Delta-Fly Pharma 4598
Delta-Fly Pharma
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37-5 Miyajimanishikino, Kawauchicho, Tokushima, Tokushima Prefecture
Summary
Using its proprietary module technology, pharmaceutical company Delta-Fly conducts R&D into new anticancer agents. Module technology is a unique drug discovery method that takes the active ingredients (modules) of anticancer agents from existing drugs whose patents have expired or whose development was halted due to side effects and combines them to create new drugs with an improved balance of clinical efficacy and safety.
BiotechnologyPharmaceuticals
Key dates
2021-07-30
Coverage initiation
Executive summary
Business overview
Delta-Fly Pharma (Delta-Fly) is a pharmaceutical company that specializes in anticancer agents, using its proprietary “module technology” to undertake R&D into novel cancer treatments. Module technology is a unique drug discovery method that takes the active ingredients (modules) of anticancer agents from existing drugs whose patents have expired or whose development was halted due to adverse effects, and combines them to create new drugs with an improved balance of clinical efficacy and safety. Anticancer agents usually take at least 10 years to develop, but module technology reduces the time frame for basic research, which lowers development risks and shortens the development process through approval to six to nine years. The drugs developed through module technology are patentable as new drugs.
As of end-FY03/21, the most advanced drug in Delta-Fly’s pipeline was the cancer cell cycle regulator DFP-10917, an anticancer drug for treating relapsed or refractory acute myeloid leukemia (AML). A Phase III clinical trial began in the US in April 2019, and Delta-Fly aims to obtain US Food and Drug Administration (FDA) approval in 1H FY03/23 and launch the drug in 2H. In Japan, the company’s partner Nippon Shinyaku Co., Ltd. (TSE1: 4516) initiated a Phase I clinical trial in February 2021. In May 2021, Delta-Fly was notified that DFP-10917 had been assigned the International Nonproprietary Name (INN) of radgocitabine by the World Health Organization’s (WHO) International Nonproprietary Name Expert Group. The company is now in the process of registering a trade name.
The COVID-19 pandemic had resulted in delays to patient enrollment for the US-based Phase III trial of DFP-10917. In order to avoid an extension of the trial duration, the company expanded the number of trial sites to 39, as a result of which the trial had more or less returned to the original schedule (as of end-FY03/21).
Drug pipeline progress: As of end-FY03/21, Delta-Fly had six drugs in its pipeline, five of which were undergoing clinical trials in Japan and the US, while preparations were underway for clinical trials on the remaining one. The company plans to launch a succession of drugs in the coming years. It expects to gain FDA approval for DFP-10917 in FY03/23 and launch in the same year, followed by launches for DFP-17729 (for late-stage pancreatic cancer) in 2H FY03/25, DFP-14323 (for non-small cell lung cancer) in 1H FY03/26, and DFP-11207 (for pancreatic cancer) in FY03/27 or later.
Delta-Fly also intends to capture higher margins by supplying drugs (i.e., finished dosage forms) after launch. Sales royalties on pharmaceutical products tend to be 10–20% of sales under license agreements for both sales and manufacturing rights. However, the company believes it can garner higher margins by outlicensing the sales rights only while retaining the manufacturing rights. This will enable the company to outsource production to major overseas contract manufacturers and supply products to the licensees. Delta-Fly has commented that margins are tracking upward, as the nature of cancer treatments is such that uptake is swift once approval is granted, and there are few to no alternatives.
Earnings trends
In FY03/21, Delta-Fly reported operating revenue of JPY300mn (+200% YoY), operating loss of JPY852mn (operating loss of JPY1.5bn in FY03/20), recurring loss of JPY859mn (recurring loss of JPY1.6bn), and net loss of JPY863mn (net loss of JPY1.6bn). The company received milestone payments of JPY100mn and JPY200mn, respectively, from Nippon Chemiphar Co., Ltd. (TSE1: 4539) and Nippon Shinyaku. R&D expenses came to JPY867mn (-38.0% YoY), due in part to progress in the manufacture of study drugs for the next phases of clinical trials. A Phase III study was ongoing in the US on the cancer cell cycle regulator DFP-10917 as of end-FY03/21. Although almost all medical institutions have been affected by the COVID-19 pandemic, the company has managed to continue patient enrollment for the study by revising the inclusion criteria (hence expanding the study population) and adding trial sites. In Japan, license partner Nippon Shinyaku has initiated a Phase I clinical trial, having submitted a clinical trial protocol to the Pharmaceutical and Medical Devices Agency (PMDA).
For FY03/22, Delta-Fly forecasts operating revenue of JPY100mn (-66.7% YoY), operating loss of JPY1.3bn (operating loss of JPY852mn in FY03/21), recurring loss of JPY1.3bn (recurring loss of JPY859mn), net loss of JPY1.3bn (net loss of JPY863mn), and R&D expenses of JPY1.1bn (+25.7% YoY). The company expects FY03/22 operating revenue to comprise JPY100mn in milestone revenue under its license agreement with Nippon Chemiphar. It also acknowledges the possibility of receiving milestone payments accompanying advances in the development pipeline, and upfront payments associated with new alliances, given that it has multiple anticancer drug candidates in clinical trials. Delta-Fly sees operating expenses totaling JPY1.4bn, comprising JPY1.1bn (+25.7% YoY) in R&D expenses and JPY310mn (+8.7% YoY) in SG&A expenses.
