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TRACON leverages its innovative product development platform that includes US commercializing expertise to license potential best-
Charles P. Theuer, M.D., Ph.D.
President and CEO
Tracon Pharmaceuticals Inc.
Mark Wiggins, Chief Business Officer
Andrew McDonald, LifeSci Advisors LLC
Interview conducted by: Bud Wayne, Editorial Executive, CEOCFO Magazine
Published – March 2, 2020
CEOCFO: Dr. Theuer, on your website one of the first things you see is that Tracon Pharmaceuticals Inc. is focused on being a leader in the development of targeted therapies for patients with cancer, ophthalmology and fibrotic diseases. Why is this such an important area that offers so much hope?
Dr. Theuer: Our goal is to advance the current standard of care by identifying unmet needs in the care of patients, with our main focus being in oncology. While most patients with advanced or metastatic disease will succumb to their disease, there are clearly new therapies, especially targeted therapies, that have made a huge impact on cancer care. Our goal is to participate in this revolution of cancer care through the concept of precision medicine whereby certain aspects of a tumor dictate that a certain therapy should be effective. Our lead asset, which I will talk about later, is an example of a precision medicine approach that we expect to develop to improve the care for sarcoma patients with advanced or metastatic disease.
We also have an important program in wet age-
CEOCFO: You were Director of Clinical Oncology at Pfizer, Inc., and had a great deal of other experience before joining Tracon in July of 2006. How did your prior experiences prepare you for your challenges at Tracon and what are some of the things you can point to that show your imprint as CEO of Tracon?
Dr. Theuer: Pfizer was a really defining moment for me and for many of our team members here at Tracon who were also part of teams that developed life changing therapies while at Pfizer. One drug that we were intimately involved with while we were part of the clinical oncology group at Pfizer is called Sutent, which is still a commonly used drug for the treatment of kidney cancer more than ten years after its approval in 2006. Prior to the approval of Sutent, the standard of care treatment for kidney cancer patients was a drug called interferon alpha that was associated with numerous and sometimes severe side effects, including severe flu-
CEOCFO: Your approach to doing clinical trials is unique in this industry. Would you tell us about that?
Dr. Theuer: One thing we are proud of at Tracon, beyond our goal of bringing new drugs to patients that we hope will change the standard of care, is our way in developing drugs that we feel is faster, generates higher quality data and it is less costly than the typical model of drug development. We have developed what we call our product development platform of drug development which is a CRO independent drug development platform. The way drugs are typically developed by most companies is they have a plan and they have a drug, but in order to implement the actual clinical trial to prove activity of the drug, they outsource the conduct of clinical trials to a contract research organization, or CRO. The problem with that is that CROs generally operate on a fee-
CEOCFO: How does that affect the cost of bringing a drug through clinical trials?
Dr. Theuer: One important part of our product development platform is the cost, as we do trials at less than half the cost of companies that are beholden to CROs. That is an important aspect of the Tracon business model that reflects our innovative culture. While we instituted the product development platform to lower the cost and speed the development of our own drugs, we realized our platform that also includes US commercialization expertise, was not just a great business model for developing our own assets, but could benefit companies in need of the advantage of our unique capabilities. As a result, our product development platform has been the basis for collaborative partnerships with multiple companies, whereby these companies trust us to manage the regulatory and clinical development aspects of development and commercialization in the US, in return for which where we share the risk, we share the cost and then we share the potential profits, knowing that we are able to do trials that at a much lower cost than they would pay a CRO, and knowing that we provide much better economics than a typical royalty from a pharma company. Thus, our product development platform helps us develop our own molecules and also helps us to secure partnerships to new potential first-
CEOCFO: Dr. Theuer, would you tell us about one or two of the deals that you have?
