon, as most drug discovery biotech companies operate at a loss, with very few generating profits. Indeed, loss-making companies make up a full 70% of US biotech companies (the 160 or so companies comprising the NASDAQ biotechnology index). It is well known that of these companies, most of the top-ranked companies in terms of market capitalization have continued to post losses for a long period while continuing to raise substantial funds from the market to finance development.

CanBas’ evolving approach to drug discovery

The focus of CanBas’ basic approach to drug discovery and development has evolved over time. Whereas the company started out doing research into G2 checkpoint inhibitors, it now concentrates on the immuno-oncology domain.

Focal points for medium term

This report examines CanBas’ medium-term outlook from several different perspectives as listed below, with a particular emphasis on the variables affecting CanBas’ enterprise value as a drug discovery biotech company.

Gauging underlying enterprise value of drug discovery biotech company

As is evident from the differences in market capitalization, Japanese drug discovery biotech companies are at a disadvantage to their overseas peers (especially US biotech companies) when it comes to efficiently raising funds via the stock market. Japanese investors tend to value a drug discovery biotech company’s pipeline on the basis of whether or not alliances have been formed with pharmaceutical companies. It is not rare for news at the discovery level to be widely reported as would be the case if a new drug had been developed. It is worth reiterating that basic research and clinical research are conducted on entirely different levels. After proceeding to the clinical research stage, a drug candidate must undergo rigorous validation in each phase of clinical trials until it is finally approved and launched. The real enterprise value of a drug discovery biotech company is consistently increasing during those processes.

Shift in emphasis from “quantity” to “efficiency”

Currently, a paradigm shift is under way in terms of the key factor underpinning development of drug discovery technologies—namely, from “quantity” to “efficiency.” Whereas large pharmaceutical (mega pharma) companies with an abundance of cash and other resources once dominated the development scene, biotech companies are now assuming a greater role. In the US, it is increasingly common for biotech companies to efficiently raise funds via the stock market and go on to independently develop drugs without relying on alliances with pharmaceutical companies, even taking these drugs right through the approval, launch, and marketing stages. Ideally, Japanese biotech companies similarly should be able to raise the funds they require, based not just on their scale and whether or not they have secured alliances with pharmaceutical companies, but also on a thorough examination of what they offer in terms of science and innovation. When that time comes, the medium-term prospects for CanBas and other drug discovery biotech companies will brighten, advancing the level of pharmaceutical development in Japan.

The company is conducting a prospective study into this calculation methodology, and if it determines that filing for approval is possible, it may include it in its pipeline as an in vitro diagnostic medical device* used in prognosis prediction for chemotherapeutic agents and immune system anticancer agents.

Business

Overview

Business model

Developing both technologies and products in-house

Basic strategy

CanBas Co., Ltd. is a drug discovery company dedicated to research and development into anticancer agents in the field of immuno-oncology. CanBas possesses a proprietary drug discovery platform enabling in-house development of technologies and products through a combination of basic research and clinical research. As an R&D-based drug discovery company, in principle CanBas conducts early-stage (Phase 1) clinical trials internally, then out-licenses drug candidates to pharmaceutical companies for late-stage (Phase 2 and 3) programs requiring heavy expenditure. The company’s basic strategy is as follows.

Formation of Scientific Advisory Board (SAB)

CanBas has assembled a Scientific Advisory Board (SAB) composed of scientists who have abundant experience in the clinical research of anticancer agents, and therefore can be expected to make a contribution to the company’s R&D. The SAB chairman, Professor Daniel D. Von Hoff, has been involved in clinical trials of anticancer drugs for more than 40 years, as a preeminent scientist in the cancer research field who is the past President of the American Association for Cancer Research (AACR) and a past board member of the American Society of Clinical Oncology (ASCO). Chaired by Professor Von Hoff, the SAB typically has met twice yearly since its establishment in March 2002, engaging in face-to-face opinion exchanges and debates over CanBas’ R&D activities in general.

