Daniel Levine: We’re going to talk about ultra-rare diseases, Devinebio, and how you work with patient advocacy groups to form drug development companies to advance needed therapies. Let’s start with the need you’re seeking to address. What led to the creation of Devinebio and what problems in drug development were you seeking to address?

Chris Hopkins: Well, thanks for asking the question. It all started with the question that I get asked by patient advocacy groups and it is: “How do we get Pharma to pay attention and make a therapeutic for my rare disease?” So this question can actually be reduced a little bit to what gets asked by biotechs when they approach big Pharma. And often the response from Pharma is, “Hey, this is a bit too early. Come back to us when it’s more mature.” And so, the really important thing here is we’ve got to try and find ways to mature the asset, to get the asset to a point where it’s attractive to Pharma. And one of our solutions that we believe will help immensely, is to form a company that we then build the asset around.

Daniel Levine: How does Devinebio work with patient advocacy organizations?

Chris Hopkins: So basically, when we form that company and these companies are called special purpose exit vehicles, or SPECs for short. These are LLCs and we’re going to co-own those with the Patient Advocacy Groups. And those SPECs are going to do five things. 1) They’re going to grow the patient population, 2) they’re going to find the biomarkers, 3) they’re going to screen for drugs. And then two other things that are really important. 4) We need to mine the IP. So we need to file when we get those discoveries and not lose the chance of having a highly valuable asset. And then of course, then the last thing is 5) we’ve got to engage with the FDA. We’re going to help and engage early when we’ve got an asset and we’re going to try and get these assets out to an IND as quickly as possible.

Daniel Levine: Well, what’s Devinebio’s role in these special purpose companies? What does it do?

Chris Hopkins: Well, basically, Devinebio will do everything but mine the patient population. And that’s the important thing. Patient population is important. We’ve got to grow the patient population to a high size and we’ve got to try and get a thousand patients registered. So that’s something that the patient advocacy group can do and that’s why they’ll be doing for the company. They can help grow that component, or that value, of the asset by growing the patient population. And then all the other activities, those are going to be supplied by Devinebio and our team of experts. That’s the biomarker development, the drug discovery, the IP capture, and the regulatory engagement.

Daniel Levine: And why 1000 patients? What’s the significance of that number?

Chris Hopkins: Well, when you do the math, if it costs a hundred million to develop a drug and you only have one patient and you want to reimburse your costs, then can you charge a hundred million for that patient? If you now have a thousand patients, you’re looking at about a hundred thousand dollar costs per patient. So the size of the patient population is what makes the economic sense that will get big Pharma to engage.

Daniel Levine: And what’s the business model? Does Devinebio charge for its services, does it take a percent of ownership in the special purpose company?

Chris Hopkins: Well, I would say it’s a good question and it’s a bit of a blend of both. First and foremost, share of ownership of the assets. Let’s go find some drug assets, build our patient population, and build value in a company. Let’s go to BIO, let’s go to JP Morgan. Let’s interact with those big Pharma, and ask them to partner with us, or potentially outright buy the company. So, co-ownership is one big thing, but part of what we do at Devinebio is harnes our Collective of Experts. We’re going to create value in our entities because we’ve got a vetted set of contractors who will do things on a fee-for-service basis, done just-in-time only when you need it. So, a high amount of cost efficiencies are going to be achieved by utilizing our contractor base.

Daniel Levine: You look at drug repurposing as well as various different drug modalities. What modalities are you able to pursue and what determines what’s the most appropriate choice for a specific indication?

Chris Hopkins: Yeah, that’s a good question. Part of it is cost efficiency. And so, I would argue that let’s first do drug repurposing. Let’s get on the board with that. That’s going to be fast and efficient. But let’s not stop there. Let’s follow on with new chemical entities, because we’ve plowed a path. We’ve got the affordability and speed of drug repurposing potentially getting out there to IND for under half million. But protectability of repurposing is challenged, right? So, it makes sense that pharma may not want to pick them up right away. Instead, it might be the N-of-1 off-label prescribing is the off-ramp for the drug repurposing. But with repurposing we’ll have figured out a development path which we can now leverage with new chemical entities. We will have efficiently seen what it takes to get to IND. We’ll have a much more efficient process for bringing those new chemical entities to market.

