Newsletter June 2017

CEO’s comments
We have received many positive reactions and relevant questions since we announced our plans to acquire Phase II substance Rabeximod from OxyPharma. Naturally, a brief media release cannot provide comprehensive information about all the various aspects related to such an acquisition, so we will be looking to provide Cyxone shareholders with information in a variety of ways in the hope that our plans will be clearer for all.

Published plan to be followed
When we listed Cyxone in the early summer of 2016, we announced plans to carry out an effective development programme for T20K on multiple sclerosis to complete Phase I trials in humans, as well as add a further project in the autoimmune area during 2017. Our proposed acquisition of Rabeximod is being conducted entirely in line with our communicated plan. My background in the pharmaceutical sector has taught me that a well-balanced project portfolio is one of the best ways to maximise shareholder value while at the same time reduce overall risk. I have built up many project portfolios in my career in Big Pharma, and I know what generates most value.

Continued focus on T20K
Ever since we started in 2016, the company’s focus has been to take T20K through pre-clinical development to start its clinical development programme. This remains our primary focus, so it feels great that T20K’s development has gone better than expected: most drug projects encounter unforeseen issues that result in delays. If everything continues to go as planned, clinical studies can begin according to our communicated schedule. Our development of T20K will not be negatively affected by adding Rabeximod to our portfolio. Quite the opposite. We calculate that the decision to acquire Rabeximod justifies to already now add medical, clinical and administrative competence in autoimmune conditions. This will give us positive economies of scale, which in turn will support the development of T20K.

A value-generating acquisition
Cyxone has being reviewing various candidate development projects for some time, projects that create synergies with T20K. Thanks to my work on CNS/autoimmune conditions area over a considerable period, we have gained unique insights into the development of Rabeximod in rheumatoid arthritis. My involvement with the project started back in 2000, when I worked at AstraZeneca on identifying new products. Back then, Rabeximod had not recorded sufficient biological results, which made it too early for large companies to get involved. Several years later, OxyPharma was founded by Leif Lundblad – who also invented the cash machine – together with experienced drug developer Ulf Björklund as CEO. Later still, in 2008, I led a team from Medwell Capital in Canada to review whether we could add Rabeximod to our fund portfolio. At the time, Rabeximod was in late Phase II, and a deal at that point was not considered optimal. When I later left Medwell, I maintained contact with Leif and followed developments from the side-lines.

The right time to acquire Rabeximod
Now that we’re proposing the acquisition of Rabeximod, I feel that it’s appropriate to explain why OxyPharma has not licenced the project already. OxyPharma’s latest study was a clinical Phase II trial that was conducted in more than 200 patients. The study was extremely well-designed with support from leading experts from the rheumatoid arthritis segment. However, it was also based on the prevailing understanding in the 2000s that clinical studies should be conducted with a time horizon of just 12 weeks. When OxyPharma completed its Phase II study, it emerged that Rabeximod had achieved a significant effect, (its primary therapeutic effect, and seven secondary indicators), but that the effects were recorded four weeks after the agreed measurement period. It was therefore found that the patients in the study, whose condition had clearly improved due to Rabeximod, had not improved sufficiently during the designated 12 weeks to confirm a positive effect from the substance. Results from the study were therefore forced to formally be recorded as not having been achieved, despite patients clearly experiencing its effects. According to the study plan, patients were monitored four weeks after the formal conclusion of the study, so it is possible to say, with evidence, that Rabeximod showed statistically significant effects on rheumatoid arthritis after 16 weeks.

Planning for Phase IIB
Cyxone is therefore currently in quite a unique situation. We’re offered the opportunity to acquire a drug candidate with proven clinical effect and an excellent safety profile. Having already reviewed study results and reports on Rabeximod for a couple of months, we can confirm that OxyPharma’s development work is of an extremely high international standard. A toxicity study is needed to start a Phase IIB study, but otherwise we expect Rabeximod’s existing regulatory documentation will be sufficient. Because it was the short study structure that resulted in a statistically significant effect not being achieved in the OxyPharma study, we would like to suggest that Cyxone carries out a Phase IIB study with 24 weeks’ daily treatment of patients with rheumatoid arthritis. In addition to extending the study, we will of course also seek expert support from leading rheumatologists at the planning stage to evaluate whether additional opportunities exist to improve the structure of the study. We believe that the project has an enormous value growth potential with more limited risk than that typically associated with initial Phase II studies on new substances.

Cyxone’s value is increasing
Finally, I would also like to mention that the proposed acquisition will position Cyxone entirely differently for future partners, strengthening our negotiating position. Instead of looking at us as a pre-clinical company, a buyer will value Cyxone because the company is in late clinical Phase II on a condition with some of the world’s currently best-selling drugs.