Clinical trial phases

Broadly speaking, the clinical trial stage can be further broken down into three phases: Phase 1, conducted primarily to verify the safety of the candidate compound; Phase 2, performed in a relatively small number of patients in order to judge the drug’s efficacy and safety and determine the appropriate dose and regimen; and Phase 3, intended to evaluate the efficacy of the drug as a pharmaceutical product. Typically, Phase 1 trials are conducted using healthy volunteers. In the oncology field where CanBas operates, however, Phase 1 studies recruit end-stage cancer patients as volunteers, as many anticancer agents produce serious side effects. In many cases, the first half of the Phase 1 trial is used both to verify safety and identify types of cancer appearing to respond to the drug, while the second half is a so-called expansion cohort study dedicated to exploring the drug’s efficacy against these particular cancer types.

Performs both basic research and clinical research

Drug discovery company specializing in R&D into anticancer agents

CanBas is a drug discovery company specializing in R&D into anticancer agents, in possession of several clinical research pipeline compounds discovered via a proprietary drug discovery approach (previously geared toward a focus on the cell cycle and now tailored to a focus on immuno-oncology; development approaches are optimized for each area). CanBas possesses a proprietary drug discovery platform enabling in-house development of technologies and products through a combination of basic research and clinical research. As an R&D-based drug discovery company, in principle CanBas conducts early-stage (Phase 1) clinical trials internally, then out-licenses drug candidates to pharmaceutical companies for late-stage (Phase 2 and 3) programs requiring heavy expenditure.

Drug discovery approach

Development race notable for variety of approaches

Pharmaceutical companies, biotech companies, and university researchers from around the world are pitting their respective strengths and expertise against each other in a bid to commercialize technologies that selectively target cancer without harming healthy cells and tissues. This competition has given rise to various concepts that in turn have caused development to proceed via a number of different approaches. The approach based on targeting specific molecular events in the signaling pathways involved in carcinogenesis (commonly known as molecular targeted therapy), for example, is based on the concept of developing drugs that only act against specific cancer cells and do not affect healthy cells, as is the approach based on antibodies that specifically target antigens expressed by cancer cells. The drug-delivery system (DDS) approach, meanwhile, is based on the concept of preventing anticancer agents from coming into contact with healthy cells. Most recently, the immuno-oncology approach (best represented by immune checkpoint inhibitors) has come to be regarded as a revolutionary approach to drug discovery that may not only extend patients’ lives but also provide hope of a cure.

CanBas’ screening method in its early days, prior to its focus on immuno-oncology

CanBas researchers found that in the majority of cancer cells, the cell cycle (process leading to cell division) differs from normal cells. This led to the development of a phenotypic screening method based on the behavior of living cells (now, the company has switched to a new system to screen for novel immunologic agents, with a focus on immuno-oncology). Both key compounds in CanBas’ development pipeline, CBP501 and CBS9106 (already out-licensed), were developed using the phenotypic screening approach. The two compounds have entirely different mechanisms of action, though, as the former is an “immune igniter” and the latter is a reversible XPO1 inhibitor.

Finding optimal combination with immune checkpoint inhibitor (ICI)

From extending life expectancy to offering promise of a cure

The development of chemotherapy (using traditional anticancer agents) and molecular targeted therapy was geared mainly toward extending the life expectancy in case of stage IV cancer patients by several months. The advent of anti-CTLA-4 antibodies (e.g., Yervoy) and anti-PD-1 antibodies (e.g., Opdivo and Keytruda) changed the face of cancer drug development, bringing about a major paradigm shift. These antibodies are known as immune checkpoint inhibitors (ICIs), and companies around the world are joining the development fray for these cutting-edge therapeutics with proven mechanisms of action. In many types of cancer, around 20% of patients respond to treatment with ICIs, and in immune-sensitive cancers the response rate can be as high as 50% or so when ICIs are used in combination with chemotherapy. Some patients have been shown to survive for several years following treatment, raising hopes of a complete cure. CanBas views this change in focus from extending life expectancy by several months to substantially raising survival rates (i.e., a cure) of stage IV patients, as a paradigm shift in the development of anticancer agents.