Daniel Levine: A lot of what you’re really doing is de-risking an asset to a point where a drug company would be willing to step in. Do you take it only to an IND stage or if it warrants, would you take it into the clinic?

Chris Hopkins: Well, yes, sort of to both, right? Our target is to go from target to IND and be IND-enabled. And we think that that will create enough value to attract attention. However, there might be some Pharmas out there that say “Come back to us when the asset is more mature, come back to us when you’ve got efficacy data in the clinic. And so, each of the SPECs is going to need to get to a level of maturity that’s going to get Pharma to engage. And we need to be able to say things like “We’re cross validated in multiple model systems”, or “We’ve got a large therapeutic index based off of the safety studies”, or “The manufacturing and supply chain is secure.” If we can get to that level of IND-ready, and get IND-enabled, we’ve de-risked a lot, but we may still have to go past that. So, we’ll need to have a good line of sight and vision on getting it all the way out to what it takes to get to market, get an NDA.

Daniel Levine: There’s been a big change in the mindset and willingness of patient advocacy organizations to move into the clinic, are increasingly unafraid to do so. But at what point is it likely to entice a pharmaceutical company to step in? Do you think it’s going to be necessary to have a proof of concept in human study?

Chris Hopkins: Well, if they’re going to want to buy the special purpose vehicle outright, we’re probably got to get to that level. But they may also want to partner early once they see something that has promise. And so, if we can get to IND-enabled and now I’ve got permission to go into the clinic, my suspicion is that we should be able to get some partnering done. Deals like a milestone payment upon getting through clinical safety, another milestone payment on getting through phase 2 efficacy, pivotal trials, getting to market, all those are going to be milestone payments. Maybe we can get royalties—that kind of partnering deal that we can do can bring in revenue and help us be able to chase after more opportunities in rare disease.

Daniel Levine: And is it the responsibility of your patient advocate partner to finance the venture?

Chris Hopkins: No, not necessarily. I mean, obviously if you bring money, whoever brings money to the table can help things accelerate quicker. But these are basically biotechs we’re creating and they can go after dilutive and non-dilutive monies. When we get one of these SPECs formed, we can get a pitch deck going. We can go to angel groups, we can go to VCs, we can ask to get some funding to get these things accelerated. And then of course we can also chase non-dilute. So, these entities are able to go and chase after SBIR money and Devinebio is going to be a guide in all that process. We will be able to do it all, with the PAG collaboration providing the patient population - it’s going to be collaborative effort. So anywhere along the development path we will be getting Pharma engaged, and we want to work collaboratively there.

Daniel Levine: You had thrown out a number before, but is there a clear sense of what it would cost to get an experimental therapy to an IND? How much funding would a patient advocacy organization need to be able to access to do this?

Chris Hopkins: Well, let’s sort of digress a little bit. Everybody hears the spooky number $1 billion to get a drug to market. Well, when you look at the direct cost, the direct costs to get to market are seven million to get through preclinical and about $40 million to get through clinical. So, we’re talking about something that’s about $50 million. Now, the reason that we hear that $1 billion number is that the attempt to get all the way up to market fails so much, like 199 times in 200 tries before we find the one works, that’s what drives the $1 billion cost. Now with today’s genetic medicines where we know the target and we’re able to design smarter drugs, we’re going to get a T-shaped curve instead of this big funnel. Things we’re going to fail right up front and what enters the drug development pipeline is going to be more efficient. So I would predict that we should be able to get drugs developed for significant cost efficiencies. Take Terry Pirovolakis. He did an AAV therapy, took him 3 years and he spent about $4.5 million and now he’s scratching at a new drug application. So being able to get novel therapies into patients quickly is doable. People are doing this, so we can do this affordably and efficiently.

Daniel Levine: You talked about the special purpose exit company. Is that your term? Is there a legal definition for that?

Chris Hopkins: Well, no, it is something that I’m bootstrapping off of what probably is a legal term. You’ve probably heard of a SPAC, Special Purpose Acquisition Company. That’s something that private equity uses when they see a technology opportunity and want to go in and gobble up all the players in a space and try and create an entity of high value. Well, they acquire things. We’re doing just the opposite at Devinebio. We’re creating SPECs, Special Purpose Exit Company. The sole focus is try to build an asset up to enough value so that it will exit quickly and early.