Strengths and weaknesses
Shared Research believes that Delta-Fly’s strengths are quicker development with relatively low R&D expenses enabled by its module technology, patents for all drugs in development as novel substances, and a track record of tie-ups with major pharmaceutical companies. Conversely, the company’s weaknesses are poor recognition of its unique business model based on module technology, which reduces development time and costs, the absence of a commercialization track record, and issues with succession and securing personnel.
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods.
Recent updates
Patient enrollment completed for the Phase II part of Phase I/II study of DFP-17729
On November 12, 2021, Delta-Fly Pharma Co., Ltd. announced completion of patient enrollment for the Phase II part of a Phase I/II study on DFP-17729.
Delta-Fly Pharma announced the completion on November 11, 2021 of patient enrollment for the Phase II part of a Phase I/II study on DFP-17729, its investigational tumor microenvironment regulator.
The Phase II part of the study on DFP-17729 is a comparative study of TS-1 or Gemzar in combination with DFP-17729 (22 patients with end-stage pancreatic cancer) and TS-1 or Gemzar as monotherapy (11 such patients). Patient enrollment took place at six sites in the Kanto Region. Investigators will evaluate the efficacy of DFP-17729 over the next six months, using the results either to file for marketing authorization with the Pharmaceutical and Medical Devices Agency (PMDA), or determine whether a Phase III trial will be necessary.
DFP-17729 is the subject of an exclusive license agreement with Nippon Chemiphar, covering manufacturing and sales in Japan. The company aims to file for approval in 1H FY03/25 and launch in 2H of that year.
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company materials due to differences in rounding methods
1H FY03/22 results (out November 11, 2021)
Summary
1H FY03/22 (April–September 2021) results
Background to higher revenue but lower profits: receipt of milestone payments
In 1H FY03/22 (April–September 2021), Delta-Fly reported operating revenue of JPY100mn (flat YoY), comprising milestone payments under the license agreement with Nippon Chemiphar (TSE1: 4539) for DFP-17729. Operating expenses rose 16.1% YoY to JPY654mn (with R&D expenses rising 12.9% YoY to JPY477mn) due to increases in the number of medical institutions conducting clinical trials on pipeline drugs and in the number of patients enrolled, as well as progress in preparing for new clinical trials. As a consequence, the operating loss expanded YoY to JPY554mn. The company booked non-operating income of JPY200,000 primarily from interest income, and non-operating expenses of JPY2mn consisting mainly of stock issuance expenses. As a result, the recurring loss came to JPY556mn and net loss JPY557mn.
Pipeline status
DFP-10917 (cancer cell cycle regulator)
Delta-Fly made progress in patient enrollment for the Phase III clinical study in the US. Although almost all medical institutions have been affected by the COVID-19 pandemic, the company managed to continue the study by expanding the study population and adding trial sites. In Japan, license partner Nippon Shinyaku (TSE 1: 4516) initiated a Phase I clinical trial.
DFP-14323 (cancer immuno modulator)
Patient enrollment is complete for a Phase II clinical study ongoing in Japan, and the company is conducting follow-up observation to gain clarity on progression-free survival (PFS) and overall survival.
DFP-11207 (cancer cell metabolism regulator)
The company manufactured the study drug as part of preparations for a Phase II trial. It continued to consider conducting trials in Japan, where the impact of the pandemic has been comparatively small.
DFP-14927 (polymeric delivery of DFP-10197)
Delta-Fly proceeded with a Phase I clinical trial in the US, demonstrating safety through dosage stage 4 and proceeding to stage 5.
DFP-10825 (oligonucleotide therapeutics delivery)
The company manufactured the active pharmaceutical ingredient for the study drug and undertook preclinical studies with a view to initiating a Phase I study in Japan.
DFP-17729 (tumor microenvironment regulator)
Delta-Fly initiated a Phase I/II study in Japan in pancreatic cancer patients, and completed patient enrollment for the Phase I part of the study. The company continued to enrol patients for the Phase II part of the study.
Note: The company mainly expects sales royalties from the outlicensing agreements.
Full-year company forecasts
Note: Figures may differ from company materials due to differences in rounding methods.
FY03/22 full-year company forecast (out May 14, 2021)
The company expects FY03/22 operating revenue to consist of JPY100mn in milestone revenue under its license agreement with Nippon Chemiphar for DFP-17729 (already received in Q1). It also acknowledges the possibility of receiving milestone payments accompanying advances in the development pipeline, and upfront payments associated with new alliances, given that it has multiple anticancer drug candidates in clinical trials. However, the company made no change to the earnings forecast as of its 1H results announcement.