A form of cancer immunotherapy with proven efficacy

Whereas chemotherapy (traditional anticancer agents) and molecular targeted therapy target cancer cells themselves, in cancer immunotherapy the idea is to use the patient’s own immune system to attack cancer cells within the body. Unfortunately, most cancer immunotherapies discovered to date have failed to demonstrate efficacy (therapeutic effect). The ranks of cancer immunotherapies demonstrating efficacy in clinical research are thin, and there are only a limited range of drugs available, including immune checkpoint inhibitors (ICIs) that work to release the brakes on the immune response that cancer often uses to escape attack. The types of cancer that can be thus treated are similarly limited. Although ICIs are reported to have fewer side effects than chemotherapy, only a limited range of cancers respond well to ICI monotherapy. As such, development is now focused on using chemotherapy in combination with multiple ICIs with a view to enhancing clinical efficacy while at the same time keeping side effects to a minimum, or alternatively to expanding the range of responsive cancers. CBP501’s mechanisms of action—namely, induction of immunogenic cell death and downward regulation of immunosuppressive M2-type macrophages, are an excellent fit for this line of thinking.

Survival curve illustrates paradigm shift in anticancer drug development

The exhibit below compares “survival curves” (Kaplan-Meier curves) for no treatment, chemotherapy and molecular targeted therapy, and immune checkpoint inhibitors (ICIs), where the vertical axis indicates the survival rate and the horizontal axis indicates the overall survival time. As outlined earlier, the use of chemotherapy and molecular targeted therapy can extend survival time (life expectancy) by several months relative to no treatment, but after that the survival rate is virtually the same as for no treatment, at close to zero. While ICI monotherapy is only effective in a limited number of cancers, it can lift the survival rate and substantially extend overall survival (OS). The ideal future scenario is one in which it is possible to raise the response rate (survival rate) in the types of cancer responsive to ICI monotherapy, and also boost the response (number of survivors) in cancer types believed to respond poorly to ICI monotherapy (e.g., pancreatic cancer and MSS colorectal cancer).

Results from nonclinical trials

In nonclinical (mouse model) studies conducted by CanBas, the combination of CBP501, cisplatin, and an ICI succeeded in suppressing tumor growth and substantially prolonging survival (raising the survival rate).

Cancer-immunity cycle

Cells in the human body become potentially cancerous every day, but such cells are promptly and effectively destroyed (elimination phase). The induction of an immune response against cancer cells, as seen in the elimination phase, is known as the cancer-immunity cycle, comprising the following seven steps: (1) cancer cell death, (2) cancer antigen presentation, (3) priming and activation, (4) trafficking of T-cells to tumors, (5) infiltration of T-cells into tumors, (6) recognition of cancer cells by T-cells, and (7) killing of cancer cells. More specifically, the death of cancer cells (immunogenic cell death) induces a release of tumor-associated antigens (Step 1), which are then presented by dendritic cells and other antigen-presenting cells (Step 2). In Step 3, the priming phase (activation phase), antigen-presenting cells present tumor-associated antigens to T-cells resulting in the priming and activation of T-cell responses. The activated T-cells then traffic to (Step 4) and infiltrate (Step 5) the tumor bed (cytotoxic T-cells, endothelial cell). In Step 6, the cytotoxic T-cells specifically recognize and bind to cancer cells, and in Step 7, following recognition of their cognate antigen, the T-cells destroy and eliminate the cancer cells (effector phase). During Step 3, the priming phase, and Step 7, the effector phase, however, cancer cells can express programmed cell death ligand 1 (PD-L1) on their surface to fend off the T-cell attack.

The role of ICIs in the cancer-immunity cycle is as follows. Anti-PD-1, anti-PD-L1, and anti-CTLA-4 antibodies release the brakes on anti-tumor immunity at Step 3, the priming phase, and PD-1/PD-L1 blockade also is effective at Step 7, the effector phase. In order to raise the efficacy of ICIs, the most logical approach is thought to be the use of these drugs in combination with an anticancer agent that has a different mechanism of action. CanBas believes that when used in combination with a platinum-based drug (cisplatin), CBP501 can play a role at each of the steps outlined in the below figure, helping to create an environment more conducive for ICIs to function.

