Investor Relations

AmpliPhi’s Chief Executive Officer, M. Scott Salka, Gives Interview to The Wall Street Transcript

Friday, October 23, 2015 8:45 am EDT

Dateline:

SAN DIEGO and RICHMOND, Va. & LJUBLJANA, Slovenia & SYDNEY

Public Company Information:

NYSE:
APHB
US03211P1030

SAN DIEGO and RICHMOND, Va. & LJUBLJANA, Slovenia & SYDNEY--(BUSINESS WIRE)--M. Scott Salka, the Chief Executive Officer of AmpliPhi Biosciences Corporation (NYSEMKT: APHB), a biotechnology company focused on the discovery, development and commercialization of novel bacteriophage therapeutics, discussed AmpliPhi’s core technology and other matters in an interview with The Wall Street Transcript on October 6, 2015.

A transcript of the interview is attached to this press release. The interview is expected to be published by The Wall Street Transcript at 10:00AM Eastern time today.

About AmpliPhi Biosciences

AmpliPhi Biosciences Corporation (NYSEMKT: APHB) is a biotechnology company focused on the discovery, development and commercialization of novel bacteriophage therapeutics. AmpliPhi’s product development programs target infections that are often resistant to existing antibiotic treatments. AmpliPhi is collaborating with a number of leading organizations, including Intrexon Corporation (NYSE: XON), the U.S. Army, The Royal Brompton Clinic in London, UK and UK-based University of Leicester, to rapidly advance bacteriophage-based therapies. For more information, visit www.ampliphibio.com.

About Bacteriophage

Bacteriophage are naturally occurring viruses that are highly specific for the bacterial hosts they infect. They can rapidly kill their host, amplifying themselves in the process. Bacteriophage are unaffected by antibiotic resistance and are able to disrupt bacterial biofilms. Such biofilms are a major line of defense for bacteria, contributing to antibiotic resistance. Bacteriophage are able to penetrate biofilms and replicate locally to high levels, to produce strong local therapeutic effects.

Forward-Looking Statements

Statements contained in this press release, including the attached transcript, that are not statements of historical fact are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements related to AmpliPhi’s use of bacteriophages to treat bacterial infections; the initiation, timing, progress and results of, and AmpliPhi’s ability to undertake and accomplish certain goals with respect to, certain preclinical studies, future clinical trials and other activities; AmpliPhi’s plans to research, develop and commercialize its product candidates, alone or in collaboration with third parties; the size and growth potential of the markets for AmpliPhi’s product candidates, and its ability to serve those markets; AmpliPhi’s ability to successfully commercialize, and its expectations regarding future therapeutic and commercial potential with respect to, its product candidates; the potential rate and degree of market acceptance of AmpliPhi’s product candidates; the actions of AmpliPhi’s competitors and success of competing drugs that are or may become available; the accuracy of AmpliPhi’s estimates regarding its expenses and capital requirements; and the accuracy of AmpliPhi’s estimates regarding its manufacturing capabilities. These statements are subject to various risks and uncertainties. Words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “will,” “goal,” “potential” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements necessarily contain these identifying words. These forward-looking statements are based upon expectations at the time the statements were made and involve assumptions that may never materialize or that may prove to be incorrect. AmpliPhi’s actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various factors, including, without limitation, manufacturing difficulties that result in the inability to consistently, timely or efficiently manufacture product candidates in sufficient quantities; delays in the commencement or completion of clinical trials or IND-enabling studies; negative or inconclusive results from clinical trials; the need to conduct more extensive and expensive nonclinical and clinical testing than currently estimated; safety or efficacy issues associated with AmpliPhi’s product candidates; and delays in, or other difficulties encountered with, obtaining marketing approval of any product candidates from the U.S. Food and Drug Administration or any foreign regulatory agency. These and other risks concerning AmpliPhi’s programs are described in additional detail in AmpliPhi’s filings with the U.S. Securities and Exchange Commission. All forward-looking statements contained in this press release, including the attached transcript, speak only as of the date on which they were made. AmpliPhi undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Transcript of Interview Conducted on October 6, 2015

(AZH606) TWST: What does AmpliPhi Biosciences Corporation do, and can you describe its core technology?

Mr. Salka: The core technology is the use of bacteriophage to fight bacteria. Bacteriophages are the natural predators for bacteria. They are viruses that infect bacteria and, in some cases, kill them by lysing them to make them explode. It is part of the virus’ reproduction cycle. The virus lands on the host bacterium, takes over its protein-production machinery, replicates itself several hundred times and then causes that bacterium to explode so that the progeny of that virus can go on to infect, reproduce and kill neighboring bacteria. This process has been going on for billions of years.

