About: Synthetic Biologics (NYSEMKT:SYN)
The U.S. and the world are clearly losing the war on obesity. Twenty years ago there were no states in the U.S. with an obesity rate (defined by a Body Mass Index of >30) greater than 14%. Today, there are no states with an obesity rate less than 21%. Given those countries such as Japan use a BMI of 25, the numbers could be far worse as the U.S. seems to be in a process of normalizing deviancy. If current trends continue, it is estimated that by 2030, 51% of the population will be obese. Current theories as to the causes of obesity are generally focused on the imbalance between energy consumption (diet) and energy expenditure (changes in the amount of exercise), but this tunnel vision provides theories which are inadequate to explain the millions of people crossing the threshold into obesity that we have seen over the last twenty to thirty years. Increasing clinical evidence suggests disruptions of the microbiome (the collection of genes of the roughly 100 trillion organisms (microbiota) which line our gastrointestinal tract) play a role in causing and/or worsening obesity and that protection of the microbiome will be a vital component of any comprehensive treatment strategy.
Synthetic Biologics is a clinical stage biotechnology company with two drugs designed to protect the microbiome and gastrointestinal tract. Data collected in Phase 1 and 2 clinical trials suggest a potential role of these two drugs in the fight against obesity. Although the primary focus of SYN-004 has been the prevention of C. difficile infections and antibiotic associated diarrhea, and SYN-010 the prevention of IBS-C (Irritable Bowel Syndrome with constipation), it is noteworthy that efforts are already underway to study the effect of the drugs on additional disease states such as obesity and Type 2 diabetes. Synthetic Biologics has hired as a consultant Ruchi Mather M.D., an endocrinologist and Director of the Outpatient Diabetes Treatment Center at Cedars-Sinai. Dr. Mathur has prolifically lectured and published regarding the relationship between microbes and obesity and other metabolic processes in the GI tract of animals and humans. Dr. Mathur gave an excellent overview of the relationship between the microbiome and obesity and other metabolic disorders, including the most relevant literature to date, in a webcast presentation delivered at the Gut Microbiome Conference on September 27, 2015.
Synthetic Biologics' focus is the microbiome and the prevention of pathologic alterations in the composition and function of the organisms lining our gastrointestinal tract. The study of the microbiome is in many ways a new frontier of medicine; we are not particularly close to fully understanding the normal composition and function of the microbiome, much less its pathologic conditions. Pharmaceuticals successfully designed to maintain the status quo of the microbiota would represent truly novel, disruptive, and meaningful change in the treatment of a wide array of diseases. Synthetic Biologics is working towards two primary goals: 1) prevent antibiotics given to patients to treat disease from inadvertently damaging bacteria of the microbiome, and 2) prevent the overproduction of methane by organisms in the gastrointestinal tract.
SYN-004 is an enzyme (beta-lactamase), which efficiently degrades multiple broad-spectrum antibiotics such as penicillins and cephalosporins (including Ceftriaxone, Cefuroxime, Cefoperazone, Ceftazidime and Cedotaxime). Ceftriaxone is one of the most commonly used in the hospital setting and is a major risk factor for subsequent development of C. difficile infections. When broad spectrum antibiotics are given intravenously, a significant portion of the drug is processed in the liver and then passes into the small intestine via the bile duct. When these antibiotics eradicate the normal bacterial flora which line our GI tract, a situation is created in which certain bacteria, such as C. difficile can seize the opportunity and grow into a wildly disproportionate percentage of the microbiota which results in potentially life-threatening damage to the GI tract and diarrhea. By neutralizing antibiotics that reach our GI tract, SYN-004 is designed to keep our microbiota in its normal state and prevent the diseases that can arise from dysbiosis (alterations in the microbiome). The enzyme, surrounded by an enteric coating designed to stay intact in acidic environments such as the stomach, begins to release from inside the enteric coating once it reaches more alkaline environments such as the small intestine. The drug has been formulated to begin to release some 80% of its payload at a pH ≥ 5.5, which, in normal circumstances, would occur in the proximal small intestine just after passing through the stomach. There is currently an ongoing Phase 2a clinical trial assessing the pharmacokinetic impact (adverse or favorable) of using SYN-004 in conjunction with the proton pump inhibitor Esomeprozole 40mg. Esomeprazole 40mg was suggested by the FDA presumably because it is associated with the greatest change (highest pH) in stomach pH of the PPIs. Many patients in the hospital setting are either already using a PPI or are placed on a PPI upon admission to the hospital in order to protect the stomach by making it less acidic (more alkaline). By neutralizing the antibiotic(s) in the small and large intestines, SYN-004 is designed to protect the microbiome without affecting the concentration of the antibiotic in the bloodstream so that it can treat the infection for which it is intended. SYN-004 is a compound which represents a single amino acid change (D276N) from a drug called P1a which was previously owned and studied by a Finnish company called IPSAT which eventually folded due to bankruptcy (SYN CEO Jeff Riley subsequently began efforts to procure the drug and it's associated patents). Previous Phase 2 studies by IPSAT using Denaturing Gradient Gel Electrophoresis DGGE showed that the drug, co-delivered with IV Ampicillin, preserved the microbiome and that the concentration of organisms such as C. difficile were unchanged pre/post treatment.