Cancer immunity now the focus of CanBas’ basic research

With a view to discovering and developing next-generation immuno-oncology drugs, CanBas has (1) begun efforts to flesh out its pipeline of immuno-oncology drugs (such as IDO/TDO dual inhibitors and the CBP-B series), and (2) initiated screening for novel immunological agents (target not disclosed). The company also aims to establish a pharmacological evaluation method for immuno-oncology drugs based on the knowledge gained in the process of fleshing out its pipeline.

Pipeline overview

Two key pipeline drugs

Over the 20 years since its establishment, CanBas has invested approximately JPY10bn in R&D, taking its two key pipeline compounds (CBP501 and CBS9106) to the clinical trial stage, and progressing next-generation pipeline compounds to the lead optimization stage. CBP501 and CBS9106 are both at the clinical trial stage, the former internally and the latter at US-based license-holder Stemline Therapeutics. CanBas also is proceeding with in-house development of two next-generation pipelines, the CBP-A08 series and CBP-B series. With a view to building expertise in the immuno-oncology area and screening for novel compounds, the company furthermore is pursuing joint research on IDO/TDO inhibitors with the University of Shizuoka. CanBas’ development pipeline is described in further detail below.

CBP501

What is CBP501?

CBP501 is a medium molecular weight synthetic peptide composed of twelve D-amino acids. It is the company’s main pipeline compound, identified from the drug discovery approach that CanBas initially employed. CBP501 is a unique type of anticancer agent that regulates the control function exerted by the protein calmodulin over a number of cell functions, displaying anti-cancer activity via several routes. 

In the past, CanBas completed Phase 2 clinical trials investigating CBP501 in combination with the existing anticancer agents cisplatin and pemetrexed in patients with malignant pleural mesothelioma and non-squamous non-small cell lung cancer. Through fresh data gleaned from these trials, the company realized that CBP501’s efficacy could be enhanced through administration in combination with immune checkpoint inhibitors (ICIs).

Mechanism of action

Mechanism of action inducing immunogenic tumor cell death with minimum side effects

Researchers are finding that CBP501 helps to improve the immunosuppressive tumor microenvironment, creating an environment in which an immune response against cancer is more likely to occur, and boosting the efficacy of ICIs and platinum-based drugs. To be more specific, CBP501 enhances the ability of platinum-based drugs to selectively act on cancer cells, inducing immunogenic tumor cell death by promoting the infiltration of effector memory T cells.

“Immune Igniter”

CBP501 helps to improve the immunosuppressive tumor microenvironment, creating an environment in which an immune response against cancer is more likely to occur. This mechanism evidently boosts the efficacy of ICIs and platinum-based drugs. To be more specific, CBP501 has a notable mechanism of action whereby it selectively kills cancer cells (i.e., effective in reducing side effects) and induces immunogenic tumor cell death (that leads to infiltration of effector memory T cells). CBP501 is a unique type of anticancer agent that regulates the control function exerted by the protein calmodulin over a number of cell functions, displaying anti-cancer activity via several routes. While researchers have known for some time that CBP501 has a direct impact on cancer cells, they have discovered that it also enhances anticancer immunity by acting on the calmodulin expressed in macrophages and in cancer cells. CBP501 can thus possibly extend the life expectancy of patients through both of these effects.

Research and development data obtained to date demonstrate the following phenomena due to regulating the action of calmodulin: “promotion of platinum uptake into cancer cells,” “promotion of immunogenic tumor cell death,” and “inhibition of immunosuppressive macrophages.” These actions prompt CD8 T cell infiltration into immune cold cancer tissue, which typically do not have (or have an extremely small number of) CD8 T cells, thereby turning the tissue immune hot and enhancing the efficacy of immune checkpoint inhibiting antibodies. Results of animal studies and clinical specimens also support this hypothesis.

Since the mechanism of action seems to be igniting the immune function, CanBas has coined the term “immune igniter” to describe CBP501’s mechanism of action.

Key functions of CBP501

Calmodulin is present in all manner of cells inside the human body, and is known to mediate transduction of changes in concentration of the calcium (which acts as a ubiquitous intracellular messenger) to other intracellular molecules, much like in the manner of an equalizer used in music. In 2005 or thereabouts, CanBas researchers found that CBP501 acts specifically on cancer cells by promoting the penetration of cisplatin and other platinum-based drugs into cancer cells, through direct contact with calmodulin which then influences the various ion channels it regulates. CBP501’s key functions are as follows.

