During Kite Pharma’s (NASDAQ: KITE) company presentation at the February 2015 BIO CEO Investor’s Conference in New York, Arie Belldegrun, M.D., created a noticeable buzz among attendees when touting the latest developments coming out of the company he founded back in 2009. But having successfully started and sold two biotechs (i.e., Agensys and Cougar Biotechnology), Kite’s chairman, CEO, and president knows biopharma investors can be a fickle bunch — often jumping on company bandwagons when early results provide promise of profits, and abandoning ship when returns aren’t realized. This is why the biopharmaceutical game, one of lengthy endurance, is best played by those whose attributes include passion, patience, persistence, and probably a good deal of wisdom, too. These are qualities Belldegrun seems to possess in spades.
In the United States, there are currently three companies leading the tumor-targeting engineered T-cell race (Juno Therapeutics, Novartis, and Kite). However, only one can claim to have a physician and current practicing scientist at its helm — Kite.
Belldegrun, who has authored several oncology books and more than 500 scientific medical papers, is also a professor of urologic oncology at UCLA. He sat down with me for this Q&A before oncology’s biggest gathering — the American Society of Clinical Oncology (ASCO) annual meeting — to share his insights and why he believes Kite Pharma will soar higher in the ever-enlarging T-cell race.
What Was The Impetus Behind Starting Kite Pharma?
The year we started Kite (2009) was the same year I was involved in the sale of Cougar to J&J. A group of us scientific founders at UCLA were thinking about what would be the next wave of scientific interest to hit the biopharmaceutical community. Through our discussions, we felt it was probably the right time for immunotherapy research to move out from being primarily an academic exercise and into a commercial company. The information and technologies that existed in 2009, in combination with developments that had taken place in cell and gene therapies, such as being able to clone enough genes for a scientist to be able to work with, all seemed to indicate that the time was right to actually build a biotech company dedicated to the development of engineered T-cell therapy. To the best of my knowledge, Kite Pharma was the first company dedicated to what we called, eACT™, Engineered Autologous Cell Therapy, which means you take the cells from the patient, you engineer them in-vitro in the laboratory, and you give them back to the patient in a now-superboosted and activated form. I like to think of the engineering process as outfitting a cancer-fighting cell not only with a weapon, but a GPS tracker so it can go directly to the cancer cell to do its job, while sparing normal healthy cells that are nearby.
We had the good fortune to be able to go back to where I started at NCI (NIH’s National Cancer Institute) and meet with Steven Rosenberg, M.D. He had continued to develop his immunotherapy research, and I had been keeping up on his work. Rosenberg had several patients he had treated with engineered T cells in two different technologies, chimeric antigen receptors (CARs) and T-cell receptors (TCRs). When we saw the first responses from these few patients, their cancer regression was dramatic, with tumor disappearance only a few weeks following initiation of therapy. In our collective careers, none of us had ever seen this type of response. We clearly understood that this was something quite transformational, and this is why we started Kite Pharma.
As 2009 Was On The Tail End Of The Great Recession, Why Not Wait To Start Kite?
It was in 2008 when we actually started discussing selling Cougar Biotechnology to a major pharma. While it seemed like the right time to sell, it was during the worst financial time in recent memory. But we had an offer which made Cougar one of Wall Street's largest acquisitions of 2009. So while many might have viewed the recession as a time to exercise caution, because everything was so depressed, we saw it as an opportunity. Because most folks were conserving cash, they weren’t looking at university IP. As a result, 2009 was a great opportunity for Kite to accumulate a set of IP from different companies and universities. Because of the extensive IP portfolio we were able to collect, we got a tremendous head start on many other companies.
As for financing, the sale of Cougar afforded us the ability to self-finance Kite. Because we didn’t have to immediately go out and look for investors, we could focus our effort on the IP component. In addition, because some people had followed me through some prior investments and had done well, angel investors like David Bonderman of TPG Capital, as well as others, were proactively contacting us asking if they could participate in Kite as a startup. As a result, it wasn’t until late 2010 that we finally decided to raise a small “A” round of financing. It was much easier to get buy-in from outside investors, since my fellow founders and myself have always been willing to put some of our own skin in the game during every financing round.
What Are Some Of The Regulatory Challenges When A Product Involves A Completely New Field Of Research?