Daniel Levine: It does also give you this financing vehicle as you touched on. Is there a potential here to marry this to another trend, which is venture philanthropy?

Chris Hopkins: I do think it’s very intriguing. So, if you are going after VC money, they’re going to be most comfortable with C-corp but they may also be comfortable with an LLC. If you’re a nonprofit in this kind of venture, that’s going to be a little challenging. So the real question then becomes, does venture philanthropy feel like putting the money into an LLC and will that still qualify as a for profit venture? Maybe we can do these as public benefit corporations, or similar entities. One thing about LLC is you can kind of make it whatever you want. If you want it to be all about the money and stockholder revenues, then it is. But if you decide to, from what I understand, you can create operating agreements that declare what is most important to you as an LLC. It’s a little different than a C-Corp. A C-corp sounds very much like you can’t really deviate from a focus of making money for the stock holders.

Daniel Levine: Devinebio doesn’t take all comers. What constitutes a disease that Devinebio would be willing to work on? And besides the size of the patient population, are there other things that patient advocacy groups need to have in place before they’re able to proceed with this kind of an approach?

Chris Hopkins: Yeah, I mean it’s a good question, but it’s actually quite interesting. It’s a focus on rare disease. Ninety percent of rare disease is gene specific. And so that’s our angle—let’s build gene specific indication companies and that’s 90 percent of rare. And so when you look at it and go in on a little more niche. Our beachhead and our experience with our team is in neuroscience. So we’re going to be neuroscience focused in most of these companies. I think that’s where we can build and create a lot of value. So how many companies could that theoretically be if you’re a gene specific indication? Well, currently in ClinVar there are 6,500 genes that are listed with at least one pathogenic allele in them. And it turns out that in rare—genes that are in rare—50 percent of it has a neurological component. So potentially there’s 3000 different companies that we could create here. So, there’s a lot of opportunity. It is a critical mass kind of question. What does it take to get these SPECs going? And I think key is focus on partnering with patient advocacy groups. So it’s basically there’s two things that need to be happening. We need to have a willingness to co-own, but also a willingness to provide sweat equity. We are going to need to build that population database. Other things will need to be in there. We’ve got to look at biospecimens, potentially trying to get a biorepository going. So a lot of things about the patient population that need to be built and constructed to create a valuable asset.

Daniel Levine: Do you need a natural history study in place? Do you need a registry in place? I mean, are there things that you would want before proceeding with a particular disease?

Chris Hopkins: If you have all of that, that becomes the negotiation point of how much of what slice of the pie in ownership. But the minimum thing for a PAG: What’s is in your Facebook page of friends. Can you contact them and create a spreadsheet and where they say, “Yes, tell me more.” Then when you get something going, see if you can get them interested in trying a trial. It doesn’t have to be too sophisticated to get started. If you’ve got access to a patient population, you’ve got your friends that are there, let’s leverage on that. Let’s create that list. Let’s start decorating them up with fields. Let’s start trying to get different levels of history done. Obviously there will be plenty of collaborations with clinicians that already have this stuff in place, so we need to merge with that, but we need to have control. We need access to that list inside the SPEC so that we can create that high value. You can’t be parking your registry somewhere else. You got to have access to it in-house.

Daniel Levine: The Devinebio website lists three key activities in finding rare disease drugs. I thought maybe you could walk us through those.

