In conversation with Gord Froehlich

After a 25-year stint with Monsanto Canada, where he rose to vice president, Gord Froehlich moved seamlessly into Kane Biotech (TSX-V: KNE) as VP of Business Development and then into the executive suite in 2006. While there is a myriad of differences between a biotech start-up and a global ag-biotech giant, Mr. Froehlich contends that the business principles moving a product from the lab bench through research, regulatory approval and on to market are pretty much the same at any company.  And he credits his business and biotech background, rather than a scientific grounding, for his success at both companies, including his time as a marketing manager for Monsanto’s herbicide Roundup.  In this exclusive interview with biotuesdays.com, Mr. Froehlich shares his views about Kane’s market niche and the prospects for its three biofilm platforms, including five products that are in development, several FDA submissions on the go and third party validation of its research.

Let’s begin with a brief historical sketch of Kane.

We were formed in 2001 as a capital pooling company by investors who were looking for technology in the biofilm area.  Our chief scientific officer, Dr. Sri Madhyastha, was a leading proponent of the idea that biofilm removal was a vastly underserved field.  His argument: while there is no shortage of antibiotics and antimicrobials that are very effective at killing bacteria, that’s not the case when bacteria hide in a biofilm.  So that’s how the company got started— with the idea of finding technology in this area.  We went public in 2003, and I joined in 2005.  We now have three biofilm platforms: coating medical devices, wound healing and oral care.

What is a biofilm?

Simply, it’s the house that bacteria live in.  Bacteria are very social bugs; they like to live together in colonies called biofilms.  For example, if you walk along a river, you’ll see slime on a rock.  That’s biofilm: microorganisms and bacteria sticking to a wet surface.  And it’s very difficult for antibiotics to penetrate biofilm and kill the bacteria.

When you have a medical device inserted into your body, like a urinary catheter or a central venous catheter, bacteria often naturally stick to it and form a biofilm, resulting in a hospital-acquired infection.  Biofilms are pervasive, costly to deal with and are involved in approximately 80% of all human bacterial infections.  And the costs to the health care system are enormous.  Our technology is based on preventing biofilms from occurring or, if they already exist, breaking them down.

We’ve had our technology validated by research at Princeton, Harvard Medical School, Baylor College of Medicine, the Wound Care Center in Lubbock, Texas, and the University of Medicine & Dentistry of New Jersey.

So what’s your core technology?

For coating medical devices, we use two well known FDA-approved drugs that we’ve combined: chlorhexidine, which is a widely used antimicrobial that kills all kinds of bacteria but cannot penetrate the biofilm, and protamine sulphate, which breaks down the cell wall and allows the chlorhexidine to enter the cell and kill the bacteria.  The two compounds are mixed together and coated on to a catheter.  Aledex is our lead urinary catheter product and was developed internally.

For wound healing, we’ve developed Dispersin B, a novel anti-biofilm enzyme that inhibits as well as disperses microbial biofilms.  We have a global license on the technology, which was developed at the University of Medicine & Dentistry of New Jersey. Now, Kane has patent applications on combinations of Dispersin B and a host of antibiotics and antimicrobials.  So you get a dual punch: keeping biofilm from forming and also killing bacteria. We’re using Dispersin B as a treatment for chronic wounds like diabetic foot ulcers, venous leg ulcers and bed sores, and we believe it will result in much easier healing.

We licensed our oral care technology, competence stimulating peptide (CSP), from the University of Toronto.  Plaque in your teeth is a biofilm of streptococcus mutans, and when you have plaque on your teeth, you create an environment for cavities.  We think this product will be a drug, not a medical device.  Cavities take a long time to form so clinical trials will be lengthy.

What’s the clinical status of Aledex?

We have three different companies testing and developing Aledex for three different catheter applications.  Harland Medical Systems is developing a coating for urinary catheters.  And two other companies that we can’t identify are developing coatings for hemodialysis catheters for kidney dialysis and coatings for endotracheal tubes, which are used in general anaesthesia, intensive care and emergency medicine for airway management.

We figure the market opportunity is around $800 million (U.S.) a year, because there are hundreds of different kinds of catheters and hundreds of companies looking for ways to prevent hospital infections.  What’s driving the sector is U.S. Congressional legislation a year ago in October, which now makes hospitals responsible for patients who contract an infection while they’re in the hospital.  And catheters are the biggest culprits.

Harland is waiting for word from the FDA about what kind of clinical data it will need to collect for its prototype.  We should find out in the next three or four months and figure the study will probably take Harland a year to do.

With all three companies, the agreements we have are that they cover all the costs of research and development going forward.  So, it’s their timelines and their money.  Our marketing agreements are confidential, which is standard practice in the industry.  But our first payments will come on sales.  There are no milestones, because our partners are taking all the risks.  In the future, as we generate cash flow, we plan to develop our technology further in-house before we license it.

What’s the clinical status of Dispersin B?

Last September, we signed a material transfer agreement with Walter Reed Army Institute of Research of Maryland, so it can test our technology for its effectiveness at inhibiting and disrupting single-and mixed-species bacterial biofilms associated with combat trauma wound infections.  They are in the research phase, both in vitro and in animal studies, and if it meets their expectations, their objective is to develop a product to treat soldiers injured in action.  At that point, I think they’ll move to the next phase, which is probably to ask for some kind of emergency use permit or conduct a clinical trial to test this on patients, such as injured soldiers.

Do you have any plans for your own Dispersin B product?

We’ve already had discussions with the FDA and have been told that because of the mode of action of our Dispersin B gel, it will be regulated as a device, which is much easier than the drug route.  We’ve also submitted a pre-Investigational Device Exemption with all our data and asked the FDA what else we need in order to submit a full IDE package.  We are now conducting some of that work, including biocompatibility studies. So, at this point, we’re thinking about whether we proceed alone or whether we use the Army data as part of an IDE submission.

The market opportunity in wound healing is some $4 billion a year.  If we get 10% share of a $4 billion market with a 10% royalty, it would be a game changer for us.  We think our first product would be through the U.S. Army because they can get through the FDA quicker than we can.  And then we could move quickly into the civilian market.

What’s the clinical status of CSP?

We have an agreement with Ward Industries Group, a companion animal company in Ireland that wants to develop a product for oral care in dogs.  In the U.S., this is a surprisingly large market of about $450 million a year and probably is the same size in Europe for things like toothbrushes and dog bones that clean teeth of plaque.

We licensed our technology to Ward in a deal that is similar to Aledex where it pays all the costs, and if the product works, we would get a royalty on sales.  Ward has had great success with in vitro lab studies and is now developing a formulation to test in dogs that should start this summer.  It will probably take about six months or so to complete, and if it works, there is very limited regulatory work to do after that. So, there’s also a possibility that this could turn out to be our first product.

Sounds like 2010 is an important year for Kane.

We’ve come a long way in the last three or four years and have a lot of things coming together in the next six to 12 months.  We’ve been very fortunate that all the research done to date has been successful.  Obviously, having it work in humans still has to be proven. But our confidence is high, because our partners are willing to spend their money to see if our technology works.

Gord Froehlich Title: President and CEO, Kane Biotech Inc. Born: December 7, 1954. Education: BSc. (Agriculture) University of Saskatchewan, 1977 Career Highlights: Director of seed and biotech traits for Monsanto Canada; VP of Monsanto Canada; past Public Governor and Director of the Winnipeg Commodity Exchange.

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