Riding High: Exclusive Interview with Botanix Pharma's Leadership Team

The Green Fund speaks with the President of Botanix Pharmaceuticals, Vince Ippolito, and the company's Founder Matt Callahan.

Botanix Pharmaceuticals Ltd (ASX:BOT) is an Australian medical dermatology company that is developing cannabinoid-based products for the treatment of a range of skin conditions.

Botanix has operations in both Australia and the US, where it works to improve the lives of patients suffering from serious skin diseases by providing new treatment options for conditions that are inadequately addressed or "treated with therapeutics that are burdened with side effects profiles".

The company already has a number of highly promising pharmaceutical products—primarily targeting serious skin conditions such as psoriasis, acne and atopic dermatitis—that are in various stages of clinical testing.

Botanix's standout product would have to be BTX1503, which is used for the treatment of chronic acne. However, investors have also been showing plenty of interest in the company's other medical trials, such as BTX1308—which is aimed at the treatment of psoriasis—and BTX1801, which uses synthetic CBD to treat serious skin infections.

In fact, the company sent the market into a frenzy in last month when it published positive updates on both BTX1308 and 1801. The news caused shares in Botanix to skyrocket by 25 percent—reaching an all-time high of 17.5 cents—before subsequently increasing to 0.27 a share by 9 July.

The company also has another powerful asset up its sleeve in the form of its exclusive license for the proprietary drug delivery system Permetrex, which has been shown to deliver significantly higher dosages to affected areas when contrasted with comparator products.

To learn more about this exciting company, The Green Fund sat down with both the President of Botanix Pharmaceuticals, Vince Ippolito, and its Founder and Executive Director, Matt Callahan, for an exclusive interview.

 

Vince Ippolito only joined the company in May 2019, but he brings more than 30 years of experience working in the pharmaceuticals industry to the role, with over 20 of those years specifically targeting the dermatology market.

He most recently served as the President and Chief Operating Officer (COO) of Dermavant Sciences—a specialty biopharmaceuticals company—and prior to that he was employed as Executive Vice President of Anacor Pharmaceuticals. During his time at Anacor, Ippolito also played a key role in the company's eventual sale to pharma giant Pfizer for a whopping USD $5.2 billion.

Ippolito brings a wealth of experience in product development to the company, having ushered more than 20 dermatology brands to the US market over the course of his career. He began his journey towards Botanix Pharmaceuticals while still working at Anacor, after crossing paths with Matt Callahan through a mutual friend.

However, Ippolito's realisation that the CBD market represented a massive untapped opportunity was the factor that really piqued his interest.

"If you think back a couple of years, companies studying CBD as a prescription product were virtually unheard of, except possibly for GW Pharma. And when it comes to using CBD as a treatment for dermatologic conditions, there wasn't anybody even thinking about it at that time."

– Botanix Pharmaceuticals President, Vince Ippolito

"The Botanix team had made a tremendous amount of progress in a very short period of time with really very little resources. They had done all of the background work to really give them a great deal of confidence moving forward with clinical programs in both acne and atopic dermatitis, and they did this really on a shoestring budget."

"It impressed me that the company worked in such a diligent fashion, but moved quickly and really respected the resources of the investors that they raised the money from."

"And as I peeled the onion back beyond that, I became very intrigued with the topical delivery system [Permetrex] which the company had acquired for dermatologic skin conditions," he said.

According to Ippolito, he was particularly interested in the company's acquisition of the Permetrex license, as he understands the necessity of effective topical delivery vehicles when it comes to dermatological products.

The reason for this is that skin diseases—or sensitive sections of skin—can often act as a barrier to topical dermatology products, meaning that delivery systems can sometimes impede "relief for patients, because they get worse before they get better".

"Some of that has to do with delivery systems that cause additional irritation, or even worse, are over-engineered to just push the molecule through the skin. And it seems with the Permetrex formulation that they really found the perfect vehicle to deliver CBD topically into the skin, to be able to address the target disease," Ippolito said.

Botanix's determination to take CBD to the dermatological market also resonated strongly with Ippolito, who undertook his own research into its antimicrobial and anti-inflammatory qualities.

He found that the CBD was perfectly suited to treating numerous dermatological conditions, as many are caused by an inflammatory response from the patient's skin.

The molecule's potent antimicrobial qualities are also highly beneficial to people suffering from chronic skin diseases, as "so many bacterial components of diseases like acne and atopic dermatitis just become a feeding ground for bacteria on the skin".

 

 

The Future Looks Green

Botanix Pharmaceuticals management sees promising things on the horizon over the next six months, as the company expects to complete Phase Two clinical trials for both acne and atopic dermatitis in Q3 and Q4 this year, respectively.

