Botanix kills superbug in a world-first study

Matt Callahan is the founder of Botanix Pharmaceuticals (ASX:BOT; OTC:BXPHF). He is the largest shareholder owning 7% of the company and early executive Bill Bosch owns 1.64%. This is important because Founder-led companies outperform the rest (via a S&P 500 study). Matt founded and sold iCeutica for US$60m in 2011. The team currently has world-class U.S executives.

Botanix did a reverse takeover on the ASX in 2016. Botanix was using Synthetic Cannabidiol (CBD – derived from a cannabis plant) for next generation treatment in skin diseases, first targeting Acne.

Scientific data showed Cannabidiol was anti-inflammatory and anti-bacterial. Botanix’s approach was data driven. Evidence started in 1976:

  1. Research into CBD & Antibacterial activity started in 1976.
  2. Antibacterial Cannabinoids from Cannabis sativa: A Structure−Activity Study, 2008.
  3. When applied in combination with a range of antibiotics, CBD increased anti-bacterial effects of selected antibiotics, depending on bacteria type, 2019.
  4. Cannabidiol is an effective helper compound in combination with bacitracin to kill Gram-positive bacteria, 2020.
  5. Antibacterial Treatment using Cannabinoid Combinations, Botanix patent 2020. Via Google Patents
  6. BACITRACIN AND/OR DAPTOMYCIN COMBINED WITH CANNABIDIOL FOR TREATMENT OF BACTERIAL INFECTIONS, 29/04/2020
  7. COMPOSITIONS COMPRISING CANNABIDIOL AND HYALURONIC ACID FOR TREATING INFLAMMATORY JOINT DISEASES, 23/04/2020
  8. “Overall, CBD exhibited a strong antimicrobial effect against Gram-positive strains and could serve as an alternative drug for tackling MRSA.”
  9. CBD has potential as a promising therapeutic agent for the treatment of acne vulgaris.

The Acne program was successful. The Acne clinical program is FDA approved for Phase 3 trials which is in planning. It’s pending their Phase 1b Rosacea study start in 2021. I wrote an article about the Acne program in detail here, titled “The first innovation in the Acne market in more than 20 years”. 2016 annual sales of 2 leading topical Acne treatments were US$494m and US$456m. Acne is a market with US$5.1 billion in annual sales in 2019. There has been no innovation in the Acne market in more than 20 years.

Along the way, Botanix explored other applications for Cannabidiol (CBD) in Dermatology like:
– Atopic Dermatitis (did not meet the endpoints, and was suspended), 
– Rosacea (going into a Phase 1b study in Q2 2021), and
– Psoriasis (suspended).

Looking at comparable acquisition data (of similar programs) shows how big pharma companies value clinical programs like Botanix’s product pipeline. In October 2016, Allergan bought Vitae Pharma for $639 million. Vitae Pharma’s clinical programs were:
– Phase 2 for potential psoriasis [Botanix have a pending FDA approved Phase 3 Acne trial]
– Phase 2a for potential atopic dermatitis [Botanix had a successful world-first Phase 2a study killing superbug staph in the nose (said another way, an antimicrobial nasal decolonization agent) initially for Surgical Site Infections]
– another R&D platform [Botanix has a proprietary skin delivery technology called Permatrex]
– Botanix have an additional program (one more than Vitae Pharma as at March 2021), a Phase 1b Rosacea trial in 2021

In 2019, Botanix killed superbug staph in a petri dish in a lab. This led to hiring world-class Dermatology executive Vince Ippolito as President, who was responsible for 2 Dermatology acquisitions worth US$7.8 billion. Shortly after, there was a capital raising of US$40 million at a valuation of US$198 million

Botanix hit the big time when they explored the antibacterial effects of CBD (again there was scientific evidence already supporting this). They made a world first breakthrough by killing superbug staph in the nose, meeting the endpoints agreed with the FDA in November 2020. This is a platform product called BTX 1801. This came from a Phase 2a trial in Australia (66 people), and will be a big Phase 2b trial in the U.S – they met the clinical endpoints agreed with the FDA in November 2020. In clinical studies, meeting primary endpoints by the FDA are required for approval.

The initial application for BTX 1801 is treating Surgical Site Infections, which costs hospitals approximately US$10 billion every year – I wrote about this. I am not sure the best way to value this. There are too many assumptions in future cash flows, so I like to presume billions will be redirected to Botanix from the cost savings.

Studies by Botanix have shown that BTX 1801 is more effective than the market leading decolonisation agent, mupirocin, at decolonising MRSA. The global market for mupirocin is worth about US$228 million a year.