SYN-010 is described by the company as "a proprietary, modified-release formulation of lovastatin lactone that is designed to reduce methane production in the intestine, curbing IBS-C." This description by the company is long-standing with the exception of the word "lactone" which began to appear in press releases a couple of months ago. Commercial available lovastatin such as Mevacor is a lovastatin lactone but is immediately hydrolyzed in the GI tract to primarily a hydroxyacid form. It is unclear what proprietary change Synthetic Biologics has made to lovastatin that would keep it in the GI tract, avoid systemic absorption, and maintain its form as lovastatin lactone. Investors wishing for comprehensive background research on the drug would do well to read the peer-reviewed review article written by Synthetic Biologics staff with the lead author being gastroenterologist Klaus Gottlieb, M.D. who was a Global Medical Advisor for 3 separate Phase 3 IBD (Inflammatory Bowel Disease) trials subsequent to working for the FDA.
Synthetic Biologics' lead consultant, Dr. Mark Pimentel, theorizes that increased methane in the GI tract causes constipation by slowing intestinal transit and promoting segmental (nonprogating contractions) in the small bowel. It is also possible that slowed transit causes an overgrowth of methanogenic organisms and by extension, increased methane. A third possibility is that there is a feedback loop at play combining the two previous theories: slowed transit increases overgrowth of a methane producing organism, Methanobrevibacter smithii, which causes increased methane production which then leads to further delay of intestinal transit. Regardless of method, the primary relevance in terms of impact on an individual's metabolic profile is that a delay in intestinal transit would lead to increased caloric extraction by bacteria from the same amount of food. The mechanism of action whereby lovastatin would decrease methane is not fully understood. There are two potential mechanisms by which lovastatin lactone would decrease methane production. First, the drug inhibits archaea cell membrane biosynthesis, mediated by inhibition of the HMG-CoA reductase, and second, it is possible that lovastatin lactone is activating receptors that modulate gene expression of methanogenesis by these organisms. On January 19th, 2016, the company reported positive topline data from a second Phase 2 study which showed a statistically significant decrease in methane production (p<0.002) and a reduction in the mean IBS Symptom Severity Score (p<0.0001).
Methane Production and Methanobrevibacter smithii Colonization are Significantly Associated with Obesity
According to Dr. Mathur and others, the presence of M. smithii increases caloric harvesting in the gut (more calories are extracted from the same amount of food) in a process labeled the Syntropic Effect. When we eat food there are substrates, which we rely upon the microbiome to digest, and when this digestion occurs, hydrogen is produced. When hydrogen builds up in the gut it slows down the body's metabolism by decreasing further digestion of substrates by the bacteria in our gut. Unfortunately, when there is a significant amount of methanogen producing M. smithii present, the self-intoxicating feedback loop is impeded because M. smithii are taking away the hydrogen to build methane molecules. M. smithii's removal of hydrogen thereby allows bacteria to flourish and produce more disgestible substrates for the host (increased energy harvest for the host).
In 2014, Dr. Mathur presented findings to the ADA that eradication of M. smithii (as measured by decreased breath methane) in 8 of the 11 pre-diabetic, obese subjects tested resulted in improvement in the patients' metabolic profiles after a 10-day course of antibiotics. In response, Jeff Riley, CEO of Synthetic Biologics stated:
Cedars-Sinai researchers have previously shown that the presence of methane in the gut is associated with a slowing of intestinal transit, which may also allow for increased time for absorption of nutrients and enhanced energy harvest thus contributing to a variety of diseases including C-IBS, diabetes and obesity. The results from this new research provide further exciting insight into the role of gut methane in various metabolic diseases, including Type 2 diabetes and obesity. These findings also support Synthetic Biologics' efforts to develop new therapeutic agents, such as SYN-010, to manage the chronic symptoms of C-IBS through gut methane depletion.