Increasing platinum influx into cancer cells (Mine, 2011)

Inducing immunogenic cell death of cancer cells (Sakakibara, 2017)

Suppressing activity of M2 macrophages (Mine, 2017)

Reducing cancer stem cell populations (Mine, 2017)

Inhibiting cancer cell migration, invasion and epithelial-to-mesenchymal transition (Saito, 2017)

Reducing activity of immunosuppressive M2-type macrophages

In many cases, macrophages are the largest component of the tumor microenvironment. In the past, they were regarded as “good cells” that attack cancer (M1 macrophages). Since then, however, researchers have discovered a dichotomy in macrophage function, finding that patients with advanced cancer also are host to “bad cells” that suppress immunity and contribute to tumor growth (M2 macrophages). CBP501 not only has a direct impact on cancer cells, as has been known for some time, but also enhances anticancer immunity by acting on the calmodulin expressed in macrophages in cancer cells. Both of these effects contribute to extending the life expectancy of patients. In the tumor microenvironment, macrophages secrete cytokines (IL-6, TNF-α, IL-10) that suppress immune response. By acting on calmodulin, which plays a role in transduction of various signals associated with these cytokines, CBP501 suppresses cytokine production while also reducing cancer stem cell populations.

New understanding of how cisplatin works

It has been known for some time that cisplatin demonstrates efficacy against a range of cancers. Researchers are now learning, though, that cisplatin not only kills cancer cells by damaging DNA, but also demonstrates other anticancer activities as listed below, including immunomodulatory effects (Andreas et al, 2014).

Upregulating major histocompatibility complex (MHC) class I expression

Upregulating the lytic activity of cytotoxic effectors

Promoting recruitment and proliferation of effector cells

Downregulating the immunosuppressive tumor microenvironment (e.g., myeloid-derived suppressor cells [MDSCs] and T regulatory [Treg] cells).

Cisplatin also promotes apoptosis (non-immunogenic cell death) of cancer cells and activates M2 macrophages. By improving on this action (inducing immunogenic cell death* and suppressing M2 macrophages), it is believed that CBP501 can enhance the antitumor activity of ICIs.

Improving the immunosuppressive tumor microenvironment

CBP501 inhibits cancer cell migration, invasion, and epithelial-to-mesenchymal transition partly by blocking the interaction between KRas (a cancer-causing gene) and calmodulin. CBP501 furthermore increases immunogenic cell death, promotes the infiltration of effector memory T cells, and creates an environment in which an immune response against cancer is more likely to occur. These mechanisms evidently improve the efficacy of immune checkpoint inhibitors (ICIs) such as Opdivo, Keytruda and Yervoy.

Improving the efficacy of immune checkpoint inhibitors (ICIs)

When administered as monotherapy, the three types of ICI currently attracting attention have limited efficacy against some cancers, including pancreatic cancer and MSS colorectal cancer. Researchers have identified four functions that they believe could enhance ICI efficacy against these cancers: (1) inhibiting immune checkpoint molecules other than CTLA-4, PD-1, and PD-L1; (2) instead of “releasing the brakes” represented by immune checkpoints, targeting other molecules to “push the accelerator;” (3) increasing tumor immunogenicity; and (4) downregulating immunosuppressive cells in the tumor microenvironment. As a drug that “induces immunogenic cell death” and “inhibits the activity of immunosuppressive M2-type macrophages,” CBP501 is expected to contribute to (3) and (4) above.

“Immune igniter” for conversion to immune hot status

The following CBP501 activities have been gleaned from research and development data obtained to date. First, CBP501 binds to calmodulin and promotes the uptake of platinum agents into cancer cells, thereby inducing immunogenic tumor cell death. It also inhibits immunosuppressive M2 macrophages. These actions prompt infiltration of CD8 T cells in immune cold cancer tissue, which typically do not have CD8T cells, thereby turning the tissue immune hot, and enhancing the activity of immune checkpoint inhibiting antibodies, reducing cancer hepatocytes, and suppressing metastasis/infiltration/epithelial mesenchymal transition. This is the most important anticancer mechanism of CBP501 for cancers resistant to conventional anticancer agents and immuno-oncology therapeutics.

