CNDO's Bobby Sandage Interview - CEO CFO

Issue: January 6, 2012 All rights reserved! ceocfointerviews.comThe Most Powerful Name In Corporate News and Information With Restructuring Completed in January 2011, the New Coronado Biosciences, Inc. is an Immunotherapy Company with One Product Focused on Autoimmune Diseases and the Other Product Focused on Immunotherapy for Cancer Healthcare including executive vice president of Dr. Sandage: Coronado as it exists Biotechnology research and development and chief today is actually a combination of two (CNDO-NASDAQ) scientific officer, prior to the sale of different companies. Originally Coro- the company to Endo Pharmaceuti- nado was formed as an oncology Coronado Biosciences, Inc. cals. Prior to joining Indevus Pharma- company with several compounds. ceuticals, from 1981 to 1991, Dr. Data from the NK (natural killer cells) 15 New England Executive Park Sandage held senior drug develop- program continued to get more inter- Burlington, MA 01803 ment positions at DuPont Merck esting. This prompted the founder of Phone: 781-238-6621 Pharmaceutical Company, DuPont the company, Dr. Lindsay Rosenwald Critical Care (formerly American to focus on the NK program. He had Critical Care) and Merrell Dow Phar- another company called Asphelia that maceuticals. Dr. Sandage is currently focused on the treatment of autoim- a member of the board of directors of mune diseases again with several Gentium S.p.A., a pharmaceutical products in that company but TSO, company. Dr. Sandage has also their lead product, was the best by far. served as a member of the board of In late 2010, he decided to combine directors of Osteologix, Inc. and the companies and focus on immuno- Genta Incorporated. Dr. Sandage has therapy, modulating the immune sys- a B.S. in pharmacy from the Univer- tem with TSO and using the innate sity of Arkansas and a Ph.D. in clini- immune system with NK cells to treat cal pharmacy from Purdue University. cancer. The combining of the two companies was completed in January Company Profile: of 2011. The new Coronado is an Coronado Biosciences, Inc. is en- immunotherapy company with one gaged in the development of novel product focused on the treatment of immunotherapy biologic agents. The autoimmune diseases and the other Companys two principal pharmaceu- product focused on immunotherapy of tical product candidates in clinical cancer. Dr. Bobby W. Sandage Jr., Ph.D. development are: CNDO-201, a bio- President, CEO and Director logic for the treatment of autoimmune CEOCFO: Did these products come diseases, such as Crohns disease, from the same technology?BIO: ulcerative colitis and multiple sclero- Dr. Sandage: No. TSO was a discov-Dr. Sandage has served as our presi- sis; and CNDO-109, a biologic that ery from the University of Iowa bydent and chief executive officer since activates natural killer (NK) cells, for Drs. Joel Weinstock, Elliott andApril 2011 and has over 30 years of the treatment of acute myeloid leu- Summers. It was originally licensed toexperience in the pharmaceutical in- kemia (AML) and solid tumors. For a company in Germany calleddustry, most recently as the vice more information, please visit OvaMed. Coronado then licensed thepresident and head of oncology re- www.coronadobiosciences.com. rights for the use of TSO for all indi-search and development for Covidien cations for North America, SouthPharmaceuticals, a specialty pharma- Interview conducted by: America and Japan from OvaMed.ceuticals company, a position he held Bud Wayne, Editorial Executive The NK program comes out of thefrom March 2010 until March 2011. CEOCFOMagazine.com University College of London, whereFrom November 1991 to December professor Dr. Mark Lowdell, the inven-2009, Dr. Sandage held various posi- CEOCFO: Dr. Sandage, would you tor is located. It was licensed directlytions at Indevus Pharmaceuticals, a give us a brief history of Coronado from the University.specialty pharmaceuticals company, Biosciences, and the vision for the company? 1

