Intensity Therapeutics – Our Take

Why We Previously Invested

Since President Nixon declared war on cancer in 1973, cancer has remained a persistent and increasing health concern. Despite much effort, and the expenditure of many billions of dollars, cancer is the second leading cause of death for all adults in the US and the number one killer of adults aged 45-64. According to the American Cancer Society, there were 14 million new cases of cancer in the world in 2012 and by 2030, the figure will be nearly 22 million.

Each type of cancer has a current standard of care, and these vary in terms of effectiveness and safety. When caught early, complete regression may be possible with a combination of radiation and/or surgical removal followed by chemotherapy treatment. After cancerous tumors have grown too large, are in difficult-to-excise areas, or have metastasized, surgery is no longer a viable option. As a result, most current treatments for latestage cancer are largely ineffective, relying primarily on chemotherapy. Often, an inadequate amount of chemotherapy fails to penetrate the fat membrane around each cancer cell to destroy, disable, or alter the DNA at its center. When low levels of chemo do reach the target, cancer cells are able to pump out or clear the chemical agents and become resistant to the drug.

What impressed us about Intensity was that the company has demonstrably and repeatedly produced results. In initial drug testing, the Intensity formulation group outperformed all other control groups in a head to head comparison study, including active drugs given via IV (intravenously) and IT (intratumorally). Furthermore, there was a complete regression (total shrinkage) in animals of tumors treated with Intensity’s product. Intensity executives and its National Institutes of Health (NIH) collaborators are unaware of any previous cancer treatment that has shown complete regression of >300mm3 Colon26 colon tumors in preclinical trials.

Beyond the hope of complete tumor elimination, Intensity’s method provides immunization-like protection against future recurrences of cancer. In a separate study, 90% of mice achieved a complete regression of cancerous tumors four weeks after inoculation. Intensity and its NIH/NCI (National Cancer Institute) advisors believe that this is likely the first demonstration ever of an immune response using the drug cisplatin. Intensity’s method of treatment does not undermine the immune system like conventional chemotherapy, allowing the body to naturally fight back and keep cancer at bay.

The mice models are considered by the company and its NIH/NCI collaborators to be highly robust. Four of the market-leading, multi-billion-dollar cancer drugs on the market were all tested – and approved – using less robust mice models with less effective results. One five-day treatment of INT230-6 eliminated cancer in animals and showed a vaccine-like effect (the animals would not get the same cancer, even when it was injected into them).

We were also impressed by the team behind Intensity Therapeutics. The team and its Board of Directors are experienced and capable of successfully building the Company and its drug delivery system.

Why We Are Investing in This Round

Intensity has met a number of important milestones since our last investment in May 2016. Intensity had an investigational new drug (IND) application accepted and received a “Study may proceed” letter from the US FDA in December 2016 and a CTA accepted with a “No Objection Letter” from the Canadian Health authorities in January 2017 for both Phase I/II trials in humans. This was a major achievement as only approximately 40% of new drug startups receive approval to move into human trials. The Company has received issued patents in the US, Korea, Australia, South Africa, and Russia and continues to prosecute patents in multiple other countries in Europe, Asia and South America for their technology. Most importantly, they have now used their therapeutic, INT230-6, in 14 human patients and to date the drug has shown good safety data to allow increased dosage and frequency. The Company is testing and enrolling patients at the following hospitals: Sydney Kimmel Cancer Center at Johns Hopkins, The Fox Chase Cancer Center at Temple University, Princess Margret Hospital part of the University Health Network in Toronto, and both the Norris Cancer Center and HOAG Presbyterian Hospitals of the University of Southern California medical system. The above list includes 3 of the top 10 cancer institutes in the world.

Below are the most recent updates from the Company’s trial sites:

There have been no observed systemic toxicity or dose limiting toxicities in the 14 patients treated thus far. Additionally, none of the patients have experienced procedure-related adverse events. Moreover, the injected tumors for which Intensity has data, visually appear to be regressing. For patients who received a proper drug load into their tumors, there was a good response – even at the lowest frequency of dosing.

Approval was given by the human study Steering Committee to administer INT230-6 into deep body tumors as a result of the initial success of Phase I trials in superficial tumors (e.g. squamous cell, thyroid). The first four subjects having deep tumors (including one with liver metastases and one with bile duct cancer) have now been treated and several more are in the initial screening process. The therapeutic thus far has been acting as envisioned. Regarding the superficial tumors, the Steering Committee has also agreed to increase the dosage and frequency further.

Increase in dose level safely achieved. With the opening of the higher frequency cohort, Intensity was able to increase the first dose from 5 to 20 ml. Drug-related adverse events continue to be minor, mostly low grade pain at the injected tumor site.