And now that its' Phase Two studies are almost complete, the company is taking the opportunity to consider what its next move should be. According to the Executive Director of Botanix, Matt Callahan, the company has "been very fortunate so far".

"But I don't think we're done. I think there's other benefits that we're going to identify in the scheme, and broader antimicrobial areas that we will find," Callahan said.

"And for me, in addition to taking on the phase two completion studies—and also a bit more work that we'll do on either one—it's really continuing to expand the area of expertise around what this drug can do, what particular benefits it can provide to patients, and then ultimately how to develop and distribute those products."

This sentiment was echoed by Ippolito, who was similarly bullish about the upcoming results of the company's Phase Two studies. However, his attention is also focused on developing the necessary "Phase Three pivotal designs" that will allow the drug to be approved by the FDA.

Ippolito believes that the data generated by these studies will be pivotal to legitimising Botanix's product offering as a legitimate dermatological treatment option, because "there's so much noise and confusion and misinformation out there today".

"Most of it is not really founded on any solid data," he said.

"Botanix is a company that will really be able to bring science to CBD, which I think is the right thing to do for these patients."

– Botanix Pharmaceuticals President, Vince Ippolito

This is an important element of the company's overall mission, as it wants to ensure that patients are confident in the knowledge that Botanix's therapeutic products have been put through a rigorous FDA trial and are "tested by physicians familiar with how the drug interacts".

And, as the company is developing products aimed at areas such as the acne market—which has not seen a new approved drug in 20 years—that also offer a considerably improved safety profile, it may open the doors for Botanix to work with other pharmaceutical developers in future.

Ippolito says that Botanix's "dance card has been very full" in terms of outreach to other companies, with the possibility that "strategic alliances or partnerships or other opportunities" may be explored in the near future as well.

Ultimately, the company hopes that the successful entrance of its pharmaceutical products into the market will both meet an unmet need in medical dermatology and serve to educate key opinion leaders and patients about the potential good that CBD can do.

 

 

Going it Alone

Once Botanix Pharmaceuticals has successfully completed its current round of clinical trials, the company will be faced with two options.

They can either pursue a licensing deal with one of the larger players operating the pharmaceutical landscape to take the products through a Phase Three trial, or they can choose to go it alone and run the studies themselves.

"We're sitting on something bigger than just the dermatologic conditions that we're studying. And a lot of those partnerships and discussions we're having are really under the auspice of unlocking the value that sits here today."

– Botanix Pharmaceuticals President, Vince Ippolito

Both Callahan and Ippolito declined to confirm which direction the company will take when queried about this possibility, however they did allude to the idea that they are "driven forever by data".

"So [we will study] what the data tells us about opportunities to take it into Phase Three, versus comparative opportunities that we have in the market—either to monetize it—or to take it to that next train station" Callahan said.

"And we've used this analogy before. Every time you stop at a train station along the journey, you get out, have a look, and you make a decision as to whether you're going to get back on that train or sell your ticket to someone else that's going to take it to the next transaction."

"We have now the skills, and the resources to take this stuff to Phase Three and ultimately through to commercialization. And that gives us real functionality that we didn't have before."

Ippolito agreed strongly with this point, saying that possibility of taking its pharmaceutical products to the Phase Three trial stage was certainly on the table, however "optionality is the key message here".

 

 

Widening Horizons

While the company initially began its research by targeting specific dermatological conditions—such as acne and atopic dermatitis—the success of its most recent trials suggests that its pharmaceutical products might have much further reaching applications than initially predicted.

As many skin diseases are driven by inflammation, the powerful anti-inflammatory qualities of CBD mean that Botanix Pharmaceuticals potential addressable market has widened considerably.

At the same time, the molecule's antimicrobial qualities also means that it may be well suited to treating patients suffering from more life-threatening illnesses. This was recently reinforced on July 15, 2019, after the company released new information regarding its antimicrobial studies.

"We are overwhelmed by the potential this new data presents. Recently we announced the ground-breaking discovery that MRSA superbugs do not develop resistance to cannabidiol, as part of our BTX 1801 program. Now we have shown cannabidiol is also an effective antibiotic against C. difficile, the bacteria that the US Centers for Disease Control and Prevention regards as a global threat requiring urgent and immediate action."

– Botanix Pharmaceuticals Founder, Matt Callahan

The latest data from the company's trials has demonstrated that one of the drug candidates from Botanix's cannabidiol antimicrobial platform displays may be highly effective at treating certain hyper-virulent strains of the bacteria Clostridium difficile.