Dr. Theuer: We are really excited about our most recent deal. That deal came about when we reviewed data at the ASCO 2019 Cancer Conference showing the class of therapies called checkpoint inhibitors that have revolutionized cancer care across multiple tumor types, are active in refractory sarcoma, which is a rare tumor of connective tissue that has limited treatment options that are associated with low response rates. Importantly, sarcoma consists of many different subtypes; there are over seventy subtypes of sarcoma. Of those subtypes, checkpoint inhibitors, which reactivate the immune system to attack the tumor, are active in certain common subtypes, including undifferentiated pleomorphic sarcoma, or UPS, but not every single one. Notably, the ASCO data showed a checkpoint inhibitor produced a response rate in UPS patients of 23%. That’s impressive, because patients with refractory UPS treated with standard of care treatment have about a 4% response rate!
We therefore embarked on worldwide search for a potential best-
CEOCFO: What led you into the area of Wet AMD? Would you tell us about macular degeneration and why DE-
Dr. Theuer: We have a drug in our pipeline called DE-
We developed DE-
CEOCFO: What are some of the other indications and clinical trial you have ongoing today?
Dr. Theuer: Beyond Envafolimab and DE-
One additional asset in our pipeline is TRC102, which is a small molecule designed to reverse resistance to chemotherapy. We have a cooperative research and development agreement with the National Cancer Institute, such that the NCI funds the four ongoing clinical trials of TRC102. We expect updated clinical trial data will be presented at the ASCO 2020 Cancer Conference.
CEOCFO: You have partnerships with 3D Medicines and Alphamab Oncology, Santen Pharmaceutical Co., Ltd., Janssen Pharmaceuticals, and I-
Dr. Theuer: The most important partnership we have done is the most recent one with 3D Medicines and Alphamab Oncology, because it solves for our quest to license a product that has near-
By commercializing in the US, we would satisfy our vision to becoming a fully integrated company. By fully integrated company what I mean is we have a powerful developmental engine, our product development platform that we feel is second to none. We have access to a broad pipeline of assets that we have discussed, but what we did not have until the December Envafolimab deal was a near-
CEOCFO: Would you tell us about the potential markets for the therapies you have in development? What are some of the current treatments and how will for example Envafolimab be different?
Dr. Theuer: In sarcoma today, the standard of care first line agent is a drug that was literally approved more than forty years ago, called doxorubicin chemotherapy. That gives you an idea of the progress that still needs to be made in the treatment of patients with sarcoma. There have been some more recent approvals in sarcoma that includes the tumor type of sarcoma we are most interested in, called UPS: Votrient is approved for patients who fail doxorubicin chemotherapy, but the response rate is 4%, so clearly there is room for improvement. No drug approved in sarcoma actually releases the immune system to attack the tumor. That is the unmet need we want to meet with Envafolimab. We feel the market size for Envafolimab in UPS and select other sarcoma subtypes would be about $200 million. Our eventual goal is to expand beyond the initial proposed study of UPS patients into broader sarcoma subtypes which could substantially increase that market.
CEOCFO: Is reaching out to the investment community an important part of your role as CEO? Do you attend much conferences and if so, what has been their response to your targeted therapies?
Dr. Theuer: We are constantly reaching out to investors and we fortunately have relationships with some great bank analysts at Wells Fargo, Jefferies, BTIG, and H.C. Wainwright. I think the analysts and investors have been very excited by our most recent deal with 3D Medicines and Alphamab Oncology, as a way to realize our vision of being a company with the near-
CEOCFO: You recently announced a change to Nasdaq Capital Market. Why is that important?
Dr. Theuer: Our listing on the Nasdaq capital markets is critical to our success to continue to attract investors including retail investors as well as institutional investors that will support Tracon and our story. We have an ATM facility and equity line of credit that require we be a publicly listed company.
CEOCFO: In closing, do you have the funds in place to continue growth and development?
Dr. Theuer: One unique thing about Tracon, is that because we have our product development platform, our capital requirements are much lower than companies that are beholden to CROs. For the next year our capital requirements are about $4M per quarter. Thus, our current cash provides capital into 2021 and have an equity credit line for $15M as well as an ATM facility that we can utilize to further extend the runway. Beyond that, we also have the opportunity to receive success based milestones from our partners. For example, if J&J opts-
“The most important partnership we have done is the most recent one with 3D Medicines and Alphamab Oncology, because it solves for our quest to license a product that has near-