CEOCFO: Does Coronado Biosci- Dr. Sandage: Let’s start with CNDO- good hygiene practices, that we neverences own both of these 100% right 201, we call it TSO. It stands for get exposed to helminths that wenow? Trichuris suis ova or more commonly might lack a key immune regulatoryDr. Sandage: As I mentioned we known as pig whipworm eggs. It is an factor. In fact, if you look at otherhave licensed worldwide rights for all intestinal helminth or intestinal para- parts of the world where the incidenceindications from the University Col- site. The idea of using a helminth as a of autoimmune disease is very lowlege of London, for which we owe a therapeutic agent is based on what is and steady, it overlaps where naturalsingle digit royalty on net sales. Again known as the “hygiene hypothesis”. intestinal helminth infections areas I mentioned, TSO is licensed from This concept was developed by the common.OvaMed, who has the original license group at the University of Iowa. As Ifrom the University of Iowa. We have mentioned earlier, Dr. Weinstock and They first tested their hypothesis inthe rights for all indications in just for his colleagues are all gastroenterolo- animals. They showed that they couldNorth America, South America, and gists and treat many patients with effectively prevent and treat modelsJapan. We pay OvaMed a royalty of Crohn’s disease and ulcerative colitis. of gastrointestinal autoimmune dis-4% of net sales and they in turn pay Like many of their colleagues, they eases such as Crohn’s disease andthe University of Iowa 4%. We pur- were trying to understand why there ulcerative colitis by exposing an ani-chase TSO from OvaMed, mal to the helminths. Theyour exclusive manufacturer. I think the best way to sum up Coronado Bio- then moved on to humanIn addition, OvaMed has a sciences, as a potential investment is to review clinical trials. There arepartner in Europe. Their the value proposition. We have two biologics, several very important fac-partner in Europe, the Dr. which are inherently more valuable than a tors to consider when tryingFalk Pharma company li- to determine which helminth small molecule because of lack of multiple po- could be used as a thera-censed just the gastrointesti-nal indications. I am not sure tential generic competitors. Both products ad- peutic immune-modulatingof the details of their busi- dress huge unmet medical need markets, one agent. The most importantness arrangement. However, for autoimmune disease potentially addressing feature is that the helminthI would like to point out that up to 5% to 8% of the U.S. population and im- not be a human pathogen, inwe just signed a three-way munotherapy for cancer. The mechanisms of other words, that it not in-agreement with OvaMed and vade or cause disease in both of these products are such that they humans. It turns out thatthe Dr. Falk Pharma com-pany. Coronado, Dr. Falk could potentially treat any autoimmune disease Trichuris suis, the pig whip-Pharma and OvaMed have or any cancer. The first biologic TSO is oral worm is the ideal choice.agreed to enter into a Col- product taken once every two weeks and al- This particular helminth elic-laboration Agreement under ready has clinical evidence of efficacy in sev- its the desired –immune-which Falk will grant Coro- eral important autoimmune diseases and the modulating response but itnado exclusive rights and doesn’t produce human in- NK program where we have evidence of effi- fections. It colonizes the GIlicenses under certain Falkpatent rights, pre-clinical cacy in AML. It also has the potential to treat tract briefly but is not sys-data and clinical data from many other cancers. We have cash in the bank temically invasive. In hu-Falk’s clinical trials of TSO that should take us late into 2012. We think the mans it fails to fully maturein Crohn’s disease, including future is quite promising. and is harmlessly shed afteran ongoing Phase II clinical - Dr. Bobby W. Sandage Jr., Ph.D. a couple of weeks. The eggstrial, for use in North Amer- or ova must incubate in theica, South America and Japan. Coro- has been a dramatic explosion in the soil for 2-3 weeks before they are in-nado will grant Falk exclusive rights number of patients with Crohn’s dis- fective preventing direct host-to-hostand licenses to Company data from ease and ulcerative colitis. They had transmission and the ova or eggs areplanned clinical trials of TSO in observed that not only were these very stable and can stand up to theCrohn’s disease for use in European autoimmune GI diseases were on the rigors of pharmaceutical grade proc-studies. The hope is that it will accel- increase but all autoimmune diseases essing. Finally, they were based inerate both of our programs and re- were increasing at a dramatic rate in Iowa, where they knew that the pigduce the overall cost for the programs the industrialized world primarily, farmers were exposed to these eggsgoing forward. North America and Europe. They de- almost on a daily basis and they had veloped this idea that instead of never observed a case of a humanCEOCFO: Could you give us a brief something from the outside like an being infected with the pig whipworm.description of the technology, what it environmental factor was causing this The first study they conducted was inis and why you are finding it effective, rise in incidence of autoimmune dis- patients with Crohn’s disease. Theyfirst for the CNDO-201 with the TSO eases that maybe it was something observed after 24 weeks of treatmentfor autoimmune diseases and then for now missing from these patients. So with 2500 TSO taken orally every 3CNDO-109 which is for the NK (natu- their hypothesis, the “hygiene hy- weeks that over 72% of the patientsral killer cells) that activates them? pothesis”, simply states that because were considered to be in complete we are so clean, in other words very clinical remission. It was very dra- 2