Phages have co-evolved with bacteria. So wherever you have bacteria, you have phage. Phage is the most abundant life form on the planet. They’ve been very, very successful and under the radar for a long time. We just discovered them about 100 years ago, but it wasn’t until the advent of some of the newer sequencing technologies that we realized that they are so pervasive in the environment. We’re basically exploiting natural predators of bacteria to develop new means for combating bacterial infections in humans, including infections that are resistant to existing antibiotics.

TWST: How is this technology different from a traditional antibiotic model? And also, can you talk about who you believe your direct competition is right now and how your technology differs from, say, your pre-eminent competition, if there is one?

Mr. Salka: Essentially, small-molecule antibiotics as we know them are based on natural compounds. In the case of penicillin, for example, yeast produces this natural compound to protect themselves against bacteria. So the small-molecule antibiotics are kind of exploiting some old, natural biowarfare that happened in the environment between, say, yeast and bacteria, or other organisms when bacteria are trying to protect their turfs.

As such, antibiotics have always been subject to the bacteria developing resistance against them because they’ve seen these things over the eons. If the antibiotics were successful, they would have wiped out bacteria. Bacteria are so successful as an organism because they can mutate around any kind of threat coming in front of them. Antibiotics have obviously been very, very successful and saved countless lives over the last 50 to 60 years since their advent, but there is this growing threat of antibiotic resistance, which is where phage comes in.

Phages can be a complement to the antibiotic repertoire that we currently use. Even with the success of antibiotics, there are still patients that need alternative treatments because the current therapies at our disposal don’t work to treat their infections. Ultimately, we would like to see antibiotics and phage being used in combination to treat infection. So rather than giving the bacteria any opportunity to mutate around the threat, we’ll come in from many, many different directions. In that way, we don’t give the bacteria a chance to circumvent the therapy regimen.

For example, if you think back to the early days of trying to develop HIV treatments, we had single drugs that worked really, really well, but they only worked for a couple of months, and then, the virus would mutate around that treatment. It wasn’t until we learned how to put several things in combination and dose them in combination that we really got some traction in fighting HIV. Ultimately, we now have Gilead that has put the cocktail in one pill to make it much easier for the patient to comply with this approach of attacking a bacterial or a viral threat with a cocktail that hits that bug from so many different directions that it can’t possibly mutate around the threat. Eventually, we will do in the bacteria space exactly what has been done in the viral space when cocktails have been used to treat viruses like HIV.

TWST: Is there any other company that’s using phage to deal with bacteria that you know of?

Mr. Salka: Yes, I know of one other company of this kind at our stage, and they are actually a little bit ahead of us in terms of getting it to the clinic. It is a small company in France called Pherecydes. Pherecydes has gotten some wonderful funding from the EU and then from some of the member states, including Belgium, France and Italy. What they are doing is developing phage therapy to treat serious burn victims, and to that end, they actually initiated the clinical study. It’s being done in conjunction with the member states that are putting in additional support and the French Army.

They are adding those phage cocktails to the dressings that are applied daily to these third-degree burn patients as their wounds are debrided and dressed. They enrolled their first patient in July. They’re going to look at whether or not the application of the phage to the dressings on these burn victims will prevent infection. It’s being done prophylactically, if you will. They’re looking at safety and efficacy before going into a more pivotal study. That is the only clinical study that we are aware of worldwide going on right now.

We expect to be in the clinic before the end of the year with a staph aureus cocktail of three phages that have shown broad activity against staph aureus bacteria. We expect to do that, and then, we expect our second study will start with the staph aureus cocktail in the first half of 2016. So this is the only company I know of that is as advanced with phage therapies in humans.

There’s another company called ContraFect that is a publicly traded company that is in the clinic, not with whole phage but with certain enzymes isolated from phage. Remember I said that when lytic phage infect bacteria, the phage complete a reproduction process, then the bacterium explode, or lyse. To make that happen, once they successfully have created a couple hundred copies of themselves, they start secreting an enzyme that breaks down from the inside. After they’ve broken down the bacterial wall, that bug explodes.

