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March 14, 2016 Issue

The Most Powerful Name In Corporate News and Information


New Topical Therapeutic showing promise to significantly Reduce Scar Tissue formed following Surgical Wound Closure



Interview with:

Stephen Whitehead - President & CEO and Parimal Nathwani - Executive Chairman

Stephen Whitehead

President & CEO


ScarX Therapeutics Inc.


Interview conducted by:

Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – March 14, 2016


CEOCFO: Mr. Whitehead, would you tell us the concept behind ScarX Therapeutics?

Mr. Whitehead: From a business perspective, we formed ScarX to develop a single very promising asset, which the company is now funded to develop and intends to take through to completion of Phase II B. At that point, we will be looking at an exit, such as a sale to large pharma or potentially a venture capital firm.


From a technology perspective, ScarX identified very promising technology developed at the Toronto Hospital for Sick Children based upon over thirty years of research conducted by Dr. Benjamin Alman. That research identified a key protein that regulates the amount of scar tissue that forms following surgical wound closure. We believe we have a promising therapeutic that will ameliorate or significantly reduce the amount of scar tissue that forms following surgical wound closure.


CEOCFO: Are you speaking of internal, external or both?

Mr. Whitehead: We are speaking of topical dermal application presently. In theory, it would have potential application for any scarring or fibrotic process but the asset is being developed as a topical therapeutic for now.


CEOCFO: How does the protein work so that it helps reduce scarring?

Mr. Whitehead: When the skin is injured, the body’s immune system goes into immediate action to close the wound. There are a number of signals that happen and are typically carried out by proteins. In this case, we focused on one protein called beta-catenin. After wounding, within a couple of days the level of beta-catenin in cells of the skin elevate significantly for a period of about three weeks and then they reduce back to a baseline level. During that three-week period, this protein activates a specialized cell type called fibroblasts, which ultimately produces the collagen, which is the scar tissue as we know it. The drug that we have identified down-regulates or turns down the volume on the amount of beta-catenin that is produced and as a result it reduces fibroblast activity and the amount of resulting scar tissue.


CEOCFO: I am guessing that reducing the level does nothing to inhibit healing?
Mr. Whitehead:
That is correct. It reduces the level but it does not take it below the normal baseline. Secondly, we have conducted a number of rigorous studies in preclinical models that have looked at the resulting scar tissue, including the strength of it as well as the time to healing. Neither one of those are impacted, in fact there are some indications the resulting wound may actually be a stronger possibly because there is less scar tissue involved in the healed wound.


CEOCFO: How is scar tissue addressed today?

Mr. Whitehead: There is no adequate or optimal way to address scarring currently and no real gold standard or agent approved as a prescription. A number of review papers cite a number of different approaches. Everybody heals differently; even different parts of the same individual’s body will scar differently. The best methods at present are around keeping the tissue moisturized without too much tension on it. Of course the actual procedure itself and how well the wound has been closed has a lot to do with scaring as well. There are a large number of remedies available over-the-counter and on the Internet, but if you look closer you will see that none of them have the rigor of prospect randomized studies behind them. Mostly, it’s unproven how effective they actually are.


CEOCFO: What have you learned so far in the process?

Mr. Whitehead: It’s apparent that everybody wounds differently and even different parts of the body respond differently to scarring. Because we are working with a specialized organ, which is the skin, all of the individuals that we have involved in the development of this asset are specialized in dermatology. The development program requires careful consideration and the design of the clinical studies is extremely important. The way we are going about it is to look at two wounds of similar if not identical nature in the same individual and treating one with the placebo cream and the other with the active, so that you actually have what is called “a within-patient comparison.” If you were looking at two different wounds on two different people, it would be much harder to compare because of this variability I mentioned to you.


CEOCFO: Does it matter what part of the skin and body?

Mr. Whitehead: It is very different from site to site in the body. For example, studies are often conducted on the inner aspect of the arm which tends to scar quite well. Other places, for example the hip, will have a more pronounced scar. A lot of it depends on the thickness of the skin on the part of the body. Other contributing factors might be the amount of joint motion, which may stress the wound when it is healing. There is high variability, but a particular type of scar that is of interest to a great number of people is hypertrophic scars. These scars produce those elevated levels of beta-catenin that I mentioned, and they tend to remain elevated for a protracted period and perhaps much longer than the usual three weeks. They could remain elevated for a couple of years, producing hypertrophic scars that are the large red raised scars that you sometimes see on wounds. Many people have them. There is a wide range of the population, anywhere from 40 to 90 per cent of the population who are prone to hypertrophic scaring.


CEOCFO: You had a recent funding; how far will it take you?

Mr. Whitehead: The recent financing of $2 million Canadian that we just closed on will finance the company for approximately the next eighteen to twenty-four months. It will allow us to complete our Phase I clinical trial, which is a single center study.


CEOCFO: Would you tell us about the repurposed drug?