Dr. Mathur has repeatedly published research linking positive methane breath testing and M. smithii colonization with obesity and changes in metabolic profile. Since she is working on research efforts for SYN in this regard, and SYN's CEO is referencing her work to link SYN-010 to the treatment of obesity and other metabolic conditions, a review of her studies seem warranted:
- Mathur et al., Obesity 21, 748-754, 2013. Rats were gavaged with M. smithii. When the rats were subsequently fed high fat diets, the level of M. smithii detected by PCR increased dramatically. When rats were fed a normal diet, the levels fell. When the rats were given half high and half low fat diets, the level of M. smithii increased/decreased accordingly. Rats with the greatest extent of M. smithii colonization (i.e.: those with no uncolonized bowel segments) had higher weights than those with less widespread M. smithii colonization irrespective of whether or not they were on high-fat diet. The lowest body weight of all was recorded for a rat on high-fat diet that lacked M. smithii colonization in 3/5 bowel segments.
- Kim et al. (Mathur 2nd author), Gastroenterology, 2013; 144: S-908. A total of 116 duodenal aspirates from patients in Greece were studied and the presence of M. smithii was detected in 17.2% of patients and, when present, had a median percent of total bacteria of 19.3%.
- Mathur et al., ADA, 2014. 40% of humans are methane producers but about 15% of humans produce detectable amounts of methane on breath analysis. When methane is detectable, it is an accurate predictor of the concentration of M. smithii in the stool.
- Mathur et al., Gastro and Hep, 2012. Looking at 58 already obese patients awaiting gastric bypass and performed methane breath test. Those with positive methane levels were 50 pounds heavier and BMI 5-7 points.
- Mathur et al., JCEM 98:E698-702, 2013. Prospective study where 792 patients presenting to tertiary care center were given breath test analysis. Those who had positive methane and hydrogen (a positive fuel source for methane) had a significantly higher BMI (34) vs those with normal breath test (28).
- Mathur et al., 2015, submitted for publication. Recorded the amount of weight loss in 156 patients that was achieved 6 months after bariatric surgery (mostly gastric sleeve procedures). Those with positive hydrogen and methane breath test had weight loss attenuated with approx. 20% weight loss vs roughly 24% in all others (p=.023).
- Pimentel et al., Am J Physiol, 2006. Infusion of 5 dogs which methane into GI tract led to a 69% mean slowing of transit time. Theorized by group to lead to a phenotype of constipation and increased caloric harvest as bacteria, archaea have more time to digest food.
- Mathur et al. ADA 2014. Examined the metabolic parameters before and after antibiotic treatment (10-day course Rifaximin 550 PO TID/Neomycin 500 PO BID) in 11 obese pre-diabetic subjects with methane positive breath tests. The goal was to assess whether the eradication of M. smithii with the use of antibiotics led to an improvement in metabolic profile. Methane eradicated in 8/11 patients. In those 8 patients, total cholesterol decreased (p=.01), LDL cholesterol improved (p=.028) and insulin sensitivity improved (p=.03).
SYN-004's (and Other Patented Pipeline Drugs') Protection of the Diversity of the Microbiome Could Provide Countless Health Benefits Including the Deceleration of the Obesity Epidemic
Although SYN-004 is being promoted as a means to prevent C. difficile infections, I believe this indication will end up being one of very many for which health care providers will end up using the drug. It is only because we are just beginning to understand the pathophysiology of dysbiosis, and that C. difficile infections are a pressing public health crisis which is quantifiable, that the relatively low hanging fruit of preventing opportunistic pathogen infections has been the sole focus to date. It is becoming clear, however, that imbalances of our microbial populations are associated with a wide variety of disease states including:
- Antibiotic-associated diarrhea
- Autoimmune diseases
- Cardiovascular disease
- Dental cavities
- Depression and anxiety
- Gastric Ulcers
- Inflammatory Bowel Diseases
- Neurologic disorders including behavior and mood
- Obesity (see review of literature)
Increased IV Antibiotic Exposure is Associated with Obesity
The greatest difficulty in studying and devising treatments related to the microbiome is that we do not understand what constitutes normality in terms of both identification of the organisms present or their function. It is clear, however, that a healthy microbiome has both high levels of diversity and redundancy. Obesity has been associated with a decrease in diversity of the microbiome (Le Chatelier E, Nature. 2013; 500:541-546) For example, in both mice and humans, obesity has been associated with a decrease in Bacteroides species. In mice, experiments have shown that germ-free mice have decreased weight and that the addition of fecal flora to the GI tract leads to a 60% weight gain while the transfer of fecal flora from obese mice leads to far greater weight gain. The phenotype of obesity, therefore, is transmissible (for a good overview see Festi et al., World J Gastroenterol. 2014; 20(43): 16079-16094.