Delta-Fly sees operating expenses totaling JPY1.4bn, comprising JPY1.1bn (+25.7% YoY) in R&D expenses and JPY310mn (+8.7% YoY) in SG&A expenses. As of end-Q1 FY03/22, the company was conducting two clinical trials in the US. In FY03/22, it plans to enroll more patients for the DFP-10917 Phase III clinical trial and complete the Phase I trial for DFP-14927, before transitioning to an expansion study. In addition, Delta-Fly and Nippon Chemiphar will continue with the DFP-17729 Phase I/II study ongoing in Japan, undertaking patient enrollment for the Phase II part of the study.
Shared Research believes additional costs could be incurred as Delta-Fly might start an expansion Phase I study for DFP-14927 and a Phase II study for DFP-11207 in FY03/22 while the COVID-19 crisis has also delayed clinical trials. Moreover, the company noted that results of the outcome survey will likely be finalized around February 2022, and that it will conduct licensing activity mainly in Europe and the US based on the results of the outcome survey.
Historical performance versus initial company forecasts
Note: Figures may differ from company materials due to differences in rounding methods.
In FY03/21, the company received a total of JPY300mn in milestone payments from Nippon Shinyaku (upon commencement of the Phase I study on DFP-10917) and Nippon Chemiphar (upon initiation of the Phase I study on DFP-17729).
Medium-term management plan
Delta-Fly has not released either a medium-term management plan or quantitative targets for the medium term. The company has cited as reason the fact that it is not yet at the stage of generating stable profits through product sales, as it remains a drug discovery start-up developing novel anticancer agents with a view to launching. It has also commented that at this juncture its revenue consists mainly of upfront payments upon concluding license agreements, along with subsequent milestone payments.
Drug discovery pipeline progress
Delta-Fly believes that its most important tasks over the medium and long term are to steadily advance development of novel anticancer agents in its pipeline, to seek out alliance partners and enter into license agreements, and to generate steady income from product sales once approval is granted. As of May 2021, Delta-Fly had six drugs in its pipeline, five of which were undergoing clinical trials in Japan and the US. Preparations were underway to start clinical trials for the remaining one.
Among the six pipeline drugs, DFP-10917 and DFP-17729 are the subject of license agreements with Nippon Shinyaku and Nippon Chemiphar respectively.
First priority is to launch DFP-10917 (INN: radgocitabine)
Delta-Fly’s immediate focus is to obtain US Food and Drug Administration (FDA) approval for and launch its first pipeline drug, DFP-10917. DFP-10917 is an anticancer agent for treating relapsed or refractory acute myeloid leukemia (AML), and its launch is much anticipated as it will be the first drug with indications for relapsed AML. However, the protocols for the US-based Phase III clinical trial had to be revised while preparations for the trial were being made, due to the approval of venetoclax—the first new drug approved in the US in 20 years for treatment of new-onset leukemia. The protocols were revised because additional comparison tests became necessary following the approval of venetoclax, and not because there was an issue with DFP-10917 itself. As a result, the start of the Phase I clinical trial to be conducted by the company’s partner Nippon Shinyaku in Japan was delayed.
Delta-Fly thinks that the Phase III clinical trial in the US, which began patient enrollment in November 2019, may be completed in FY03/22 if all goes smoothly, despite some impact from the COVID-19 outbreak. After data analysis and an application filing, the company expects to obtain approval from the FDA and launch the drug in FY03/23. In February 2021, Nippon Shinyaku initiated a Phase I clinical trial in Japan.
Plans to launch succession of drugs in coming years
Delta-Fly has five pipeline drugs in addition to DFP-10917 and plans to launch a number of them in coming years. It expects to gain FDA approval for DFP-10917 in FY03/23 and launch in the same year, followed by launches for DFP-17729 (for late-stage pancreatic cancer) in 2H FY03/25, DFP-14323 (for non-small cell lung cancer) in 1H FY03/26, and DFP-11207 (for pancreatic cancer) in FY03/27 or later.
In order for Delta-Fly to proceed with R&D, it needs funds to strengthen its R&D infrastructure and to continue investing heavily in development. The company says it may be able to use the revenue generated from launching DFP-10917 to fund subsequent pipeline drug development on its own, and thereby avoid fundraising risk. As of end-FY03/21, Delta-Fly had zero interest-bearing debt. As fixed costs alone amount to around JPY1.0bn annually, the company should be able to fund around two years of R&D with its JPY2.1bn in cash and deposits as of end-FY03/21.
Intends to capture higher margins by supplying drugs (finished dosage forms) after launch
Sales royalties on pharmaceutical products tend to be 10–20% of sales under license agreements for both sales and manufacturing rights. However, the company believes it can garner higher margins (30–40%) by outlicensing the sales rights only while retaining the manufacturing rights. This will enable the company to outsource production to major overseas contract manufacturers that can manufacture quality products at low cost, and then supply the products to its license partners. As a fabless company, though, Delta-Fly must rely on the contract manufacturers not just for manufacturing equipment, but also for everything from basic research through to production technology, stable supply, and quality control. In the event of unforeseen adverse effects, though, manufacturing responsibility lies entirely with Delta-Fly, as the client. To prepare for such a contingency, the company has taken out insurance to cover product and other liabilities.