Moreover, this is not just theory, as results from animal studies and clinical specimens has supported the validity of the hypothesis. Accordingly, the company has coined the term “immune igniter” to describe CBP501’s mechanism of action as it seems to ignite the immune response.

Mechanism of immune checkpoint antibodies

Immune checkpoint antibodies (ICI) promote immune function by releasing the brakes on CD8 T cell activation. However, even if tumor cell death occurs, CD8 T cells are not attracted because it is not immunogenic cell death (upper left of following diagram). While ICI release the brakes on T cells activation, insufficient numbers of crucial T cells hamper an effective response (upper right).

Accordingly, coadministration of CBP501 and platinum agents increases immunogenic tumor cell death, which in turn attracts CD8 T cells. It also suppresses activity of immunosuppressive macrophages (lower left of following diagram) while ICIs release the brake on cell activation, exhibiting highly effective anticancer activity (lower right).

History of CBP501 development

Started out as a G2 checkpoint inhibitor

CBP501 began development at the time of the company’s founding, as a cell cycle G2 checkpoint inhibitor. In the course of basic research conducted concurrently, however, the company discovered that CBP501’s actions were not limited to G2 checkpoint inhibition. At the point of commencing clinical studies, CanBas discovered that CBP501 acts on calmodulin at a lower blood concentration than is necessary for G2 checkpoint inhibitor activity, thereby increasing the influx of platinum-based drugs in cancer cells (rarely within normal cells, though). At the cell line level, CBP501 increases platinum uptake in 50–60% of cancer cells (sometimes by as much as 18x, where any increase of 2x or greater is deemed to indicate sensitivity). CanBas administered the first-in-human (FIH) doses in studies investigating CBP501’s ability to enhance the effects of platinum-based drugs, evaluating the safety of CBP501 as monotherapy, as combination therapy with a platinum-based drug (cisplatin), and added on to a two-drug combination of cisplatin plus pemetrexed (two-drug combinations are standard in cytotoxic chemotherapy) to form a three-drug regimen of CBP501 plus cisplatin plus pemetrexed.

Background to formation and dissolution of alliance with Takeda Pharmaceutical

When used in combination with cisplatin, CBP501 demonstrated numerous favorable effects. When evidence of antitumor activity was observed in platinum-resistant ovarian cancer patients, the company proceeded to the Phase 1 study in an expanded cohort of 14 patients, in which CBP501 demonstrated comparable efficacy to that shown by Avastin in early studies in ovarian cancer. Takeda Pharmaceutical came into the picture as the drug was about to advance to further clinical studies, and the two companies formed an alliance. As they were preparing for a trial in malignant pleural mesothelioma, a disease that is strongly linked to asbestos exposure and occurs in approximately 2,500 new cases per year in the US, Takeda suggested that CBP501 also be investigated in cancers with larger potential markets, and the decision was made to initiate another study in (non-squamous) non-small cell lung cancer (NSCLC, which accounts for 60% of all lung cancers). Around that time, however, Takeda acquired Millennium Pharmaceuticals, Inc., following which all projects at Takeda’s oncology division came under Millennium’s jurisdiction. This led to a reprioritization of Takeda’s oncology pipeline and termination of the agreement concerning CBP501. CanBas received a one-time payment consisting of accrued development expenses payable and compensation for the termination, and continued with clinical trials independently.

New insights gleaned from post hoc analysis

The primary endpoint was met in a Phase 2 study in malignant pleural mesothelioma. However, a Phase 2 study in non-squamous non-small cell lung cancer failed to achieve its primary endpoint of extension of progression-free survival (PFS). In post hoc analysis of this open-label trial in 192 patients (randomized in a 1:1 ratio), it was discovered that some patients had a high white blood cell count and life expectancy in these patients was alarmingly short. However, life expectancy was extended by as much as five months in patients with a normal white blood cell count (where an extension of 3.75 months or greater is considered significant). While the post hoc analysis did not attract a pharmaceutical company partner, CanBas worked out the cause for this discrepancy via basic research, published three papers on its findings and applied for two patents.