So what this company ContraFect has done is they have isolated one of those enzymes, and been able to manufacture, purify and then deliver the lysin, meaning the enzyme responsible for this lysis. Their approach is to deliver the phage lysin to treat infections in humans, and I think they’re initially going into bacteraemia and endocarditis. So this is a bloodborne infection, and in some cases, the bloodborne infection then results in an infection in the heart valve or in the heart itself, as happens in endocarditis. They are currently in Phase I and are administering the lysins in combination with antibiotics. That is a very exciting approach as well.

TWST: Now, you mentioned the bacteriophage cocktail for staphylococcus aureus. You just released animal data that showed that the cocktail had demonstrated comparable efficacy to vancomycin. Can you talk about that further and what it means?

Mr. Salka: What we were looking for in that study was to see how effectively we could deliver that cocktail to the lung of these animals with an established infection in the lung. What we were hoping to see was comparable activity to vancomycin, a standard of care for that type of infection. The vancomycin was delivered systemically, which is how vancomycin is delivered. It went through their bloodstream and found its way to the lung, and then attacked and effectively controlled that infection.

We were delivering our cocktail by having the animal inhale it to get it directly into the lungs. We wanted to show that this was going to be an effective way to control that infection, and indeed, that is what we saw. It is exactly what we wanted to see from that type of animal model to give us the confidence that if we can deliver the phage to the lung of the patients topically, either through a nebulizer or through some kind of misting, that we could have an impact on that lung infection.

TWST: What is the market potential for that particular cocktail?

Mr. Salka: For the staph cocktail, there are not only staph aureus infections but also, as we know, methicillin- and vancomycin-resistant strains of staph aureus. If you look at that broad market, it can exceed $1 billion. If you look at more narrow opportunities in MRSA and VRSA, and the vancomycin- and methicillin-resistant strains, then it is smaller than that but still very interesting in terms of numbers. These are patients who don’t have a lot of options if they are resistant to methicillin and vancomycin. You have a near-term opportunity that could be in the several hundreds of millions of dollars, and then ultimately, if you can show broad effect and complement some of the existing antibiotics that are out there, then the opportunity could be quite larger.

TWST: Can this phage technology be made to create a broad-spectrum antibiotic?

Mr. Salka: That is not really the strategy for us though. Our strategy is to be very, very narrow-spectrum. One of the benefits of being narrow-spectrum is that it cleaves nicely with our growing understanding of the microbiome and how important it is, and the negative consequences that you can have if you wipe it out with broad-spectrum treatments.

TWST: I understand what you’re saying. You are trying to create a more sustainable antibiotic?

Mr. Salka: Exactly. Instead of wiping out general gram-negative or gram-positive bacteria in the human, we now know that an average human has six or seven pounds of microbes, and that these are beneficial microbes that live on the skin, in the gut, sinuses, lungs, vaginal cavities, and they mostly should be there and not wiped out. There are distinctly negative consequences that can arise when you wipe out the entire flora in the attempt to control a pathogenic bacterium.

TWST: You’re going to keep trying to use this technology for a variety of types of bacteria though?

Mr. Salka: Exactly. So one example of some of the negative consequences of using broad-spectrum antibiotics can be viewed in attempting to combat C. difficile infections. Many of these infections arise as a result of people taking long-term antibiotics to treat some other infection, and what happens is the antibiotics wipe out gut flora, and you end up with C. difficile establishing a big beachhead in their guts, and they become pathogenic. Most of us have C. difficile. It’s in the environment, but it’s not able to takeover our gastrointestinal system because our gastrointestinal tract is populated with a lot of beneficial bacteria, and so there’s just not room or resources for C. difficile to spread out and take over.

But in patients whose flora had been decimated by chronic antibiotic use, then these bacteria have this nice dark place full of nutrients to expand like crazy and become pathogenic. It can be very, very difficult to treat. So we’re actually developing a phage cocktail to treat C. difficile infections, but ultimately, what we would like to see is the very narrow use of phage to take out pathogenic bacteria without causing the destruction of beneficial flora in the body.

TWST: Where is that phage for C. difficile in development?

Mr. Salka: We expect a 2017 clinical trial start. We are in the relatively early days of identifying and selecting the cocktail in the preclinical sense before we move it into production and characterize it for manufacture to move into a clinical study. That is our third program. The staph aureus is our first cocktail, and the second cocktail will be a cocktail aimed at pseudomonas aeruginosa. That’s a gram-negative infection that can be a very, very significant problem in the cystic fibrosis population.

