A Fireside Chat with Frank Gleeson, MBA - Co-founder, CEO, and Board Member of Satellos Bioscience
OTC:MSCLF
Richard Hantke: Hello everyone. My name's Richard Hantke, I'm with Zacks Small-Cap research. I'm here with Frank Gleeson, who is the co-founder and CEO of Satellos Bioscience (OTC:MSCLF). Hi, Frank.
Frank Gleeson: Hi, Richard. How are you doing?
Richard Hantke: Good, very good. For those of you that are not aware, Zacks Small-Cap Research, we're a division of Zacks Investment Research, and we've got a team of 10 seasoned research analysts doing fundamental research on small and micro-cap companies. We currently have about 100 under coverage. What we have today is another in a series of CEO Chats. For those that are not familiar with Satellos Bioscience, it trades on the TSXV under the name ticker MSCL, and as of this past October, it is listed on the OTCQB under the ticker, MSCLF. Our Senior Technology Analyst, David Bounce Ph.D., initiated in November, basically in conjunction with the OTCQB listing, and he just issued an update report the other day. He's got a US 70-cent, price target on the company. If you go to our website, scr.zacks.com, you can see his latest research. But with that said, I want to get into it, Frank. I've got a brief series of questions here for you from David. Why don't you set the table here a little bit? Tell us about Satellos Bioscience and what are you looking to accomplish.
Frank Gleeson: Sure. Well, thank you for the opportunity, Richard, and we're delighted to be working with Zacks and have a chance to speak to you today. So, Satellos Bioscience is focused on the area of muscle regeneration, and that's why our ticker is MSCL for muscle. We've identified deficits in certain disease areas in which the body is unable to repair and rebuild muscle the way it's intended. We are built to regenerate muscle throughout our lives. From the time we're very small until the time we're full-grown adults, we are growing and laying down new muscle, and we don't think necessarily of this as a regenerative process, but our muscles are like the newt's tail. When we damage muscle when we go to the gym and do something silly, like lift heavy weights to get bigger and stronger, then we are tearing a muscle, and that sets in motion, a regenerative process in our bodies that allows that muscle to repair itself and to get bigger and stronger.
Frank Gleeson: Well, some people aren't so fortunate. Some disease situations impair that ability. Some genetic diseases eliminate or virtually eliminate that possibility for people. These individuals that live with these genetic or other diseases or disorders are experiencing a constant breakdown and destruction of their muscles. One of those diseases is Duchenne Muscular Dystrophy. By its genetic nature, it affects young boys. It affects one in 5000 boys worldwide, regardless of background or location. These children, as they grow, are unable to repair and regenerate new muscles. This is a discovery that we have made, that these children have this deficit. This was not known before our pioneering work. It was not known before my scientific co-founder, Dr. Michael Renicki published this and was able to say that Duchenne Muscular Dystrophy, which was only known for its genetic nature, is a disease of our muscle stem cells.
Frank Gleeson: This is a disease in which the stem cells in our body that are intended to create new muscles are not working properly, and we can correct that. We have shown in our work that it is possible to correct this deficit, and we do this by designing and developing new small-molecule drugs. So think of a pill, this would be a pill that an individual could take, that would reset this program in their stem cells to divide properly to create new muscle. It is an extraordinary idea, and we are moving this forward with as much pace as we possibly can, and we believe that we can make a huge impact in the lives of many, many thousands of people, if not millions of people worldwide, that suffer from debilitating muscle conditions.
Richard Hantke: So you have a series of inflection points that you've achieved. You went out with two very important press releases recently. One on January 3rd, which I think you disclosed your lead development candidate. Then you also went out with the press release on February 6th, and you had some very exciting pre-clinical results showing increased muscle growth and strength in a mouse model in DMD. Can you tie those two press releases together and talk about their significance?
Frank Gleeson: Sure, I'd love to do that. We've been working since the foundation of the company, which started in 2018, on identifying ways to correct this problem that we identified. We've been looking for biochemical pathways in the body that we can leverage to restore this regenerative capacity. We look for drug targets. In the drug development business, the key is to find a protein target in the body that we can design a drug to interact with, and by interacting with that particular target to have the biological effect that we want. So there's a great deal of scientific work that goes into assessing and analyzing the many millions of proteins in the body to find that one that we believe can act as a master switch to turn back on the ability of muscle stem cells to properly divide to create new muscle.
Frank Gleeson: We've identified that particular protein that we believe can do that. One of the press releases which spoke to the proof of concept was a press release that in essence said, "If we affect this target, the way that we plan, it directly results in these animals growing more muscle, and that muscle is functional, so it's not enough to make people bigger, the muscle has to work and work well." And that's what we showed in that press release that we can... We believe this is the first time that anybody has shown that this is achievable in any type of model of a mammalian system, and the particular model we used is the gold standard model for studying this disease area, so that particular model, that mouse model, is characterized by an inability to regenerate muscle, and so we show that we can fix that. And so we're thrilled with those results. So that's proof of concept of our idea, and of course, that's where science starts and... Well, first you get the idea, then you have to get proof of concept of the idea.
Frank Gleeson: And then the third key piece is you have to develop a proprietary drug. So something that you can take forward into clinical development that you can then get out into the market and into the hands of physicians so that they can treat their patients and those people that live with conditions that are very, very difficult, and in the case of Duchenne Muscular Dystrophy are fatal.
Frank Gleeson: So the first press release describes the fact that we've identified that drug candidate that we are prepared to stand behind and take forward, and so those two together are key. We've shown and validated the drug target, and we've shown and validated that if we affect that target the way we believe is required, it has the result, the biological result we're looking for. Now we have the drug candidate to take forward.