These results are huge news for both the company, and the global healthcare community, as Clostridium difficile—which causes over 30,000 deaths annually in the US alone—is the most commonly acquired hospital infection in the world. As a result of its pervasive nature, Botanix estimates that the impact of Clostridium difficile on the US amounts to more than USD $5.2 billion a year in healthcare costs.

Aside from killing all the major human and veterinary strains of the infection—with potency levels similar to current antibiotics—the same study discovered that the company's CBD formulation can be used to treat the super hypervirulent epidemic strain of Clostridium difficile, ribotype 027, which is responsible for severe outbreaks of the disease in North America and Europe.

This new will be of particular interest to doctors operating in the developing world, as ribotype 027 has shown increased resistance to antibiotics while also demonstrating an ability to thrive in sterile hospital environments, despite exposure to industrial cleaning agents and infections. The company's CBD formulation was also found to be effective against ribotype 078, which commonly spreads between animals—most often cattle and pigs—and humans with no discernable geographic barrier.

When the news hit the market it caused stock in Botanix Pharmaceuticals to jump by 14 percent to 24 cents a share, representing an increase of nearly 250 percent since 2019 began.

"So other things that we could go after where those two properties are concerned are important. Potentially also raising broader opportunities across antimicrobial diseases and different routes of delivery," Callahan said.

"And also even a number of other applications that might not just be human skin focused."

The company's portfolio of assets is proving to be so valuable—if the results of its most recent clinical trials are anything to go by—that Botanix's greatest challenge might be working out the best way to monetize them, while still maintaining a focus on the research that is its' "bread and butter".

"We are developing products that truly represent a potential breakthrough in safety for patients. and for those patients that have to use these products for continual long-term treatment, there's nothing [like it] available on the market today."

– Botanix Pharmaceuticals President, Vince Ippolito

And from an investor's perspective it's easy to see why, as the company not only holds the license to a highly valuable delivery system technology, but also has the data—and the necessary proof of concept—to really take on several areas of the dermatological market.

According to Ippolito this is even more clear if you compare Botanix to other similar pharmaceutical companies—which may be working with three or four different molecules, each with their own unique delivery system—as it significantly increases the "risk quotient as you move from disease to disease".

"In regard to dermatologic skin conditions, we're highly focused in what we're doing today, but we are also thinking linearly within that line."

"What are other diseases where there's no great medications or treatments today? Can our CBD formulation and delivery technology work for them?"

"So maybe that's low hanging fruit, but then we're also thinking to the left and right of that as well. As in what are the potential orphan diseases which this can be applied to, where there currently is no really great treatment," Ippolito said.

To aid in this, Botanix is considering undertaking a US-focused capital raising effort, while also exploring potential partnerships or collaborations as a way of co-funding the company's ongoing work.

Although in the past the company has typically sought additional backing from Australian investors, Callahan admits to having become somewhat jaded by the "rinse and repeat" nature of the process.

"So finding a way to get the capital that we need to progress—but also to return value to shareholders—is kind of a key focus for us at the moment, and we're looking at a potential US rising," Callahan said.

 

 

High Expectations

When Botanix Pharmaceuticals first listed on the ASX in July 2016—generating $3.5 million for two cents a share—it used the shelf of a Perth-based biotech company known as Bone Medical. Like Botanix, Bone Medical were also in the process of developing several pharmaceutical products targeting serious conditions such as osteoporosis and rheumatoid arthritis.

Unfortunately, the company's clinical trials ended in failure, sending Bone Medical into a death spiral that allowed Botanix to pick up its listing and enter the market. However, this is where the comparison ends. Unlike many of its competitors—who have rushed out unapproved over the counter (OTC) products to capitalise on the growing CBD craze—Botanix is taking a decidedly slow and steady approach to clinical research.

Although this means that the company will have to invest considerably more time and money into bringing its products to market, the eventual return for investors could be equally as huge. While OTC creams containing CBD can typically sell for up to USD $100, the company's management predict that with FDA approval it will be able to sell its pharmaceutical products for USD $2,000 to USD $5,000 a tube.

If this seems outlandish, then it's important to remember that last year GW Pharmaceuticals confirmed that the cost of its flagship CBD based drug Epidiolex—which is used to combat treatment-resistant epilepsy—would be USD $32,500 a year.

Luckily for Botanix investors, the company has both the technological acumen and the management talent needed to push its products to the finish line. In fact, when Vince Ippolito oversaw the acquisition of Anacor by Pfizer in 2016 for USD $5 billion, the company was in the middle of Phase Three dermatitis trials.

I don't know about you, but that sounds like serendipity to me.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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