matic effect and it is as good as any database that allowed us to open an they end up with colostomy bags. It isof the current treatments that are on IND with the FDA. We have initiated a a terrible disease, so there is clearlythe market for treating Crohn’s dis- phase 1, single dose, dose escalation room for a safe, effective orally activeease. They then went on to conduct study which we anticipate completing product to help these patients.another trial but this time it was a in the first quarter of 2012 and thendouble-blind, placebo-controlled trial hope to start our own Phase 2 Crohn’s CEOCFO: So this is clearly an areain 54 patients with ulcerative colitis. study some time in the second quarter of unmet need?They observed statistically signifi- of next year. Dr. Sandage: It clearly is an area ofcantly more patients responding to unmet need. Our KOLs, our key opin-TSO when compared to the placebo CEOCFO: Are there any other bio- ion leaders and thought leaders in thistreated patients. It was very well tol- tech companies that are trying this area believe that this has real poten-erated in both studies. approach or are you the only one? tial. If the studies continue to show Dr. Sandage: No, not that we are similar effects as has bee observedWe now know a lot more about the aware. However, there are individual then they believe TSO could eventu-mechanism of how these helminths investigators that are studying the ally become first line therapy; espe-may work to modulate the immune mechanisms of how other helminths cially because it is so easy to admin-system in patients with autoimmune might work for treating autoimmune ister and it appears to be very safe.diseases. In simplest terms, in the disease. For example, there is a The side effects are limited to mildlong list of 100 autoimmune disease, group in the U.K. that has been study- diarrhea and GI cramping that lastssuch as ulcerative colitis or Crohn’s ing the mechanism of action of the for a few days. It occurs in about adisease or multiple sclerosis or Type I hookworm. There are several prob- third to one-half the patients and itdiabetes, or rheumatoid arthritis, there lems with the hookworm. First, unlike seems to go away with continued dos-is one common feature they all have TSO which is taken orally, the hook- ing.an excess activity from their T-helper- worm has to penetrate the skin to get1 (TH1) cells producing an excess of into the gastrointestinal tract. Sec- CEOCFO: What is the potential mar-proinflammatory cytokines. For ex- ondly, it is a human pathogen, so it ket size for Coronado’s TSO product?ample, these patients typically have actually causes disease in humans, Dr. Sandage: We have not com-elevated levels of interleukin II and whereas the pig whipworm does not. pleted a large-scale market researchinterferon gamma. When you expose We don’t think this application has study yet, but I will provide you twoan animal or a human to a helminth, any commercial utility. As I mentioned pieces of information. In a NIH surveythe body’s natural reaction is to reject before, TSO is really the ideal product conducted a few years ago, theyit, but over the years, the helminths and we do not know of anyone else found that 5% to 8% of the U.S. popu-have figured out a way to live in the that it is doing any work regarding a lation, which is tens of millions ofintestines. It is the perfect environ- commercial application and our pat- people, has an autoimmune disease.ment for them. So they respond to ents are pretty broad. We actually We do not know if it going to work inthis reaction from the host by up regu- cover a range of other helminths and every autoimmune disease but welating what is known as the T-helper-2 a many autoimmune diseases. believe that it has enormous potential.cell cytokines. This action automati- The current size of ulcerative colitis,cally down regulates the action of the CEOCFO: Are there any other prod- Crohn’s disease and multiple sclerosisTH1 cells. The effect from this action ucts on the market that have been in market is about $9 billion.is an immunomodulation