New determination of a listed innovative drug discovery venture

New determination of a listed innovative drug discovery venture

The amazing regenerative power of the human liver. There are great expectations for therapeutic agents for intractable diseases using "HGF (hepatocyte growth factor)", which holds the key.
Kringle Pharma was listed on the Mothers market of the Tokyo Stock Exchange at the end of 2020 as the only drug discovery bio-venture in the world that has the technology to mass-produce HGF in pharmaceutical grade.
Kiichi Adachi, President and CEO, and Yukatsu Hongo, KII's investment manager, look back on the road to achieving listing as the first investment destination for KII, and think about their new determination.

The world's only drug discovery technology using "HGF" that regenerates the liver

Adachi: As a drug discovery bio-venture from Osaka University, we are working on drug development using a protein called "HGF (hepatocyte growth factor)" that exists in the human body. The liver is the most regenerative organ in the human body. For example, donors of living-donor liver transplants are known to regenerate even after removing one-third of the liver, but the mechanism has long remained unclear. HGF was discovered by Dr. Toshikazu Nakamura of Osaka University School of Medicine in 1984 as a protein involved in liver regeneration, and subsequent research revealed that it is responsible for the regeneration and repair of various tissues and organs of the human body. It was found to have a strong effect on the nervous system.
We are the only company in the world to realize the technology to mass-produce this HGF in pharmaceutical grade. Currently, we are conducting clinical trials of treatment with HGF for several types of intractable diseases. For example, for the acute phase of spinal cord injury in the first pipeline, the Phase 3 study, which is the final stage before application and approval as a therapeutic drug, and for the amyotrophic lateral sclerosis (ALS) in the second pipeline, patients We are conducting a Phase 2 study to confirm the effectiveness of the drug.

Hongo: I first met Mr. Adachi in the spring of 2016, a few months after the establishment of KII. I heard from Professor Masaya Nakamura of Keio University School of Medicine, who is involved in clinical trials of spinal cord injury in the acute phase using HGF. I was surprised that I had cultivated knowledge and technology. I myself used to be involved in regenerative medicine research and R & D work with pharmaceutical companies, so it is difficult for venture companies to continue to maintain R & D at a high level, including the environment of the Japanese pharmaceutical industry. This is because I have occasionally felt it.

Adachi: Actually, at that time, we were in a very difficult situation. I was just conducting a Phase 1/2 clinical trial for the acute phase of SCI, but it took an unexpected amount of time to enroll patients and I was running out of funds. Our company was founded in 2001 and has a long history as a drug discovery venture, and we have already obtained investment from many venture capital companies, so we could not find a new investment source. Inside the company, there was an opinion that if we could not raise funds, we would have no choice but to close the company, but when we heard that Keio University would establish a venture capital, Nakamura was jointly promoting the Acute Spinal Cord Injury Project. It was introduced by Professor Masaya.

Hongo: At that time, Kringle Pharma had already accumulated a large amount of data and was engaged in clinical research. There was data to support that good results would be obtained if we proceeded as it is, and I think that the thoughts of the employees, including President Adachi, on the project were also a major factor in deciding the investment. And this was my first investment in KII.

Adachi: For us, it was in the form of reaching out at the last minute. As a result, we were able to successfully complete the Phase 1/2 study in the acute phase of spinal cord injury and obtain data suggesting its effectiveness for patients. The investment contract was in December 2016, and I was appointed president in the same month, which was a big turning point for me.

The figure which showed the onset mechanism of spinal cord injury and the therapeutic effect by HGF.

Days of collaboration between drug discovery ventures and VCs to realize new drugs

--What kind of system did each other proceed with the project after the investment?

Adachi: Mr. Hongo went beyond the image of a so-called venture capitalist and provided hands-on support while making use of his abundant experience and knowledge related to drug discovery. In addition to financial support, I feel that it has been a great help to us, not only for external negotiations with various companies, but also for organizing business negotiations in English overseas.

Hongo: Thank you. When developing a new drug, if it is a large pharmaceutical company, experts from various fields such as research and development, clinical trials, and sales belong to it, and it is possible to systematically work together, but venture companies We cannot provide such human resources in-house. I wanted to help with the situation as much as possible, so I spent as much time as possible.

