The Attractions of PYC's pipeline

Perhaps it’s just an Aussie thing, but ASX investors seem to lack interest in biotechs that are focused on rare disease drug development. Whereas diseases with huge markets such as arthritis, numerous cancers, diabetes or Alzheimer’s can easily generate investor interest, orphan diseases don't garner the same attention.

Back in 2015, a (current) CEO of a (successful) ASX-listed biotech, who at the time was a commentator on ASX-listed biotechs, stated that “most proper pharma companies won’t touch them (i.e orphan indications) with someone else’s barge pole.” While it’s unclear whether this comment merely reflected the thinking of many investors and funds, what is clear is that this type of comment won't encourage investment in this shunned biotech sector.

Australian biotech, Neuren Pharmaceuticals (NEU), might be about to change that negative view with an FDA marketing approval decision due next month for its lead candidate, trofinetide in Rett syndrome. Hopefully, any successful outcome for Neuren, which is now focused solely on rare, monogenic, neurodevelopmental disorders, will help to shift Australian investor sentiment towards orphan diseases.

Having been invested in Neuren over the last decade, I’m relatively familiar now with orphan diseases and the benefits they can provide as pipeline assets. Hence, I’m a fan of PYC’s decision to select orphan disease drug candidates for its early pipeline. I'll also point out that PYC’s drug candidates, while still early-stage, offer a higher probability of success than Neuren’s did at the same stage.

Listed below are 6 attractions I see in PYC’s orphan disease pipeline selection.

Orphan (rare) diseases

PYC’s leading drug candidates, VP-001, PYC-001 and PYC-002 all address orphan diseases - Retinitis Pigmentosa Type 11, Autosomal Dominant Optic Atrophy and Phelan-McDermid Syndrome.

Orphan diseases are defined in the US as conditions that affect fewer than 200,000 in the US population and in the EU as conditions that affect no more than 5 in 10,000 people in the EU population. Orphan disease designations and regulatory review pathways are not limited to the US and EU; they also exist in Japan and China.

Orphan disease indications offer multiple benefits - a faster and cheaper path to market, easier to identify/access patient populations and special market exclusivity provisions that provide protection from generic competition. In the US, the FDA also provides orphan drug developers with more guidance, waives some fees, seeks out patient/caregiver perspective on the disease and reviews marketing applications with greater flexibility.

Higher prices are commanded by orphan drugs (average US pricing for an orphan drug is $150,000 p.a.) Hence, the market served by an orphan drug can have a value in excess of $1bn. Furthermore, under the US Inflation Reduction Act 2022 signed into law last year, orphan drugs for a single indication are exempt from Medicare price negotiation.

The multiple benefits attached to orphan drugs have led to strong pharma interest in orphan assets. This is evidenced by Amgen’s US$28bn acquisition last December of rare disease company, Horizon Therapeutics.


Monogenic (Mendelian) disorders

VP-001, PYC-001 and PYC-002 all target monogenic disorders with identified root causes.

Targeting disorders in which a specific gene variant has been identified as the root cause doubles the likelihood of drug development success; if the monogenic disorder targeted is rare, the likelihood of success increases five-fold compared with a standard drug in development. Hence, a drug in Phase 1 development  for a rare monogenic disorder has an equivalent likelihood of approval (~50%) to a standard drug post-Phase 2.


Target disease caused by insufficient expression of one gene (haploinsufficiency). Proposed therapy works by restoring gene expression toward normal levels

Genetic diseases can cause errors in the code sequence carried by the mRNA, leading to abnormal protein production. In certain monogenic diseases – where a single gene is affected, if the disease-causing mRNA can be targeted and silenced then negative impacts of the abnormal protein production can be avoided. This is the basis of the therapeutic approach utilised by PYC.

Evans & Partners Report, 20 December, 2022

PYC’s lead indication, Retinitis Pigmentosa 11, is caused by insufficient expression of the protein coding gene PRPF31 in the retina. The second indication, Autosomal Dominant Optic Atrophy, is caused by insufficient expression of the protein coding gene OPA1 in the cells that form the optic nerve in the eye.  The third indication, Phelan-McDermid syndrome, is caused by a mutation in or loss of one copy of the protein coding SHANK3 gene. The goal of all three PYC drug candidates is to increase protein levels towards normal and above the anticipated disease correction threshold.


Disorders with severe impact and no disease-modifying treatments

Retinitis Pigmentosa Type 11 and Autosomal Dominant Optic Atrophy are both progressive blinding diseases. Phelan-McDermid syndrome causes life-long disabilities including intellectual disability, developmental and speech delays and motor regression. There are currently no approved disease-modifying treatments for these disorders.

All three disorders have patient registries and/or strong patient advocacy groups which facilitates faster trial recruitment and patient uptake on marketing approval.

An additional attraction of severe diseases with no approved therapies is that they are eligible to request FDA priority review, which shortens the time for FDA marketing approval review from 10 to 6 months.


All pipeline candidates are being tested pre-clinically in patient derived cells

PYC’s retinal disease drug candidates have been tested pre-clinically in patient-derived cell models. According to CSO, Sue Fletcher, these patient-derived cell models provide unique insight into what might be expected when PYC’s drug is delivered into the patient’s eye. Patient-derived models have been shown to recapitulate the disease state of humans and are viewed as the gold standard in preclinical efficacy readouts for genetic eye disease.

Cellular models derived from patients with PMS are also currently being used to study PYC’s CNS drug candidate for Phelan-McDermid syndrome.


Lead drug candidates targeting eye disease

As explained by Evans & Partners’ David Nayagam, who has considerable expertise in the area of retinal disease, the eye has the advantage of being a self-contained space. Drug development in the eye limits the possibility of immune reactions and systemic toxicity.

An additional advantage is the existence of well-developed objective measures for eye health and sophisticated non-invasive imaging techniques.

Nayagam provides the further insight that the eye is quite literally a ‘window to the brain’ given that the retina is an anatomical and developmental extension of the central nervous system. He views PYC’s two eye disease programs as presenting a rare opportunity to decipher mechanisms that could translate to CNS disease.