Sometimes, companies are working on therapeutics that seem to fall somewhere between a drug and a product. But the FDA has two arms: CDER (Center for Drug Evaluation and Research), which deals with the drug component; and CBER (Center for Biologics Evaluation and Research), which deals with the biological component. The latter looks at the cell and gene therapy technologies we are developing at Kite. To evaluate the therapeutics we are developing, the CBER branch of the FDA has to have expertise in cells, clinical data, clinical cancer, clinical gene therapy, and the manufacturing process. That’s a lot. Now, I am not an expert on the internal workings of the FDA, but when it comes to how they will go about evaluating engineered T cells, it looks like CDER and CBER will have to work collaboratively, since approving such a class of drugs will be an FDA first. Most likely, CBER will be evaluating the cell and manufacturing side, while CDER will be taking a hard look at the data and clinical patient outcomes.
As it stands right now, CBER has primary responsibility for evaluating our product, since they gave us the breakthrough designation. It should be noted that no biologic that has received a breakthrough designation on behalf of CBER has yet received an FDA approval. Thus far, everything that has been approved for cancer as breakthroughs has gone through CDER. But again, we see this as an opportunity, as the goal of designating a product as a breakthrough is to get the product to the patient more quickly. Right now our timeline for that is very short. We are finalizing our registration studies, which is our last group of studies being prepared for the FDA. If all goes well, we plan to submit the entire package to the FDA by the end of this year, with the hope that it becomes commercial sometime mid-next year. Since the FDA has never approved a class of drugs which are engineered T cells of patients, now reengineered and infused back to the patients, there are a lot of questions of safety and efficacy, which are the prime concerns and responsibilities of the FDA. So, the FDA is going through the process of learning this whole new field as well. While we are all running very fast to help usher in this new era of engineered T-cell therapy, I believe this technology will go well beyond just treating cancer patients, to other diseases as well.
What Are The Differences Among Kite And The Two Previous Companies You Founded?
The first one, Agensys, was founded in 1996. At that time, we were involved in cloning the human genome. We didn’t know a whole lot about genes, so the idea for companies like Human Genome Science and Celera was to produce multiple genes or discover new genes, and throw these out to other companies and let them evaluate — basically gene discovery. Agensys was more of a boutique approach. We said let’s clone a gene, find a new gene and understand the biology, and then see how we can use that gene to convert it to a drug. From the start of this gene discovery, we began developing a whole battery of monoclonal antibodies. While today, this is now the standard, 20 years ago, developing and humanizing monoclonal antibodies was quite a challenge. Agensys came up with a great list of antibodies.
When I look back at the challenges we had at Cougar Biotechnology, at the time they seemed great, but at the end of the day, we made a pill. We knew this pill had a good chance in prostate cancer and possibly some chance in breast cancer, too. But to stay focused, we developed it just for prostate cancer. Though we all knew the pill was effective, the expertise revolved around taking it through global clinical trials as fast, and as safely, as we could.
These two companies are completely different from what we are doing today at Kite. First, we are working with a completely disruptive technology. Second, engineered T-cell technology will go way beyond cancer. But even in oncology you can develop the T-cell technology for a variety of different cancers. For example, hematologic (blood) cancers (e.g., leukemia, lymphoma) were the first proof-of-concept (POC) that we took to the FDA. This work led to multiyear hematologic collaborations with companies like Amgen, focused primarily on CAR-Ts. However, with CARs we are also working on multiple other products that extend beyond just blood cancers. On the engineered TCR programs, we have multiple collaborations with other companies, such as Bluebird Bio, to develop the next generation TCR cell-therapy products to treat HPV (Human Papillomavirus)-associated cancers. At Kite, we have essentially a platform technology that has the potential to treat every type of cancer. All we need is the right target on the surface of the cells. The new concept today in immunotherapy is that the cell of origin (i.e., where the cancer originates) is less important than what the cell expresses on its surface. So if a cancer cell expresses antigen “X” on the surface, whether it is a brain or kidney tumor, or perhaps a melanoma, it doesn’t make a difference, because these are all potential candidates for a treatment that can knock out antigen X. In other diseases, engineered T cells can be developed toward treating nononcology indications such as HIV, autoimmune diseases, and difficult inflammatory bowel diseases. To be successful, depending on the disease, some of these will need to activate the gene within the T cell, while others will have to suppress the gene.
As this is a platform technology, at Kite we decided very early on to develop a manufacturing facility for T cells, yet be agnostic of what will be produced there. This is why we acquired a company called TCF (T-Cell Factory) in Amsterdam. And now we have a commercial manufacturing plant in El Segundo, next to the Los Angeles airport. In addition, we have a clinical manufacturing facility in Santa Monica, where we are now actively developing and producing cells for clinical trials. Each facility is different. What Kite has that is different from the two previous companies I was involved in founding is an opportunity to transform all of medicine, rather than developing just one drug at a time.