Business
Business model
Development of anticancer agents that place minimal burden on patients
Delta-Fly is a drug discovery startup that specializes in anticancer agents, using its proprietary “module technology” (described in more detail below) to undertake pharmaceutical R&D. It aims to develop anticancer treatments that place a minimal burden on patients, both physically and financially. Current president Kiyoshi Eshima established the company in December 2010 in Tokushima, gathering a team of colleagues with over 20 years’ experience in anticancer agent development.
The three main types of standard treatment for cancer are chemotherapy using anticancer agents, surgery, and radiation therapy. These are used either individually or in combination, depending on the cancer type and stage.
Anticancer agents utilize substances that are toxic to cancer cells, to arrest cancer cell proliferation by restricting cell division and preventing generation of substances critical to cancer cell growth. Anticancer agents accordingly also have effects on healthy cells, resulting not only in subjectively perceived adverse effects such as nausea, mouth ulcers, peripheral neuropathy, and hair loss, but also in adverse effects that are only detected via testing, such as leukopenia (low white blood cell count) and liver function disorders. All of these impose a burden on the patient’s body. Delta-Fly is using its proprietary module drug discovery technology to perform R&D into new drugs it hopes will lessen adverse effects.
R&D into new drugs using module technology
Module technology
Module technology is a unique drug discovery technique that combines components (modules) that comprise active ingredients in existing drugs to create new anticancer agents with an improved balance of clinical efficacy and safety.
Delta-Fly develops new drugs that have equivalent efficacy but fewer and less severe adverse effects compared with off-patent drugs or anticancer agents (whose development was halted due to adverse effects) by combining their active ingredients. All base drugs being used require almost no basic research because either they are already in use as drugs, or the reasons as to why their development was halted are evident (i.e., data is available for failed clinical trials). Delta-Fly also resolves problems with existing anticancer agents by adjusting their dosage and methods of administration to expand indications to other forms of cancer or reduce adverse effects.
The company looks for compounds that were not fully utilized due to strong adverse effects despite efficacy or those that did not reach the regulatory approval stage. If these compounds appear to have potential for improved safety without losing efficacy, the company attempts to alter their chemical structures. The work up to this point is handled in-house, but all subsequent processes are outsourced to contract research and manufacturing organizations (CROs and CMOs, respectively). Delta-Fly also applies many and varied approaches aside from modifying the chemical structures of modules. These include reviewing indications, adopting drug delivery systems (DDS*), and tweaking administration methods and dosages.
The company president Kiyoshi Eshima and other anticancer drug experts exchange ideas regarding module technology during weekly meetings that connect offices in Tokushima, Tokyo, Canada, and China. The company does not merely concentrate on finding the means to shrink tumors but rather develops drugs from the perspective of what is good for the patient.
Modules to create ideal drugs
Modules in the original sense of the word are interchangeable, highly functional components that make up hardware or software. In module technology, Delta-Fly chooses suitable drug components—proprietary or otherwise—that can bring to reality the idea of “anticancer agents that place minimal burden on patients” (the company’s ideal), then combines them, and makes solid improvements applying clever techniques. Its aim is to develop affordable anticancer drugs with few adverse effects, allowing them to be used with peace of mind.
Shorter development period and lower R&D expenses
With module technology, it is possible to shorten the development period by up to ten years versus typical drug development processes. Because Delta-Fly focuses on resolving issues in existing anticancer agents, there is a high likelihood that it will obtain favorable results in clinical trials. According to the company, success rates of anticancer drug discovery are typically in single digits, but success rates from basic research using module technology have been higher, at roughly 50–70%.
Unlike generic drugs, Delta-Fly’s pipeline products developed under module drug discovery methodology are new compounds, and are patented as new drugs. Even if the patents covering substance rights for existing compounds have expired, it is possible to apply for a new-use patent, which the company can hold for 20 years. The company also applies for international patents under the Patent Cooperation Treaty covering some 30 countries worldwide. The company has applied for and obtained patents in key countries for all six pipeline drugs under development.
Clinical trials overseas
Delta-Fly is conducting clinical trials in both the US and Japan. Clinical trials of new drugs cost less in the US than in Japan, and it is relatively easy to enroll patients with rare diseases in the US. Clinical trials in Japan are shorter for new drugs already approved in the US, so the company hopes to launch these drugs sooner. The company is considering clinical trials in China similar to those it conducts in the US.
Out-licensing sales rights while retaining manufacturing rights
According to Delta-Fly, if it retains the manufacturing rights, despite having a sales agreement with a partner, it will be able to continue manufacturing drugs after launch. By contracting R&D and manufacturing to several major Asian and US contract research and manufacturing organizations (CROs and CMOs) that are familiar with FDA approval standards, the company should be able to secure high margins after launch. The DFP-10917 contract with Nippon Shinyaku is for sales rights in Japan only.
