Frequency Therapeutics — FX-345

Is that your idea? Is it speculation? Did the contract text state that the improved version is also covered?

Astellas does not have a patent. They signed a contract with Frequency Therapeutics when several people saw a 10 dB improvement at 8 kHz from FX-322. $545 million would be too cheap if the FX-345 provided a more substantial hearing recovery. I think FX-345 is a different drug than FX-322, even if it is an improved version.

 

Every step forward, even the small ones, are good. Astellas is a large company and will likely make access to FX-322 and FX-345 much more available to people in general.

 

No, it is not my idea or speculation, it is fact.

The annual report reads:

"Under the Astellas Agreement, Astellas has the right to market and commercialize FX-322 for the treatment of SNHL, and any other products containing both a GSK-3 inhibitor and an HDAC inhibitor if approved, outside of the United States. For any other product candidates that are not part of the Astellas Agreement and that may be approved, we intend to establish marketing and commercialization strategies for each as we approach potential approval and expect to be able to leverage our then existing sales and marketing force."

 

What is stated in the annual report means that Astellas has exclusive marketing rights to FX-322 and similar drugs in countries other than the United States.

It means that Astellas has the same exclusive marketing rights as FX-322 for similar drugs that will occur in the future.

Determining rewards for the development of other drugs similar to FX-322 is another matter.

The contract I mentioned is a rewards decision contract.

There is a document published by Astellas in Japan. I would like to have an English version of this document. It is written as follows:

"Astellas will acquire the rights to develop and commercialize FX-322 outside the United States and bear the costs of doing so. Astellas will first pay $80 million to sign the deal. And the maximum total amount as a milestone according to the progress of development and commercialization is $545 million. In addition, there is the possibility of royalties based on sales in the contract area."​

That is a reward arrangement for FX-322.

The reward arrangement for FX-345 has not been decided.

 

FX-345 contains both a GSK-3 inhibitor and HDAC inhibitor so Astellas has the right to market and commercialize it. Do you really think FREQ can say "Oh, we know you promised us a half billion dollars for FX-322 but we tweaked the compound of the drug a little bit so now you're going to have to shell out another half billion dollars for this one too." They would be doing Astellas dirty if they did that. I can guarantee that half billion dollars locks in FX-345 for Astellas without additional rewards contract needed.

 

I hope that FREQ will develop drugs that improve small molecules and gels such as FX-4 **, FX-5 **, and FX-6 **, and ultimately have a better effect on the entire cochlea. I'm looking forward to it.

I hope they will work hard to improve even presbycusis with stronger or different types of GSK-3 inhibitors.

Does that mean they won't get more than $545 million in their future efforts?

I think they are working hard now, faster than usual.

FREQ is a partner of Astellas, not a subsidiary.

 

I hold a large number of FREQ shares so I'm well aware that Astellas is not a subsidiary

Once FX-322 makes it to market, there is little concern for the amount of money FREQ may generate off future partnering/drug improvements for hearing regeneration as the revenue stream that FX-322 and all subsequent drugs will unlock will be quite substantial. The dollar amount FREQ stands to make from the Astellas partnership today is quite substantial to them right now however since they have no incoming revenue stream currently.

 

If they are to the point of getting the total milestone payments from Astellas for FX-322 OR FX-345, they will be in a position where they're generating (or nearly) positive cashflow from product(s) in the market. From there, its a matter of reinvesting in developing the 3rd generation of "FX" product. A number of the executives have reiterated that the end-goal is to treat the whole cochlea, and they've validated their own statements by releasing FX-345, which goes deeper into the cochlea, while the inferior FX-322 is still in trials. So, it stands to reason, they're working to go even deeper than FX-345 given enough resources.

 

Astellas paid $3 billion when it acquired Audentes Therapeutics.

In the future, Astellas will benefit in all countries except the United States with FX-***, which provides a hearing-restoring effect across the cochlea. The royalty paid to FREQ is about 10%.

Given the number of non-rare patients and the size of the market, $545 million is a very cheap purchase.

In any case, I have seen the annual report and public relations, but have never seen the details of the original contract. Have you seen it?

As I know, also:

I think Astellas is a visionary company in the Japanese pharmaceutical industry. For example, more than 10 years ago, they co-developed a new venture company, Medivation and Enzalutamide (Xtandi), to make it their flagship product, accounting for 40% of sales.

Therefore, I think it is highly possible that the FX-322 that Astellas has noticed will also succeed.

Enzalutamide (Xtandi) will expire in 2027, so Astellas is eagerly looking for a successor.

FX-322 is probably one of the successor products.

I think it is necessary for both FREQ and Astellas to have a win-win partnership in the development of hearing recovery drugs.

 

Enzalutamide (Xtandi) currently sells $3.5 billion annually. It is a drug for prostate cancer.

How many FX-*** patients will eventually be in the world except the United States?

In addition, including multiple injections and re-injections after recovery, I think it's likely to be well over $3.5 billion.

I think it is fair for both parties to discuss, including royalties, and agree with each other to negotiate compensation for each version upgrade.

Can you assert that FX-345 is "tweak"? Can you say it's an easy improvement? Is it because the development period is a few years? Rather, why did they need a few years? It is possible that they were completed in a short period of time due to their unique technological capabilities and past data accumulation.