Interaction with immunosuppressive cells

While on its own cisplatin induces apoptosis (cell death), CanBas discovered that the combination of cisplatin and CBP501 promotes immunogenic cell death. Furthermore, when administered at the site of the primary tumor, anticancer agents activate macrophages (a type of immunosuppressive cell) which then secrete cytokines in large numbers, triggering an immunosuppressive response and increase in cancer stem cells. When CBP501 is co-administered with cisplatin to a patient, it binds to calmodulin and downregulates cytokine production by macrophages. CanBas discovered that by interacting with calmodulin, CBP501 also inhibits cancer cell migration, invasion, and epithelial-mesenchymal transition (EMT).

Excluding patients with high white blood cell counts

In a patent for CBP501 (filed in 2014 and since granted in key markets including Japan, the US, and Europe), CanBas stipulates that CBP501 not be administered to patients with high white blood cell counts (indicating inflammation associated with bacterial infection, or as a response to cancer itself), because in combination with chemotherapy, CBP501 adversely suppresses macrophage function and diminishes life expectancy of these patients. Neutrophils, a type of white blood cells, release neutrophil extracellular traps (NETs) to ensnare and kill pathogens. Macrophage suppression reduces the clearance rate of the released NETs, causing the NETs released by neutrophils to attach to blood vessel walls, contributing to thrombosis formation and clogging the blood vessel.

Change of plan

Upon completion of the Phase 2 studies, CanBas had two options: (1) proceed to Phase 3 studies in platinum-resistant ovarian cancer and malignant pleural mesothelioma, in which CBP501 had demonstrated favorable safety and efficacy; or (2) advance to Phase 3 after conducting a Phase 2b study to see if the primary endpoint of progression-free survival extension could also be met in non-squamous non-small cell lung cancer if enrollment was limited to patients with normal white blood cell counts. If it chose option (1), the company would struggle to attract an alliance partner from among pharmaceutical companies, as with only 2,500 patients newly diagnosed each year in the US, the market for malignant pleural mesothelioma treatments is small. CanBas would have found it difficult on its own to conduct a Phase 3 study requiring enrollment of hundreds of patients (at the very least). Pharmaceutical companies were similarly apathetic toward the idea of challenging the post hoc analysis, and this option also was shelved in the absence of an alliance partner.

CanBas persisted with basic research and came up with a third option after some time. It resolved to independently conduct a Phase 1b study with an entirely new protocol. This third option involves running a Phase 1b study to investigate a three-drug regimen including an immune checkpoint inhibitor (ICI) (CBP501 plus cisplatin plus Opdivo) in cancers that have proven resistant to ICI monotherapy (e.g., pancreatic cancer and MSS colorectal cancer), with a view to advancing to a Phase 2/3 pivotal study. This decision was hastened by the increasing attention being given at that time to ICIs (subsequently, Opdivo demonstrated efficacy in non-small cell lung cancer and won regulatory approval).

Paradigm shift

With studies demonstrating that immune checkpoint inhibitors (ICIs) effectively fight cancer by releasing the brakes of the immune system, there has been a paradigm shift in the development of anticancer agents in which the goal of drug development has veered dramatically from extending life expectancy by several months to substantially raising survival rates even for the advanced cancer patients (i.e., a cure). As CanBas’ basic research points to synergies between CBP501 and ICIs, this paradigm shift has provided the company with an opportunity to start over. In the words of CanBas, CBP501 had been “reborn.” It has been shown that ICI monotherapy is ineffective against the cancer types selected for the Phase 1b study (pancreatic cancer and MSS colorectal cancer). At only a few percent, these cancers have the lowest five-year survival rates of any tumor. This makes it possible to demonstrate efficacy even with enrollment of only a dozen or so patients (the probability of successful commercialization would be heightened even if the drug generated favorable results in just one or two patients), which means that CanBas is able to fund the clinical research on its own. In cancers that have very large patient populations and comparatively high five-year survival rates even when ICIs are administered as monotherapy (e.g., non-small cell lung cancer), demonstrating 10% efficacy improvement would require that CanBas enroll hundreds to a thousand or so patients. This effectively precludes CanBas from independently conducting clinical trials in such cancers.