Background to promoting module technology
In general, pharmaceutical R&D comprises basic research including searches for drug discovery seeds; preclinical studies using animal models to gauge the efficacy and safety of the compounds thus discovered; and clinical trials where the compounds are administered to humans—healthy volunteers and patients—to confirm efficacy and safety. Huge amounts of data concerning the product’s quality, efficacy, and safety are then used as basis for an approval filing with various countries’ regulatory authorities. Only when these authorities have conducted a review and granted approval can a product launch. This is a lengthy process that can take 10 to 15 years, costing billions or even tens of billions of yen. Moreover, during this period there is every possibility of development being halted due to reasons such as change in the external environment or failure to obtain the desired results.
It usually takes nine to 17 years from basic research into compounds that act on cancer until regulatory approval. It normally takes two or three years to conduct basic research including searching for drug discovery seeds and testing drug candidate toxicity. Module technology requires almost no basic research, since it involves chemical compounds whose safety and efficacy have already been confirmed in humans, and that have been used in the past. While toxicity testing is essential for any new drugs, according to Delta-Fly it is possible to enter the preclinical study stage within roughly one year of starting development. Results of preclinical studies conducted to confirm the efficacy and safety of drug candidates can be extrapolated from prior studies. Further, development starts with a focus on resolving known issues with the drug, so adverse effects are known, and there is therefore reduced development risk, such as failure during clinical trials. This shortens the time spent on development, and Delta-Fly believes the process from drug discovery through approval will take six to nine years using module technology.
Note: Norm refers to regular pharmaceutical R&D process
Four forms of revenue in near term
As of end-Q1 FY03/22, Delta-Fly had six pipeline drugs, but none had been launched yet. In the near term the only source of revenue is payments from tie-up pharmaceutical companies.
In general, revenue moves progressively from (1) upfront payments when alliance agreements are inked, to (2) milestone payments accompanying pipeline progress (such as when clinical trials are initiated), (3) development support payments, and (4) royalties proportional to sales once the product launches.
Note: Figures in parentheses show usual duration of drug discovery and development
Revenue to date
In FY03/15 and FY03/16, Delta-Fly received milestone payments from Kyowa Chemical Industry Co., Ltd. (unlisted) based on a license agreement between the two for DFP-14323. In FY03/17, of the company’s six pipeline products, Delta-Fly had an agreement for DFP-10917 with Nippon Shinyaku and for DFP-14323 with Kyowa Chemical Industry, receiving a total of JPY700mn in upfront payments. In the same year, the company also received roughly JPY200mn in development support payments from Yakult Honsha Co., Ltd. (TSE1: 2267). In FY03/18, Delta-Fly received JPY150mn in milestone payments for DFP-14323 from Kyowa Chemical Industry.
Delta-Fly had expected to receive a milestone payment of JPY200mn from Nippon Shinyaku in FY03/19 for the initiation of a Phase I clinical trial of DFP-10917 in Japan, but the delayed start of the US-based Phase III clinical trial postponed the start of the Japanese trial. As a result, the company booked no operating revenue in FY03/19. In FY03/20, it received an upfront payment of JPY100mn after signing an exclusive license agreement with Nippon Chemiphar covering DFP-17729 manufacturing and sales in Japan. In FY03/21, Delta-Fly received a milestone payment of JPY200mn when Nippon Shinyaku initiated a Phase I study on DFP-10917 in Japan, and a JPY100mn milestone payment from Nippon Chemiphar for DFP-17729.
Delta-Fly said it basically does not enter partnerships such as license agreements in the early stages of clinical trials. For DFP-10917, the company is looking for partners in markets outside Japan among European, US, and Asian pharmaceutical companies in conjunction with progress in the US-based Phase III clinical trial. With other pipeline compounds, the company believes that early outlicensing could in fact hinder development. Any thought of alliances will accordingly take into consideration the development stage.
Pipeline
Note: The company mainly expects sales royalties from the outlicensing agreements.
As of end-Q1 FY03/22, clinical trials were ongoing in Japan and the US for four of the company’s six pipeline drugs. Preparations were underway to start clinical trials for another two. DFP-10917 was at the most advanced development stage.
DFP-10917 (radgocitabine): cancer cell cycle regulator
Pipeline drug closest to launch
DFP-10917 is an anticancer drug administered by continuous infusion with an indication for relapsed or refractory acute myeloid leukemia (AML). Through continuous intravenous infusions in low doses over an extended period of time, this new deoxycytidine derivative is taken up by the DNA in cancer cells and induces apoptosis (cell death) by causing DNA strand breaks. Delta-Fly expects DFP-10917 to prove effective in patients who have not responded to existing chemotherapies, as its mechanism differs from the nucleic acid derivatives (such as cytarabine* and gemcitabine**) that have traditionally been used.