How Were You Able To Create A Successful Collaboration With the Government?
One advantage I had was having worked with Dr. Rosenberg as a post-doc fellow. When I went to him expressing the value of his work to the benefit of patients, I also pointed out that despite all this great work, there has never been a drug that has been developed by government organizations like NCI. This is a problem. Dr. Rosenberg was sitting on top of transformational research being used in the clinic. So when I asked him why he had never developed it into a drug, his simple answer was that he didn’t know how to do that. The NCI has great mechanisms in place to fund researchers, but doesn’t have the mechanisms for how to develop a commercializable product that could benefit so many more people. I told him if he agrees to work with us, Kite could become the commercial arm for the engineered immunotherapy for the specific project in which he is currently involved. He was very happy to partner with us.
But this is the government, and as such, there are details for how to collaborate with nongovernment organizations. To facilitate collaboration, Kite had to enroll in a cooperative research and development agreement (CRADA), which is essentially a partnership between the NIH and a biopharmaceutical company. This is very different from merely allowing a company to license a government-developed molecule. Because the scope of what we wanted to do was so large and involved doing joint R&D, collaborative clinical trials, and moving technology out from NIH and improving it in our manufacturing plant, it took us two years just to sign the deal. Because so many different agencies and the government had to be involved, the transfer went all the way to the desk of the president of the United States, as well as the heads of the NCI and NIH. It was a long process; and while two years is a long time, and admittedly did involve some frustration, the relationship we have forged with the NCI is second to none. We have weekly conferences and visits. The NIH is sending people to work with Kite, and vice versa. The collaboration is very active. The benefit for us is that we can tap into the best brains at the NCI to work on engineered T cells. Though I had trained as a post-doc at NCI, doing business with a government entity was something completely new to me.
Since the signing of that initial CRADA, we have expanded this relationship to other departments beyond that of Dr. Rosenberg. Some of the people we started working with, who are great scientists who started off as fellows like me, are no longer working with Rosenberg, but continue working as independent investigators at the NIH. So we had to go through the whole CRADA process again to keep these folks involved. Now we have three CRADAs with three different units at the NIH. Of course, we learned to do it quicker. The fact that we had established a great deal of trust expedited the process, while minimizing the bureaucracy that can often come with partnering with large government organizations.
But this isn’t a one-sided relationship, as the NIH benefits from us as well. We are paying them an annual fee and supporting the research in their labs. If we sell the company, they will have a significant royalty stream.
Given The Work At Kite Is More Of A Platform And A Process, Is There Any Concern With IP Challenges Similar To What We Saw With Mayo Collaborative Services Versus Prometheus Laboratories?
We have put a lot of effort into securing our technology. Basically, there are three types of IPs that are a focus for Kite. One is the engineering of T cells. Early on, we secured very broad IP patent protection on the creation of CARs. While the notion of engineering a T cell to be able to find and kill a cancer cell seems well understood and straightforward today, such was not the case some years ago. Therefore, IP patent protection was given to five different institutions, all of which license to Kite. So basically, we own the license for the creation of CARs. Another type of IP is the process by which we are creating this factory for T cells. This is the secret sauce, and therefore, everything that we are doing is proprietary to Kite. For other companies, the process is proprietary to them. Some can be patented and some cannot. There is a very complicated way of producing, simplifying, and automating manufacturing, and each company has its own IP on that particular group. The third piece of IP is the antigen on the engineered TCR. That antigen is something you are licensing from scientists. We now have about seven types of genes from which we are developing the therapy. We license these from the NIH, as well as other places. There’s a race to have more and more targets for IP.
While the IP map is pretty clear in the U.S., outside of our borders, it becomes much more convoluted. For example, I had a delegation visiting from China the other week. During their visit, I was informed by a leading Chinese health authority that there are 500 companies in China working to produce CARs. Though I was shocked, it gives you a glimpse of the proliferation that is taking place around Kite’s technologies. In the United States, it’s much more regulated and a completely different system. Both of our competitors (Novartis and Juno Therapeutics) have similar transformational data on patients that failed every possible therapy. However, one point of differentiation is at Kite, we have the longest follow-up data on patients who are alive and well without cancer for over three years. Keep in mind that at the time of their diagnosis, they probably had a life expectancy anywhere from three to six months. We will be sharing this information, as well as insights on what we see as being the future of engineered T-cell therapy, at this year’s ASCO meeting in Chicago.