Of course, the greatest threat to the diversity of our microbiome is the prolific expansion of our antibiotic exposure. Farmers have exploited knowledge that sub-therapeutic exposure to antibiotics can increase the weight of mammalian and avian species for decades. Blaser et al. 2011 showed that, across species, the earlier in life antibiotics given, the more weight gain was observed. He persuasively argues in a 2011 editorial ( "Stop the Killing of Beneficial Bacteria") that antibiotic use in humans results in permanent changes to our gut microbiome, alters the balance of bacterial species and maintains resistant bacteria in the gut.
In particular, the association between antibiotic use and obesity in children has been recently noted in the mainstream media as well as multiple large studies including 11,532 given antibiotics in the first two years of life (Trasande et al., 2013), 9,886 with prenatal exposure to antibiotics (Mor et al., 2015), and 163,820 children aged 3-18 given antibiotics and whose electronic medical records were available for review (Schwartz et al, 2015). In short, all of these studies concluded that exposure to antibiotic therapy led to a greater incidence of obesity. In the NYU study, it was the exposure to IV antibiotics in the first six months of life which was most closely associated with subsequent increases in body mass. This study is consistent with studies of IV antibiotic use (such as Vancomycin used in infective endocarditis patients (Thuny et al., 2010) in adults which revealed a correlation with subsequent increases in body mass. An additional electronic medical record review of 64,580 children found that the increased incidence of obesity was found only with the utilization of broad-spectrum antibiotics and not narrow-spectrum drugs (Bailey et al., 2014). Finally, exposure to broad-spectrum antibiotics has been associated with a higher adjusted risk for Type 2 diabetes among individuals with recurrent exposures to PCNs, cephalosporins, macrolides and quinolones (Boursi et al. (2015) studying 208,000 diabetics and their exposure to antibiotics one year prior to the index date of diagnosis).
Healthcare Costs Related to the Obesity Epidemic are Unsustainable
Obesity has been linked to more than 60 chronic diseases and greatly increases the risk and cost of medical complications. Annual health care costs caused by obesity are estimated to exceed $200 billion with total economic costs approaching $450 billion. Researchers estimate that if the increase in obesity levels continues at its current rate, the increase in obesity related health care costs could rise by $43 to $66 billion each year in the U.S. by 2030. Obviously, if SYN-004 and/or SYN-010 were to achieve efficacy in the treatment of obesity, the economics of the drugs would undergo radical change in valuation.
Next Steps for Synthetic Biologics
A detailed examination of the data from the Phase 2b study of SYN-010 would likely be presented at a meeting such as Digestive Disease Week (where SYN has presented before) in May 2016. Body Mass Index and other metabolic profile data (such as glucose levels) are among those which have not as of yet been released by the companies' CRO but which should be released to the company imminently and be made public by no later than May 2016. While a decrease in breath methane is the primary endpoint for the study, the work of Dr. Mathur and others suggests that in decreasing methane, patients may realize a significant improvement in their metabolic profile. The majority of the patients in the Phase 2b study rolled over from a 4-week Phase 2a study which would give those patients a total of 12 weeks of exposure to the drug. Although improvement in metabolic profile and/or body mass index are not secondary endpoints in the Phase 2 study, data which advanced the hypothesis that decreased methane led to improvements in metabolic profile could potentially result in its incorporation as a secondary endpoint in the upcoming Phase 3 trial scheduled to begin later this year or in subsequent studies.