DFP-10917 has been shown to be effective against AML, a disease that starts when immature blood cells (e.g., white blood cells, red blood cells, and platelets) become cancerous. First-line treatment of AML is usually chemotherapy, which is effective in 80% of patients. Only around 30% achieve complete remission, though, and chemotherapy eventually loses efficacy against the remainder, who are classed as having relapsed or refractory disease. Delta-Fly is developing DFP-10917 specifically to target patients with relapsed or refractory AML.
The base compound for DFP-10917 is a drug originally developed for colorectal cancer by Taiho Pharmaceutical Co., Ltd. (unlisted), a consolidated subsidiary of Otsuka Holdings Co., Ltd. (TSE1: 4578). The drug was not approved as it was ineffective on solid tumors and caused strong adverse effects in large doses. Delta-Fly thought the drug might be applicable to leukemia because there were some responses in blood samples of animal models.
DFP-10917 has been shown to be effective in treating patients with relapsed or refractory AML who do not respond to standard treatments. The company made changes to the conventional route of administration and tried low-dose, continuous IV infusions over extended periods (14 days, 24 hours a day). A Phase I/II clinical trial was conducted in the US. In the Phase I part of the study, efficacy was demonstrated in seven of 10 patients, indicating that low-dose, continuous administration over an extended period was effective. In the Phase II part of the study, complete response was observed in 14 of 29 patients, with the disappearance of all signs of cancer. The high 48.3% overall response rate (complete response + partial response) demonstrated efficacy of the drug.
As of end-Q1 FY03/22, a Phase III study of DFP-10917 was ongoing in the US. In Japan, alliance partner Nippon Shinyaku initiated a Phase I study after obtaining approval from the PMDA in February 2021.
Note: Changes have been made to dosage and administration, not to chemical structure. Application has been filed for method-of-use patent.
Start of Phase III clinical trial delayed
While preparations were underway for a Phase III clinical trial, venetoclax, the first new drug for new-onset AML in 20 years, was approved in the US. As a result, the company had to delay the start of the Phase III trial, since it had to partially amend the trial protocol based on the new treatment system. Delta-Fly resubmitted the protocol to the FDA, and in April 2019 began preparations to enroll patients for the Phase III study. The trial was registered at the clinical trial registration site of a US public institution, and patient enrollment started in November 2019. There were only 29 patients in the Phase II part of the Phase I/II study, but the company aims to enroll 450 for the Phase III study. In FY03/20, it expanded the study population and the number of clinical trial facilities.
In Japan, Delta-Fly has a partnership agreement with Nippon Shinyaku. The delay in the US-based Phase III trial also delayed the start of a Phase I trial in Japan, so the company did not receive the JPY200mn milestone payment it expected in FY03/19, hence posting no operating revenue. The Phase I study in Japan commenced in FY03/21, and the company received a milestone payment as a result.
Impact of COVID-19 pandemic
Initially, the US Phase III study of DFP-10917 was conducted at 20 sites. Patient enrollment was slower than planned, in part because some patients and staff were unable to come to hospitals due to lockdowns aimed at containing the spread of COVID-19. According to Delta-Fly, five trial sites completely halted patient enrollment at one point, another five sites experienced some delays, and the remaining ten sites were able to continue enrollment at about 80% of the expected pace. To avoid prolonging the trial, the company increased the number of participating facilities to 39 and said as of end-March 2021 the trial was more or less back on schedule as a result.
Endpoint of Phase III clinical trial
Delta-Fly plans to increase patient enrollment for the US Phase III study. In the US at present, the drugs used as standard therapy for relapsed or refractory AML are believed be effective in only about 10% of cases. Delta-Fly had thought the FDA might grant fast-track approval if the complete response rate of 21% for DFP-10917 in the Phase II study could be sustained over a certain time frame. This would have also raised the likelihood that complete responses in 150 patients would be the endpoint. In that case, Delta-Fly thought R&D expenses for the Phase III trial would be about JPY1.5bn. The trial was prolonged by the pandemic, but the company has worked hard to ensure no additional costs and believes investment in the study will be more or less as originally planned. Delta-Fly had already secured the funds for development through its October 2018 listing.
Earnings impact
According to the Surveillance Epidemiology and End Results (SEER) program of the National Cancer Institute, there were an estimated 20,240 new AML cases in the US in 2021. Guidelines from the Japanese Society for Transplantation and Cellular Therapy (JSTCT) suggest that about 30% of new-onset AML patients are cured with standard treatments, but 70% have recurrence. In Japan, the US, and Europe, there are tens of thousands of relapsed or refractory AML patients yearly (15% refractory, 55% relapsed), and according to Delta-Fly, the number of people dying from AML each year numbers around 10,000 in Japan, 30,000 in the US, 30,000 in Europe, and 20,000 in China, more than 85% of whom are aged 65 or over. The company expects annual sales for DFP-10917 to peak at about JPY100bn for Japan, the US, and Europe combined. Shared Research believes that sales could be several multiples of this if the drug was also used in conjunction with other therapies in new-onset cases.