In January 2021 Botanix published a peer reviewed scientific paper showing they can kill a wide range of bacteria. New treatments for antibiotic resistant bacteria is a high priority for the World Health Organisation (WHO). In the medical community, this is known as Antimicrobial Resistance which some claim is a pandemic. New treatment for killing superbug staph is highest priority for the WHO, due to antimicrobial resistance.

After the successful BTX 1801 Phase 2a trial in February 2021, Botanix expanded the team for commercialisation and growth. They hired a Chief Medical Officer, Vice President of Development, and Head of Commercial.

Synthetic cannabidiol, better known as CBD, has been shown for the first time to kill the bacteria responsible for gonorrhoea, meningitis and Legionnaires’ disease. The Gonorrhea therapeutics and Meningitis vaccine markets are in the billion dollar range.
– The Gonorrhea therapeutics market was US$1.4 billion in 2019
– The global Meningitis vaccine market was valued at US$2.1 billion in 2015

A compound of cannabis which can kill drug resistant ‘super-gonorrhoea’ could be prescribed by the National Health Service (NHS) in just five years, leading neurologist Professor Mike Barnes said.

In March 2021, Botanix presented at the ASX Small Cap Conference.

Botanix Pharmaceuticals presenting at the 2021 ASX Small and Mid-Cap Conference

Vince Ippolito said the BTX 1801 Phase 2a study killing Staph was outstanding (a world-first for synthetic CBD), and it opened the door to a wide range of opportunities (including being a nasal decolonization agent for Surgical Site Infections which costs hospitals US$10 billion a year). For Antimicrobial Resistance, these include:
– Dialysis related infections from catheter usage
– Skin structure infections, diabetic ulcers and wounds
– Skin infections, impetigo and bacterial folliculitis
– Gonorrhea (market size US$1.4 billion in 2019)
– Meningitis (market size US$2.1 billion in 2015)
– Legionnaires disease
For Dermatology, being a safe antimicrobial and anti-inflammatory agent, these include:
– Impetigo
– Cellulitis
– Folliculitis
– Acne (Pending BTX 1503 Phase 3 study after the BTX 1702 Phase 1b Rosacea study in 2021)
– Erysipelas
– A previous Dermatitis study failed to meet primary endpoints
– SSI and ulcers
– Erythrasma

After the ASX conference, Proactive Investors asked Vince Ippolito some questions.

Botanix Pharmaceuticals with Proactive Investors at the 2021 ASX Small and Mid-Cap Conference

So how much does a big pharmaceutical company value intellectual properties like Botanix? I looked at some comparable acquisition data relating to Dermatology and Antibacterial development:
– In 2020, Eli Lily bought drug developer Dermira for $1.1 billion. Dermira had a Phase 3 trial for Atopic Dermatitis and a product for primary axiliary hyperhidrosis which did $10.3 million in sales Q3 2019.
– In 2011, Allergan bought Vicept for a $275 million transaction. Vicept has two Phase 2 studies in Rosacea.
– In 2011, Rib-X signed a R&D agreement with Sanofi worth $200 million. Sanofi were an early stage clinical developer of 2 potential antibiotics.
– In 2018, JW Pharmaceuticals signed a licencing agreement worth $402 million. JW Pharmaceuticals had an early-stage clinical trial in Atopic Dermatitis.
– In 2016, Allergan bought Vitae Pharma for $639 million. Vitae Pharma’s clinical programs were:
– Phase 2 for potential psoriasis [Botanix have a pending FDA approved Phase 3 Acne trial]
– Phase 2a for potential atopic dermatitis [Botanix had a successful world-first Phase 2a study killing superbug staph in the nose (said another way, an antimicrobial nasal decolonization agent) initially for Surgical Site Infections]
– another R&D platform [Botanix has a proprietary skin delivery technology called Permatrex]

Following the science, Botanix has proven that Cannabidiol is a miracle drug.

New class of antibiotics

What is antimicrobial resistance? Antimicrobial Resistance (AMR) occurs when bacteria, viruses, fungi and parasites change over time and no longer respond to medicines making infections harder to treat and increasing the risk of disease spread, severe illness and death.

The WHO have declared that AMR is one of the top 10 global health threats facing humanity. Better antibiotics are needed, and Botanix’s new cannabidiol formulation will help create a new class of antibiotics. As their peer-reviewed scientific paper states, the breakthrough could lead to the first new class of antibiotics for resistant bacteria in 60 years.

Antibiotics have helped to reduce global deaths from infectious diseases by over 70% since 1942

As this image shows, antibiotics have helped to reduce global deaths from infectious disease by over 70% since 1942.

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About Me

My name is Mark.
I’m an Early Stage Technology Investor and help with marketing.
Founding Investor and did Marketing at CXi Software.
I’m part of an investor community called IO Private.
Mentor at Startupbootcamp Australia.