Shouldn't the rewards for each version be comprehensively discussed based on how much the drug has improved efficacy and how much unique technology is involved, as well as development costs?

I think that $545 million is the reward for a drug that improves by 10 dB at 8 kHz with a single injection, and is the start of the entire FX series.

 

I would bet money that Astellas will not need to renegotiate or pay more for FX-345.

 

I'm trying to understand the debate here? Looking at the 10-K, the partnership is strong with Astellas. Even if we could argue over some semantics in the 10-K whether or not FX-345 goes to Astellas, we know for a fact the contract is for FX-322. It seems reasonable to me that if there were some need to setup a second contract, or extend the original for FX-345, Astellas might as well be grandfathered into it.

 

I wanted to say that the current contract is about FX-322.

And by your post, I understand the logic that the parties may be exempt from new contracts and contract extensions for FX-345.

Since the exemption is not a decision, I think it is necessary for both parties to confirm their intentions.

However, I have doubts about the following.

In the case of drugs such as FX-*** that are composed of a GSK-3 inhibitor and a HDAC inhibitor, even if a more powerful molecule or a breakthrough gel is invented in the future, FREQ must pass sales rights to all countries except the United States with only 10% royalties.

 

Kiki seems to think that FREQ can take FX-345 and negotiate more milestone payments out of Astellas for it. But according to the annual report, it reads:

"Under the Astellas Agreement, Astellas has the right to market and commercialize FX-322 for the treatment of SNHL, and any other products containing both a GSK-3 inhibitor and an HDAC inhibitor if approved, outside of the United States. For any other product candidates that are not part of the Astellas Agreement and that may be approved, we intend to establish marketing and commercialization strategies for each as we approach potential approval and expect to be able to leverage our then existing sales and marketing force."​

Since FX-345 contains both a GSK-3 inhibitor and an HDAC inhibitor, Astellas already has the right to market and commercialize it. They aren't going to pay FREQ more money on top of the almost half billion they have already agreed to. They will likely have to foot the bill for development costs outside the U.S but I would guarantee they aren't going to be cutting another fat check for milestone payments or anything of that nature. Also, the royalty FREQ is going to receive is higher than 10%; the wording was low teens so 13% to 14% I believe.

 

For example, if the contract contains the following text, isn't Astellas entitled as stated in the annual report?

"Similarly, if any other products containing both a GSK-3 inhibitor and an HDAC inhibitor are approved, Astellas has the right to commercialize in countries other than the United States. Each reward will be discussed and decided separately."​

Don't such contracts exist in business practice? I'm not familiar with that.

I'm posting because I'm skeptical of a comprehensively binding contract, even for rewards for products with more advanced technology in the future.

I think there is a possibility that similar products can be made for eyes, cartilage, etc. other than the ears that they claimed. Do you think they are the same?

 

It would likely be worded with something along the lines of "Astellas retains the rights of first refusal" if there were any future contingent negotiating requirements. To me it sounds like Astellas plunking down a half billion locked in all future improvements on FX-322.

As for the eye, cartilage, etc, the pathways to activate each are pretty unique. Their current MS route is a "target 14 antibody", I remember their hair patents talked about a "Sonic Hedgehog" pathway. So each system appears to be different so Astellas only has rights to the ear right now.

 

Guys, who cares about the millions they're going to make? Clearly there's an unmet demand to treat tinnitus/hearing loss patients with a reliable drug.

What we truly care about is if the drug will work or how well it will work.

 

Why was there a reduction in word scores after 1-2 years?

 

Don't those prospective drugs contain both a GSK-3 inhibitor and an HDAC inhibitor?

 

No. GSK-3 and HDAC are just two of many targetable pathways in the ear. There are also PI3K agonists, Jag-1 agonists, FOXO inhibitors & Taz activators to name a few others that are listed in their patents. Those are just in the ear alone.

Their patents for hair growth lists the Shh pathway for example:

https://patents.google.com/patent/US20200121681A1/

 

We can only speculate at this point. Could be due to neuroplasticity, could be due to the massive new growth of cochlear hair cells and some just don't quite "take" as well and the body eliminates them. Or maybe noise damages/hurts some of these brand new hair cells. We can only guess. The good thing is though that the pullback in word scores seems consistent across multiple trials which further suggests its a true hearing signal and not just placebo. They saw it in both the Phase 1/2 trial and the open label study. Many of the patients saw a pullback in WR scores but still remained well above their baseline.

 

Please let me know if you know.

If you don't know, I would like to hear your opinion.

There is an eye medicine in their concept.

Can macular degeneration be a target?

 

Bruh, just because you regain something, it doesn't mean you can't lose it after, due to noise exposure etc again.

 

They have listed the eye as a potential target for PCA but I have not seen any patents or data relating specifically to the eye yet.

 

Wow, they are doing trials in the Buffalo area. I wonder if I can join. I'm 20 minutes away in Canada.

 

Is that trial for FX-345 or FX-322? Where can I find the link?

 

Maybe the new cells are weaker. I didn't damage my ears with a single noise exposure. It took many concerts and mistakes.

 

@Eliot Martin, I might have misread which one it was. Trying to find it again.

 

Even if the new hair cells are weaker, if I have to take this drug (in case it works) every 4 months, I would have no issue at all with that.

 

The IND for FX-345 should be filed soon, correct? I don't want anything derailing the first trial beginning in the fall.