The company plans to file a New Drug Application (NDA) with the FDA in 1H FY03/23, with a view to launching DFP-10917 in 2H FY03/23. It received a milestone payment from Nippon Shinyaku upon the latter’s initiation of a Phase I clinical trial in Japan in FY03/21. The company says it has started partnership negotiations with multiple overseas pharmaceutical companies regarding license agreements in markets outside Japan. It may receive upfront payments depending on the progress of these discussions.
DFP-14323: Cancer immuno modulator
Aimed at finding new indications for ubenimex
DFP-14323 is an oral anticancer agent indicated for non-small cell lung cancer (NSCLC). Its base is ubenimex (UBX), a drug already approved for treating acute non-lymphocytic leukemia after demonstrating safety and improved immune function in cancer patients. Delta-Fly took note of this drug’s ability to enhance immune response against tumors and effectiveness in suppressing cancer stem cells. For the purpose of improving cancer patients’ immune function, the company reduced the dose below normal levels and administered the drug either as monotherapy or in combination with another drug (e.g., an anticancer agent or molecular targeted therapy). The drug is expected to be used to treat terminal or elderly lung cancer patients, who have a depressed immune function and are not responding adequately to standard chemotherapy.
As ubenimex is already approved, Delta-Fly was able to skip the basic research stage and start development from a Phase II clinical trial. The company was developing the drug in collaboration with Kyowa Chemical Industry, with which it signed an exclusive license agreement for DFP-14323 in Japan in April 2016. Due to internal circumstances at Kyowa Chemical Industry, though, the license agreement was terminated in November 2020. Delta-Fly then single-handedly filed with the PMDA for marketing approval of a ubenimex “generic.” Following evaluation of progression-free survival (PFS) and overall survival (OS) data, it plans to apply to the PMDA for approval of ubenimex “with expanded indications.” DFP-14323 is the development code for obtaining approval both for ubenimex with expanded indications and ubenimex as a new drug.
The Phase II study in Japan is targeted at Stage III and IV epidermal growth factor receptor (EGFR) mutation positive NSCLC patients. In order to speed up patient enrollment, Delta-Fly increased the number of clinical trial sites from one to nine core hospitals across the Kansai region. By end-March 2020 it had completed enrollment of the planned number of patients. The disease control rate*1 (DCR) for all enrolled patients (40% of whom had brain metastases) was 100%, significantly exceeding the 87% response benchmark needed to move to Phase III trials. Moreover, the overall response rate*2 (ORR) was 65.4%. Delta-Fly will decide on the Phase III study protocol following evaluation of PFS*3 and OS*4. It announced detailed clinical trial data via a poster presentation at the ESMO (European Society for Medical Oncology) ASIA CONGRESS 2020 held in Singapore in November 2020.
The Phase III clinical trial (large-scale comparative study) will target patients with Stage III/IV advanced NSCLC and compare the use of afatinib (a molecular targeted therapy*) and the use of DFP-14323 in combination with a half dose of afatinib. The company is in license negotiations with a Chinese pharmaceutical company that has previously expressed interest in joint development. Replacing the molecular targeted therapy used in the combination regimen with a new drug (afatinib) has extended the trial timeframe from the initial schedule. However, Delta-Fly plans to file for approval in Japan by 2H FY03/25 for the additional indication of lung cancer, with an eye to launching in 1H FY03/26.
Delta-Fly already had patents for DFP-14323 (both as a monotherapy and as a pharmaceutical composition including a molecular targeted cancer therapy) in Japan, the US, Russia, Australia, South Korea, and Taiwan, and this was followed by Europe in May 2020. Based on the discovery that DFP-14323 may be effective as a treatment for NSCLC patients with brain metastases (DFP-14323 has extremely high oral absorption as an amino acid-like, low-molecular-weight substance with excellent biomembrane permeability), the company submitted an international patent application to the member nations of the Patent Cooperation Treaty (PCT) in July 2020.
DFP-11207: Cancer cell metabolism regulator
Fewer adverse effects than base drug
DFP-11207 is an oral anticancer agent developed by combining three modularized active substances in order to control the pharmacokinetics of 5-fluorouracil (5-FU)* cancer drugs. It is indicated for pancreatic cancer, gastric cancer, colorectal cancer, and other digestive system solid tumors. DFP-11207 has a very low incidence of platelet count declines and other adverse effects seen in 5-FU anticancer formulations, enabling continuous administration over the long term. At a certain dose the drug can be safely administered continuously, without the need for a withdrawal period, or for calculation of the amount of drug required per square meter of body surface area (BSA). It is therefore expected to have a life-extending effect and improve cancer patients’ quality of life (QOL). Delta-Fly believes that DFP-11207 could be effective in preventing recurrence in post-operative cancer patients.