and a re- successful in Crohn’s or is this anlated improvement in the patient’s area that there is such a great need CEOCFO: Would you tell us aboutautoimmune symptoms. That is what and nothing else has really worked your NK (natural killer cells) technol-in fact they were able to observe in that it has made a difference. ogy, and where are you in the clinicalthe studies of patients with Crohn’s Dr. Sandage: There are other drugs studies?disease and ulcerative colitis. In addi- on the market to treat Crohn’s dis- Dr. Sandage: In your body there aretion, the first study has been pub- ease. However, the ones that are well a group of cells called natural killerlished showing that TSO has a bene- tolerated have limited efficacy and cells and they make up about any-ficial effect in multiple sclerosis. This the ones that work well have seriously where from 5% to 10% of your whitestudy also demonstrated immuno- toxicities, such as steroids and the blood cells. They are part of what ismodulation and a rebalancing of the TNF alpha Inhibitors or the mono- known as the innate immune system,TH-1 and TH-2 system. clonal antibodies; drugs like Humira so they are there for two reasons. and Remicade®. They work, but be- One is that you have cells turningCEOCFO: Where is Coronado in its cause they are immunosuppressive over in your body all the time andhuman trials? agents, they can dramatically sup- sometimes you get a mutant cell andDr. Sandage: The previous studies in press the immune system. The pa- the NK cells job is to identify that ab-Crohn’s disease, ulcerative colitis has tients and doctors worry about the normal cell and kill it before it growsprovided phase 2 efficacy data. The development of serious infections and into a cancer. The other feature is itmultiple sclerosis trial also provided cancers. In addition, many patients kills cells infected with a virus. How-early phase 2 efficacy. These data are also faced with the real prospect ever, what happens is that as youprovided us with a significant clinical of requiring abdominal surgery and age, you get defects in the system, 3

either they do not work as well as they leagues studied 8 patients with acute Dr. Sandage: We took a very un-used to or the cancer gets a foothold myelogenous leukemia (AML). AML usual route to becoming public. Tradi-and tricks the NK cells in not being accounts for 90% of all new adult leu- tionally companies do IPOs or reverseable to recognize it. In other words, kemias have a survival rate as low as mergers to get their companies pub-your NK cells lose their ability to rec- 15% in five years. In addition, there lic. We had completed three privateognize the aberrant cells or they just have not been any new therapies for rounds and raised $65 million to-date.do not work as well as they once did. AML in the past 25 years. One of the The last round was completed in lateIn simple, terms they just were not hallmarks of AML is each subsequent June for $26 million. We had hadactivated in a way to be effective any remission is shorter than the previous evaluated various routes to get thelonger. A group at the National Can- remission. For example, a second company public. In the end we de-cer Institute in the early 1980’s came remission is always shorter than the cided to go public through a self-up with a method to activate NK cells. first remission and so on. In Dr. registration process. We first filed aThey would separate the NK cells dur- Lowdell’s study the patients received Form-10 and after approval by theing an apheresis process. They then their standard cancer therapy and SEC became a public reporting com-would incubate these isolated NK then two to three days later they were pany in the middle of September.cells with Interleukin II (IL-2) outside infused with activated NK cells from a Then a potential market maker filed athe body and then infuse them back donor and followed for the length of Form-211 to allow us to list on theinto the patient. These activated NK the current remission which was then OTC Bulletin Board. At the same timecells would then be able to kills aber- compared to the length of the previ- we filed an S-1 to register all of ourrant cells again. One issue with this ous remission. In 3 of 5 patients, they private shares. The S-1 went effectivemethod was to keep the NK cells acti- observed a longer remission than the and we started trading on the OTCvated they had to infuse IL-2 in to the previous one, something that is never Bulletin Board, in the middle of No-patient following reintroduction of the seen in AML patients. The investiga- vember. On that same day we sub-activated NK cells. Unfortunately, IL-2 tors treated