Mr. Whitehead: It is very fascinating. The drug was originally developed in the late seventies in Europe as a non-narcotic analgesic to be used for post-surgical pain. For those of us who have been around for a little while, if you cast your mind back to the late seventies and early eighties there were no non-narcotic analgesics at that time other than aspirin and Tylenol. That has changed quite a bit. The drug was developed in Europe and continues to be prescribed there but it has never been developed anywhere in the world as a topical agent so it was actually through a drug screening conducted by Dr. Benjamin Alman through the Princess Margaret Hospital here in Toronto, that the drug Nefopam was identified as an agent that down-regulates beta-catenin. The good news is that we have in excess of thirty years of safety experience with the drug administered orally or systemically, which is beneficial. The topical application shows, at this point, no toxicity as you might expect. Secondly, we are a bit ahead of the game because the active drug substance is well characterized and manufactured under GMP conditions in Europe already so there is a huge cost savings in terms of the drug development part. It is de-risked from a safety perspective and it accelerates our development program because the API, or active drug, is already available and manufactured.


CEOCFO: Is the medical or dermatology community aware of what you are working on yet? What is interest?

Mr. Whitehead: There is an increasing level of awareness. The company is still very small and our studies are at an early stage but we have conducted focus groups with plastic surgeons in particular and we have had extremely positive feedback from them. It was interesting to learn that most patients who go to see a plastic surgeon actually expect no scar at all; they have high expectations of the skills of plastic surgeons. The reality is that everybody scars and although plastic surgeons typically are the subject matter experts in scarring, they still are challenged with minimizing the amount of scar tissue that forms particularly hypertrophic scars. They are extremely keen to see something come out that will be proven and that they can add to their toolbox to help their patients. There is hope that beyond the initial market, that being cosmetic and reconstructive surgery, that the drug might have great benefit down the road for other types of scars such as from burn, traumas and routine elective surgeries.


CEOCFO: What are the most important things you have learned from your past experience - what to do and not to do in bringing a drug to the forefront?

Mr. Whitehead: I would say that to begin with the end in mind. You have to understand who the end users will be and what their expectations and needs are. Working backwards from that point, the level of rigor that you apply to developing the asset, the extent of consultation and engagement with the various stakeholders and the pool of knowledge that you tap to try to maximize the asset are critical and take a lot of thought and collaboration.

Mr. Nathwani: I agree with everything Stephen has said regarding drug development. If I approach it from the business angle, I would say what we have learned is in the context of making sure we bring to bear the right plan, experts and financing around the opportunity and build it in a step-wise manner. That was essential for ScarX. The company has been around for a relatively short time. The company took an asset from a basic invention or discovery stage from the Hospital for Sick Children, and then spun it out into a company. We’ve developed both the company and asset all the way to the door of a Phase I clinical trial. This is a herculean task for an asset coming out of an academic institution. This is where groups such as MaRS Innovation and Hospital for Sick Children are critical. Without our early investment in developing this technology, it wouldn’t be ready for a Phase I trial now.


CEOCFO: Why is ScarX Therapeutics important and the real thing?

Mr. Whitehead: We have taken great interest and a lot of time looking at what those before us have done and why they may not have made it past the clinical trial goal posts. There are a few factors but I think overall, it is what has been collectively learned in the scientific community over the last decade in the field of scarring and wound healing. Instrumental to that, I will point back to Dr. Alman’s groundbreaking work where he identified this critical three-week window where the levels of Beta-catenin are elevated. Many of the other agents that have been developed or are in development are targeting other aspects of the scarring process. If you look at the designs of their studies, in some cases, they missed this three-week window entirely in their course of treatment. But it’s hard to point conclusively to any one thing. I think the underlying science and having what we believe is the correct target is key. Another important factor is the root of administration. Many of the agents being developed as prescription therapeutics must be administered by interdermal injection because they are biologics and are much larger and more complex molecules. ScarX is very simple in terms of being a topical cream but still delivers a potent and targeted drug to influence the scarring outcome. I think those are really key elements but it all comes back to the underlying scientific foundation of Dr. Alman’s work around the role of Beta-catenin and the influence of the drug Nefopam itself on the scarring process, which we believe is groundbreaking and promising.


CEOCFO: Final thoughts?

Mr. Whitehead: My final though echoes what Parimal was saying, how tough it is to get off the ground as a startup in the therapeutics space. It’s particularly the initial $1 million to $3 million investment that falls in-between what the VCs might find attractive; they are often looking to make much larger investments. Then there is the angel community and they are typically looking at smaller numbers of maybe a million dollars or a million and a half. To have the backstop of an incubator and founding partners that are invested in the technology and want to see it commercialized is hugely helpful—in this case with MaRS Innovation and Sick Kids. In general, for any startup, having that backstop of an incubator environment is really important. It is a pretty tough slug in the first couple years.


“The reality is that everybody scars and although plastic surgeons typically are the subject matter experts in scarring, they still are challenged with minimizing the amount of scar tissue that forms, particularly hypertrophic scars.”- Stephen Whitehead


ScarX Therapeutics Inc.



Stephen Whitehead

(1) 647.258.4493







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