A Phase I dose escalation study in the US (initiated in July 2014, in patients with solid tumor, including those with pancreatic cancer) had been completed. There were no reports of platelet count declines and the drug was deemed pharmacologically effective. A subsequent food effect study similarly demonstrated safety, and results from this study were presented at a US academic conference and published in a US academic journal dedicated to cancer treatment.
In FY03/20, Delta-Fly manufactured the active pharmaceutical ingredient and study drug as part of ongoing preparations for a Phase II trial targeting pancreatic cancer and gastric cancer. However, the company is considering limiting the trial to pancreatic cancer patients and conducting it in Japan, as the COVID-19 pandemic has had a smaller impact there than in the US, where the study was originally to be conducted. The trial accordingly looks likely to take longer than initially expected, and the company now aims to apply for approval for and launch the drug in FY03/27 or later.
Delta-Fly already had substance patents for DFP-11207 in Japan, the US, 20+ European countries, Russia, China, South Korea, Australia, and Taiwan. However, the drug was sensitive to humidity and unstable, so the company focused on improving the formulation technology, and succeeded in developing a stable formulation. In April 2021, Delta-Fly filed a patent application for a stable pharmaceutical composition with the member nations of the Patent Cooperation Treaty (PCT) and in Taiwan. The Japan Patent Office granted a patent for Japan in September 2021.
The base drug for DFP-11207, TS-1, was first approved in Asia, and according to Delta-Fly a Chinese pharmaceutical company is interested in obtaining the license.
DFP-14927: Polymeric delivery of DFP-10197
Once-weekly DDS for DFP-10917
DFP-14927 is an intravenous anticancer drug with indications for solid tumors and blood cancers. It is a compound made by functionalizing DFP-10917 through binding the substance with polyethylene glycol. The mechanism entails DFP-10917 being released by amidolytic enzymes in cancer cells. Whereas DFP-10917 needs to be administered for 14 consecutive days using a pouch for continuous intravenous injection, DFP-14927 is administered intravenously on a once-weekly basis.
The company’s joint development partner, Sanyo Chemical Industries, Ltd. (TSE1: 4471), has been a shareholder since before Delta-Fly’s listing. The polyethylene glycol that Sanyo Chemical Industries produces under the trade name Macrogol has low toxicity, and is listed in the Japanese Pharmaceutical Excipients drug addendum as a tablet coating agent, among other uses.
In January 2019, the US FDA completed a safety review, and the substance obtained Investigational New Drug (IND) approval. In October 2019, the company began a Phase I clinical trial which included an expansion study corresponding to an early Phase II study targeting pancreatic and other gastrointestinal cancers. The clinical trial facility located in Texas (University of Texas MD Anderson Cancer Center) temporarily stopped enlisting patients due to the spread of COVID-19, but has resumed enrollments with just a slight delay. The company secured new trial sites in order to reduce the delay, and with the addition of two more cancer centers in the US, the expansion part of the study commenced in April 2021.
Upon completion of the Phase I clinical trial in solid tumors, Delta-Fly plans to initiate a Phase I study in FY03/23 in patients with myelodysplastic syndromes (MDS), who may go on to develop AML, against which DFP-10917 has proven effective. The company has not clarified when it plans to submit an approval filing for and launch DFP-14927, due in part to the delays affecting the Phase III study for the active substance DFP-10917.
DFP-10825: Oligonucleotide therapeutics delivery
Oligonucleotide therapeutics using RNAi*
DFP-10825 is an anticancer drug administered intraperitoneally, with indications for peritoneal dissemination of metastatic cancer including gastric and ovarian cancer. Peritoneal dissemination refers to cancer cells being scattered in the peritoneal cavity due to the progress and metastasis of primary cancer originating from abdominal organs such as the stomach, liver, pancreas, colon, kidney, or ovaries. It is classified as stage IV.
Oligonucleotide therapeutics target ribonucleic acid (RNA), preventing the generation of proteins that cause cancer, thereby suppressing the expression of abnormal genes as well as cancer aggravation and metastasis. They have few adverse effects and appear to be a promising option for eradicating cancer, but an issue is the difficulty of delivery to the interior of cancer cells because oligonucleotide therapeutics decompose readily and rapidly in the body.
Delta-Fly noticed this and looked for a way to improve effectiveness by changing the route of administration. On the assumption that direct administration inside the abdominal cavity might be the answer, it commenced preclinical studies. As shown in the following photograph, an animal study in mice demonstrated that direct administration inside the abdominal cavity was indeed effective. At one point, though, Delta-Fly was forced to suspend the preclinical studies, owing to difficulty securing animal models (monkeys) from Wuhan, China, because of the COVID-19 pandemic. Once the spread of infection had been contained in Wuhan the company resumed the preclinical studies. The company already has completed the manufacture in Japan of the oligonucleotide substance and drug transporter, and production of the investigational drug began in March 2021 at a US contract manufacturing organization (CMO). The company had aimed to initiate clinical trials in the US in FY03/22, but now plans to proceed with clinical development mainly in Japan, which has been less impacted by the pandemic.