Richard Hantke: You are pre-clinical, and my understanding is that you expect to file the IND by the end of this year, or the beginning of next year. But what data do you need to generate to be able to do that? What has to happen before then data-wise?
Frank Gleeson: Well, there are many steps in the process from where we are to becoming a clinical-stage company. We think that is one of the reasons that makes us exciting, it's getting in on the ground floor with us at this juncture. We need, of course, to satisfy all of the FDA requirements. That involves approximately one year of quite precise, detailed scientific experimental work, where we have to lock down the manufacturing process for the chemical entity, the drug itself, where we have to do the safety testing that's required in different systems to show that we're not going to have any untoward effects on people.
Frank Gleeson: This is a very prescribed body of work that takes about a year in total. The kinds of things we need to do are line up the various contract research organizations that specialize in these studies, enter into contracts with them, book dates to get the work started and get the work finished, get all the reports drafted in forms that the FDA is prepared to accept and demands are provided, and then put all that together in a package for the FDA. In addition to that, we need to think about the clinical trial, design the clinical trial that we're going to conduct, and get the FDA's buy-in for all of that. So all of that work, it's a lot of heavy lifting, we believe that we're on track and in good shape for all of that, and we will update the market regularly to how we're doing along those lines.
Frank Gleeson: I would also point out that we're building a company. We're trying very hard to build one of the foremost companies in the regenerative medicine space that is pioneering new technologies and new approaches to treat disease, so we will also be looking to form relationships, and we are actively forming relationships with various advocacy groups in other disease areas, aside from Duchenne, where we'll look to form relationships to get proof of concept. We are now in active discussions with many pharmaceutical companies who are interested in our work and wondering if we'd be willing to talk to them or maybe form relationships with them. It's a very exciting time for us on a lot of different fronts. Of course, in the medium-term, for us to fulfill our dreams and ambitions, we need to be able to access institutions, institutional funds, we need to get to NASDAQ, and all of those things are on our plan for the next year to 18 months. We're going to be busy, we're going to have a lot going on. We're going to have a lot to be able to tell the market about over the next year to 18 months.
Richard Hantke: Could you talk a little bit about how once you are in phase one in the clinic, how quickly do you think you can generate some data?
Frank Gleeson: This is such a fascinating question because we're doing something that hasn't been done. We're creating muscle. We're resetting the body's ability to create muscle. Virtually, every type of treatment that we are aware of, whether it's genetic or otherwise, is focused on either trying to stop the damage or trying to stabilize the damage. What we are trying to do is correct the damage, and lay down new muscle. That's important because when we think about a clinical trial, of course, the very first thing we need to do in any clinical trial, is doing a safety study. So we all have to do that, not just Satellos everybody has to do safety studies on human beings to make sure that there isn't some surprise that didn't get picked up in the pre-clinical work, and also that we figure out the kind of dosing and so on that is acceptable or tolerable by humans, so that takes a few months. By the middle of next year, we anticipate going into what is more regarded as phase two development, where we start to think about efficacy, where we started to think, can we get a signal that says, the effect is happening? We know the specific target protein that we're interacting with. We know the biological effect on muscle stem cells that we're looking for, and we know that if we do both of those things, based on all our pre-clinical work, we will see muscle generation. We believe it will be possible in a short period, in a matter of months, not years, to be able to see an effect on the muscle itself. And if that is correct, then we would anticipate being able to see at least early-stage indicative data before the end of 2024.
Richard Hantke: Is there a biomarker you could be using during the clinical trials rather than waiting on biopsy results? How would that work?
Frank Gleeson: Yes, we're hoping and we believe that we can design our trials to avoid that need to put people through biopsy. We believe that tools such as MRI may be suitable for looking at muscle directly, particularly if we're talking about being able to visualize an increase in the size of the muscle. That would be something that would be non-invasive, which in the population of patients that we're working with, would be a relief for them.
Richard Hantke: And that was my last specific question. I want to know what do our investors. What should keep track of, what are the milestones they should be looking for, the information flow, they should be tracking progress, and how do they do that throughout 2023?
Frank Gleeson: Well, building a company is a lot like building a winning team, so we'll do several things, and investors can look for those signals. We'll be adding key members of our team, particularly on the medical side, we'll be announcing that we're putting in place relationships with contract research organizations which are an indication of progress as we're kind of moving the ball down the field. We'll be reporting on our pre-clinical studies that are, when they wrap up, that we've done certain studies that demonstrate the continued safety of the product, we'll do additional proof of concept work, shorter-term models, and longer-term models. We'll do other disease areas. So these are the sorts of things to be looking for. Biotechnology isn't a sales business where you have feedback every day. The spreading out of these kinds of updates will be over months, but we will be making updates, and we will be keeping the market informed, but those are the types of things. Those signals that say, yeah, management has a vision here, they know what they're doing, they're putting the pieces in place, the pieces are moving forward, and that's the key. We hope to keep the market informed.
Richard Hantke: Everyone out there, if you have any questions for our analyst, David Bautz, his reports are widely available on a lot of different channels. You can go to our website, scr.zacks.com, and his contact information is there. Frank, if they've got any questions directly for you or the company, how should they get in contact? Who should they call?
Frank Gleeson: They can contact us through our website if they want to drop a note to fgleeson@satellos.com. We’ll endeavor to keep engaged.
Richard Hantke: And for those of you that want to hear more about our program and how it works and any ideas for covers or any other comments on this, you can contact me my email address is rhantke@zacks.com. So that concludes today's CEO chat. Frank, thank you very much for your time, really appreciate it.
Frank Gleeson: Richard, thank you for your time. Great working with you.
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