Chris Hopkins: Well, certainly I’ve been harping on about how important the population is. We need to identify and recruit, get that history data, try and get biospecimens, try and get a biorepository, and basically get a big group of people pre-consented for clinical trials. That’s going to be powerful. Another powerful thing to do is work on biomarkers. Biomarkers have multiple angles or aspects. One of them is what is that killer assay, that readout that we can use and very quickly use to get for drug screening. So what is that drug screening assay? That’s one type of biomarker. But then other biomarkers we need to work on are the ones like the surrogate endpoints. These are the shared biological activities we see in our model systems and will be seen in humans. Potentially they can be used in clinic as a surrogate biomarker. And next, we got to go to find candidates drugs. We’ve got to do some drug screens. Our SPECs will be finding those biomarkers, they’ll be finding those drugs that we’re going to groom across multiple testing systems. We are going to use that to build a nice IND package. Then I would say that there’s two more things. Again, this is what the SPECs do. We got to mine that IP. If we get some discoveries, we’ve got to get that protection in place before we go public with it. That’s really important. And then engage with regulatory. We’re going to get in there and get in early. It sounds frightening, but I have been talking to a lot of FDA people and they’re people too. They just want to help. So, let’s just get in there. This is going to be done with our collaborative team or collection of experts and it’s fee-for-service done just-in-time. So we’re going to be cost efficient as cost efficient as possible to get to IND-enabled status.

Daniel Levine: You’ve already launched a number of special purpose exit companies. I’m wondering if you can offer one or two examples and walk us through what you’ve done and the progress you’ve been able to make to date.

Chris Hopkins: Well, I love the fact that you say have launched them. They’re conceptually launched. I haven’t actually triggered on an LLC creation just yet. We need to get a few things in place first. The most critical thing, in my opinion to get in place is the patient population advocacy groups that are willing to co-own and willing to put in sweat equity. Once we get that, we can really move forward. But I will say that STXBP1 is one I’ve been working with for a long time and I’ve been obviously really amazed with that group. Five years ago, I attended their researcher retreat and it was just a few academics in a room. However, I just came back from their recent meeting and they’ve gotten organized. The first started out just a couple hundred patients, maybe not even that. And in just very shorter, they’ve exceeded a thousand patients in their registry and Pharma is starting to pay attention. There were the biggies there, BioMarin and a few others were showing up. So, you can build that population database, you’re going to get somewhere. One thing I would like to say is that even with drug repurposing, it’s some interesting stuff that is going on. We did a screen in STXBP1 and found some hits. We screened drug repurposing libraries and we found a really high hit rate because we were using our smart libraries. We found one of those hits was nicotinamide mononucleotide, NMM. That was done at the behest of working with Sagi Gidali at Rafa’s Moonshot. They’ve now taken that and have had their clinician prescribe it to their kid and it’s working. And right now, the clinician’s working on dosing optimization studies. So that’s kind of that N-of-1 off-label prescribing. We just need to get out there and screen. We’re finding some really interesting effects of being efficient and using the right models at the right time.

Daniel Levine: I know it’s early days to think about exits, but looking at the experience of patient advocacy organizations that have moved into this area of actually doing hands-on drug development, one of the, I think, painful lessons learned for them is that they don’t have control over how their drug is prioritized within a drug company. Do you think in terms of having to put in some things like rights to reclaim a drug if it’s tabled or not making adequate advances or other things to ensure they’re part of the clinical development decisions.

Chris Hopkins: You nailed it. Those are really important things that upon exit, if you’re exiting the whole company, you still want to be able to have some claw back strings going on. So it’s really important to be considering that. And I think that that’s what we’re going to be looking for in our partnering agreements with big Pharma is to make sure that things are going to be moving forward and things are getting down the road. So we’ll definitely want to be making sure we’re mindful of expediency and driving things forward. Basically, we’re building an ecosystem at Devinebio. And Devinebio is basically doing three things. First and foremost, it’s an incubator. We’ve got gene specific indications for each one of our SPEC companies. We’re aiming to do that in partnership with the patient advocacy groups. We are chasing after and finding drugs as fast as we can and as efficiently as possible, so that we can try to find something and get into the clinic, not 10 years from now, but just in a few years from now, maybe even sooner. The other thing is that Devinebio is a marketplace. We have biotech contractors and they’re doing fee-for-service work. It’s done efficiently, just-in-time only when that activity is needed. So we like to think of it as a highly cost effective approach. And the third thing about Devinebio, it’s a platform we have built for going after SBIRs to develop our IPSC technology that we are going to utilize as highly efficient systems for accelerated drug development.

Daniel Levine: Chris Hopkins, CEO of Devinebio. Chris, thanks so much for your time today.

Chris Hopkins: Daniel, it’s been a pleasure. I’m really excited about what we’re all doing together and trying to help people in rare solve these dilemmas.