one patient that was in mitted our application to NASDAQ.can have significant toxicity. Since partial relapse. Following treatment Four weeks later we were approvedthis initial discovery that activated NK with activated NK cells the patient by NASDAQ and started trading oncells can treat cancer, specifically achieved a complete remission. Al- Monday, December 19, 2011. As ofminimal residue disease many re- though it is a small set of patients, the end of September we had $27searchers have been searching for a these activated NK cells demon- million should take us toward the endmethod to activate these NK cells strated dramatic results. We are in of 2012. Therefore, we are in a veryoutside the body without having to the final steps required to completing good position going into 2012. Theuse IL-2. We now believe that Dr. our IND for submission to the FDA in programs are making significant pro-Lowdell has discovered a method to the first quarter of 2012. We then gress, we are a NASDAQ listed com-activate NK cells without the use of hope to initiate a Phase 1/2 dose es- pany and we executing on our plan.IL-2 by using CDNO-109. Dr. calation trial in the United StatesLowdell’s discovery is a tumor cell starting some shortly after the IND CEOCFO: Do you spend much timeline that when incubated with NK cells submission. out doing road shows to reach inves-activate them without IL-2. tors? CEOCFO: Going forward will this be Dr. Sandage: Yes we do! Again, be-When you are diagnosed with cancer, like an adjuvant or something you are cause we did not do a traditional IPOwhatever cancer it is, your doctor will doing in conjunction with other with a banker assisting with the road-treat you with either chemotherapy or chemotherapies or will this be a show, we are doing it ourselves. It isradiation or both and hopefully that stand-alone product? up to us to make sure people heartreatment will put you into remission. Dr. Sandage: It is not technically an and understand the story, the poten-If you are really lucky you stay in re- adjuvant, but this therapy is not de- tial of the products and the plans formission for a long time, however, signed to be used alone. It is antici- the company. Therefore, we aremost people relapse. Many experts pated that the patient will be treated spending a lot of time on the roadbelieve that the relapse is due to what with the prescribed chemotherapy and meeting with buy-side, sell-side or-is known as “minimal residual dis- then treated with the activated NK ganizations, individual investors andease” or MRD. MRD are the cancer cells. Because of the nature of the NK brokers. Just a few weeks ago the firstcells that remain after your cancer cell treatment we think it might have analyst initiated coverage of the com-treatment, the resistant cells. These utility in many cancers and in fact pany.resistance cells then get a foothold have laboratory data showing efficacyand are believed to be the cause of in multiple myeloma, ovarian cancer, CEOCFO: In closing, why should po-many relapses. Activated NK cells are breast cancer and prostate cancer. tential investors consider Coronadospecifically designed to kill these re- Biosciences?maining cells. The first study to test CEOCFO: How is Coronado Biosci- Dr. Sandage: I think the best way tothis hypothesis with CNDO1-109 was ences situated financially to move sum up Coronado Biosciences, as arecently presented at the international your products into the trials and will potential investment is to review themeeting of the American Society of you have to raise funds at this point or value proposition. We have two bio-Hematology. Dr. Lowdell and his col- are you ok? logics, which are inherently more 4

valuable than a small molecule be- of both of these products are such have evidence of efficacy in AML. Itcause of lack of multiple potential ge- that they could potentially treat any also has the potential to treat manyneric competitors. Both products ad- autoimmune disease or any cancer. other cancers. We have cash in thedress huge unmet medical need mar- The first biologic TSO is oral product bank that should take us late intokets, one for autoimmune disease taken once every two weeks and al- 2012. We think the future is quitepotentially addressing up to 5% to 8% ready has clinical evidence of efficacy promising.of the U.S. population and immuno- in several important autoimmune dis-therapy for cancer. The mechanisms eases and the NK program where we 5

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CNDO's Bobby Sandage Interview - CEO CFO

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CNDO’s Bobby Sandage Interview - CEO CFO Document Transcript