Adachi: What impressed me was the business discussion with Claris Biotherapeutics, a bio-venture from Harvard University. While looking at the contract with the president of the other party at a hotel in San Francisco and squeezing the details, Mr. Hongo gave me polite advice on the spot where I could not catch up. It took a long time to negotiate, but I think it was because of this careful exchange that we were able to realize the HGF protein license and API supply contract with the company.

Hongo: I remember that time well. That's nostalgic. Since drug discovery-related contracts are very diverse, for example, legal matters require expert confirmation, such as by asking a lawyer, but as far as I can tell, Kringle Pharma should properly include the rights that it should hold. I've been checking and negotiating with them. I also participated in the board meeting as an outside director, and had the opportunity to share my frank opinions about the organizational structure for aiming for an IPO.

Adachi: IPO is an important milestone for us, but our goal is to bring medicine to the world. I feel that having a deep understanding of this and receiving accurate opinions has led to the results so far. Also, as for the IPO, I have kept in mind that one of our responsibilities is to create an opportunity to sell the shares to the investors who have supported the project so far. In terms of the way to get there, Mr. Hongo's advice has always been very helpful.

Hongo: But I'm just in a position to support. I think it is the result of President Adachi's decision and achievement of the given conditions that he has steadily achieved results toward the IPO.

A new mission and the future of drug discovery talked about after the achievement of listing

--As a result of these efforts, we were listed on the Mothers market of the Tokyo Stock Exchange on December 28, 2008. How did you feel when you were listed?

Adachi: There was a possibility that the event would be canceled due to the impact of the new coronavirus infection, but it was a deep emotional experience to be able to attend the bell-ringing ceremony at the moment of listing. However, rather than joy, I remember feeling that my future responsibility was extremely heavy, saying, "I have to use this feeling as an encouragement to get the medicine out to the world." Because it is my role to accelerate the growth of the company from here. From now on, it is necessary to properly achieve results for general shareholders, such as obtaining approval for the practical application of drugs and acquiring overseas partners. I think it's all about this.

Hongo: KII's involvement with Kringle Pharma as a venture capitalist was completed when the IPO was achieved. This is the first company I was in charge of, and KII has various feelings about achieving the listing of the investee venture for the first time, and I myself have the opportunity to acquire a lot of knowledge and experience through five years of interaction. I feel blessed. From now on, I would like to devote that feeling to the IPO of new investment destinations. I think that is our mission.

Adachi: Even from 2016, we were able to achieve the IPO at the shortest speed thanks to the support of Mr. Hongo and many others. I'm really grateful. Above all, from the beginning when I met Mr. Hongo, I felt that he was a person who could share the fundamental vision and desire to contribute to the world through his work, even if he was in a different position.

Hongo: It's the same with me. As a lead VC, we will communicate with existing investors and help new investors understand the significance of investing in Kringle Pharma. I feel that the experience of being able to work together in Japan has become a great asset for me.

--Please tell us about your vision for the future of Kringle Pharma.

Adachi: In the short term, we will complete Phase 3 trials for the acute phase of spinal cord injury, which is the first pipeline, and obtain our first regulatory approval. This will be followed by clinical trials for other diseases such as ALS, vocal cord scars, and acute kidney injury. In the medium term, we intend to maximize the value and potential of HGF by expanding the scope of application for intractable diseases and expanding alliances with overseas pharmaceutical companies.
In the long run, we would like to grow this company with the aim of becoming a biopharmaceutical company that can handle everything from drug development to sales in-house. There are many examples of Western pharmaceutical companies starting from venture companies and growing to a global scale, but one of the common characteristics of these companies is that they develop their own products. Can be mentioned. On the other hand, I think that licensing out a new drug developed to a pharmaceutical company is nothing but passing on future profits to that pharmaceutical company. That is why we want to create and deliver better medicines with our own hands to patients suffering from diseases for which there is no cure. I would like to make an effort without forgetting that feeling for further research and development in the future.

Hongo: I think this is a story that leads to great hope for the Japanese pharmaceutical industry, which is said to be a harsh environment for venture companies. Personally, I am really looking forward to seeing Kringle Pharma, which has grown as a pharmaceutical company.

【Related article】
Interview with Kringle Pharma CEO Kiichi Adachi "Hope for the future drawn with the world's only drug discovery technology" (2017)
https://www.keio-innovation.co.jp/dialogue/369/