Stable disease observed. Patients receiving multiple injections at a proper dose to tumor volume ratio have maintained stable disease during treatment, although it is not yet clear whether the injected tumors have been killed in those patients. There is visual evidence, however, of injected tumors having necrosis (indicative of cell death).

In the next 12 months, Intensity expects to initiate new cohorts for their trial, which allow for various dose frequencies, tumor loading (1:2) and dose volume. Additional safety data in key tumor types (pancreas and liver) could be obtained as the trial progresses. The potential exists for a collaboration with organizations producing PD-1 and/or CTLA4 antibodies (immune system stimulating agents) and initiation of a combination study early next year. Lastly, data to be collected in 2018 should enable Intensity to design a Phase IIa expansion trial for specific tumor sites. Pancreatic cancer may be a target for such a trial, as it has a five-year survival rate of 2% and there currently is little to no effective treatment.

This current raise for up to $9m will allow the Company to complete their Phase I trial and complete the design for Phase II. The Company currently has approximately $5m in cash. Additional objectives include adding more hospital sites and obtaining preliminary information on drug safety and efficacy. Although the primary focus is obtaining clinical data for the lead INT230-6, the capital from this raise would also be used to search for a scientist to begin research for next-generation products. The DfuseRx℠ platform technology may provide the opportunity for development of multiple drugs, outside of what is currently studying.

There are several possible outcomes for Intensity’s efforts against cancer. If Intensity develops a way to shrink tumors (previous studies have suggested tumors up to 15cm in diameter) that is an alternative to cryo or heat therapy (which only works on tumors 3cm or less), while not causing collateral damage (as radiation does) and providing for less disfigurement than surgery, this will be significant. If the Intensity “cocktail” either stabilizes or eliminates metastasis for a solid tumor, this result would be ground breaking, as no current cancer treatment has seen this outcome. Finally, as seen in the Intensity animal studies, should INT230-6 have a vaccine-like effect (preventing the treated cancer from reoccurring and/or making it less likely other cancer types will develop), this would be a revolutionary cancer treatment. It remains challenging to estimate the market value of these various outcomes, but cancer drugs that extend life by only several months have values in excess of $1 billion

Exit Opportunities

We believe this company could have an IPO or be acquired in the near future. Although the CEO is targeting a potential liquidity event in the next few years, we are always conservative in our forecasts, especially when dealing with a therapeutic. There are four milestones which need to be reached in order to realize the ultimate return: (1) safety, which so far has been shown, (2) shrinking of the tumor, which with the proper dosage appears to be occurring, (3) killing of the metastases and, (4) the vaccine-like effect. The company, however, could have an exit event before the last two milestones have been achieved. Depending on results and data, a receipt of breakthrough therapy designation from the FDA could greatly expedite the timing for a liquidity event. While the company is likely to need to begin showing both safety and some efficacy in both Phase I and Phase II trials prior to a liquidity event, the current heated acquisition climate by big pharma may allow for a significant early liquidity event.

Pharma companies are searching for oncology drugs that can work synergistically with PD1 inhibitors (which take the brakes off the immune system). These companies have a compelling need for another compound or drug cocktail to combine with their PD1 inhibitors. Several of these companies are already familiar with Intensity and have been following their progress. A research paper from 2016 showed that approximately 50% of the R&D pipeline of multinational pharmaceutical companies come from external sources. This need for new drugs, together with low interest rates, has led to an increase in acquisitions. According to Dealogic, there has been more than $190b worth of global biotech and pharma acquisitions so far this year, which is on pace to beat the record set in 2015 of $315b. Furthermore, the average transaction value for a drug deal is $335m this year compared to $68m in 2011. Pharma companies are paying greater prices for unproven drugs. The external sourcing strategy has shown success: Gilead Sciences bought Pharmasset for $11b, acquiring what became its $56b hepatitis C drug.

There is also the possibility of a partnership with a major pharma company which would contribute to financing the clinical studies. For example, Novartis invested $170m in Surface Oncology in Jan. 2016. Surface Oncology went on to raise $108m in its IPO, putting its post-money valuation at $413m. Surface Oncology (like Intensity Therapeutics) has only one product in Phase I.

If a Phase II study is needed and the company cannot find a partner and the data is not strong enough for an IPO or acquisition, Intensity will need to raise a bridge or C round to conduct the Phase II trial.

The immuno-oncology space is crowded and Intensity is not without competition. Although this adds some risk to Intensity, the early financial success of some of their peers has helped us in our due diligence and pricing of this round.

As with all new drug development companies the risks are high (please see the Intensity Therapeutics, Inc. Offering Memorandum for risks), and so is the potential reward. To date Intensity Therapeutics has made excellent progress in the early stages of human trials. We are optimistic about what is to come.