In terms of SYN-004, it is the advancement in understanding of how to deliver a payload to the desired location in the gastrointestinal tract that is the highest priority. Studies from both IPSAT in Finland and SYN have persuasively shown that SYN-004 effectively degrades antibiotics. Once precise deployment is achieved, SYN can utilize its wide patent profile to insert different payloads into the enteric coating it has devised to degrade a wide assortment of antibiotics. Perhaps of even greater eventual importance, if SYN can reliably deliver a payload into say, the distal small intestine or large intestine after an oral (PO) antibiotic were already absorbed into the bloodstream, it may be possible for SYN to extend protection of the microbiome to include PO (oral) antibiotics as well as intravenous ones. At that point, the overriding question for patients, healthcare providers and investors will be "if an antibiotic is able to be absorbed into the bloodstream to treat the infection for which it is intended, but the antibiotic could reliably be degraded in the GI tract to protect the microbiome, then why would one not be administered the drug?"
Short-term Risks for the Synthetic Biologics Investor
Synthetic Biologics has been de-risked to some extent based on previous companies' studies (IPSAT) of very similar drugs, having multiple drugs in the pipeline, having drugs whose side effect profile has already been studied extensively (i.e.: Lovastatin) and which appear very safe without off-target activity, and having had successful Phase 1 and 2 studies. Nonetheless, SYN should be considered a high-risk, high-reward investment typical of small-cap biotechnology companies without large cash reserves facing a multitude of binary events. There are three primary short-term risks for an investor to consider.
First, it is unclear what effect the proton pump inhibitor Esomeprazole 40mg will have on SYN-004 and the results of this second Phase 2 study could be released at any time. The FDA presumably chose Esomeprazole 40mg because it has been shown to raise the pH higher, and for a greater period of time, than other PPIs and because PPIs are associated with an increased incidence of C. difficile infections. Whether SYN-004 would release prematurely in the stomach rather than the small intestine, where it would normally first encounter a more alkaline environment, is yet to be determined. In addition, PPIs can slow gastric emptying time, and if the drug, which has a roughly 6 hour range of activity, were to release in the stomach prematurely and then be further delayed from reaching the small intestine, the drug's effectiveness could be further challenged. Interestingly, at Synthetic Biologics' December 10, 2015 Microbiome Clinical Program Seminar, consultant Dr. Mark Wilcox suggested for the first time that Esomeprazole might help facilitate the drug's delivery.
Second, the SYN-004 Phase 2b study needs to achieve statistical power. This study is documenting the incidence of C. difficile infections and other side effects of using IV Ceftriaxone alone or in combination with a macrolide in 372 patients over the age of 50 with a lower respiratory tract infection. In Q1 '16, we should be presented with an interim analysis of the trial. The interim analysis will not present results as to effectiveness of the drug but rather, will be an assessment of the rate of C. difficile infections in the study population. If the observed rate of infection is not high enough, then it would be difficult to detect differences between the two groups if there was indeed one and more patients would need to be added to the study to achieve statistical power.
Third, is the overhanging threat of dilution. SYN filed a $200 million dollar shelf in August 2015. As of the end of Q3 '15 (9/30/15), SYN had cash reserves of $31.8 million and had prepaid expenses of $10.3 million to give a total current asset value of $42.1 million. When asked about the companies' burn rate and future plans for obtaining capital, CEO Jeff Riley gave the following answer in a December 10th, 2015 televised interview for The Street:
We raised enough capital back in July of this year to get us through all of these Phase 2s, so that's what we're doing. We are in partnering discussions on a couple of our drugs and seeing if we can find some ways to raise non-dilutive capital, but it's likely that as we go into the Phase 3s we will need to do another capital raise sometime next year.
Synthetic Biologics has something today, however, that it did not possess on December 10th when this statement was made; a very successful Phase 2b study for SYN-010 with a p-value of <0.0001 for the IBS Symptom Severity Score. It is hard to imagine SYN having difficulty finding a partnership as the odds of FDA approval have now substantially increased. CEO Riley used the word "acquired" as a possibility in his presentation at the Biotech Showcase 2016 on January 11th, 2016 and seemed to allude to the same possibility while presenting the topline data for the Phase 2b trial of SYN-010 in a conference call on January 20th, 2016. If the as of yet unreleased data shows that administration of SYN-010 results in improvement in body mass index and/or additional metabolic parameters such as glucose level, CEO Riley and SYN will gain tremendous leverage in partnership/buyout talks as the obesity and/or diabetes markets will be added as targets of the disruptive potential of Synthetic Biologics.
Disclosure: I am/we are long SYN.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I have not discussed the contents of the article with any employee, representative or consultant of SYN.