Most adult cystic fibrosis sufferers have the consequence of long-term pseudomonas infection in their lungs that leads to the decline in lung function and, ultimately, death in those patients. That is a huge unmet need. It is a great commercial opportunity but also a wonderful way to extend and improve the lives of those patients. Pseudomonas is also certainly a problem in our wounded-warrior population. It’s a problem with people who suffer severe injuries as a result of accidents or burns. These patients can get pseudomonas infections in their wounds and lungs, and they can be very, very difficult to treat.

We’re pretty excited about the pseudomonas cocktail. We have data showing that our pseudomonas phages retain their ability to infect and kill bacteria following nebulization in a commercial nebulizer. We are in the process of manufacturing the pseudomonas cocktail. We’ll be doing the toxicology studies required to support the move into the clinic in the second half of 2016.

TWST: Can you talk to the financial health of the company and tell us how long you have the money to cover development work going forward?

Mr. Salka: Based on current projections, we believe that our current resources are sufficient to fund our operations through the end of Q3 of 2016. That is pressing as fast as possible to get into the clinic, initially with the staph aureus cocktail and then in late 2016 with the pseudomonas cocktail while we’re developing the C. diff program. So we’re moving on three different fronts there. We hope to hit several milestones over the next several quarters.

TWST: You have an agreement in place with Intrexon. Can you talk about that and also any other significant agreements you have in place?

Mr. Salka: Intrexon is a strategic partner as well as an investor. Our partnership with Intrexon is aimed at engineering both the phage and the hosts, meaning the bacteria that we use to actually manufacture the phage that we use in our drug product. So there are a lot of exciting things that we can do on both fronts. We can modify the wild-type phage so that they’re even better at destroying bacteria. For example, we can give them broader host range, and we can engineer an improved ability to penetrate biofilms and kill bacteria that are sitting in those biofilms, which is a big problem in lung infections and wound infections.

So there’s plenty that we can do to make phage even better than how they are in the wild. So it’s very, very analogous to what breeders do with animals, meaning to what folks do with corn, soybean and cotton to engineer those food crops to be better than they would be if left alone. We can do some of those same things with phage, and we can do some of those same things with the hosts that we use to manufacture the phage. We can manipulate those hosts to prevent any potential impurities in our drug product, meaning impurities that are bacterial-related.

We can do some clever things on the host-engineering front to make the whole manufacturing process more efficient and maybe making the drug safer. That is what the Intrexon relationship is about. We would capitalize on their synthetic genomics platform and capabilities to improve our phage and manufacturing hosts.

TWST: You also have some other agreements. Can you talk about those, and are these exclusive agreements or for exclusive applications?

Mr. Salka: The Intrexon collaboration is an exclusive collaboration, and then, we have several other relationships that are quite important. We have a wonderful relationship with the U.S. Army to develop our staph aureus cocktail to treat infections. The army is quite interested in pseudomonas and how that pseudomonas cocktail could be used to treat not only the wounded-warrior population but also service members who have surgeries and get prosthetics that get infected with pseudomonas, which can be very, very difficult infections to treat. We expect to do great things in our collaboration with the army as we move these cocktails into the clinic and start treating patients.

We also have relationships with hospitals and academic institutes in the U.K. We are working very closely with the Royal Brompton Hospital in London. Jane Davies is there to develop the pseudomonas cocktail, and we’ll be working very closely with her and other colleagues as we move the pseudomonas cocktail into the clinic to treat cystic fibrosis patients. That study will likely be initiated in the U.K. in conjunction with Jane Davies at the Royal Brompton. Then, we also have an agreement with the University of Leicester with a wonderful scientist and thought leader named Martha Clokie. We are working with them to develop our C. difficile cocktail.

TWST: Again, is that an exclusive relationship?

Mr. Salka: Yes, the collaboration with the University of Leicester is exclusive for the development of C. diff phage cocktails.

TWST: Can you talk about if you have any operational and/or management changes that you expect to make in the coming 12 to 24 months?

Mr. Salka: I’m sorry, but it’s our policy not to comment on these types of matters outside of press releases and our SEC filings.

TWST: Can you talk about what the capacity in the manufacturing site in Slovenia is and if it’s going to be enough for you going forward if you have success with some of your compounds?

Mr. Salka: We have 4,000 square feet of laboratory and office space in Slovenia, and right now, we believe our facilities are adequate for our near-term needs. But of course, as we grow, we may need to expand our capacity.

TWST: You are geographically spread at this point? Is there a reason for that?

Mr. Salka: A part of it is a function of how the company was pulled together. The company AmpliPhi is the result of acquiring a company called Biocontrol that was based in the U.K. We shut down the laboratories in the U.K., but that gave us those important relationships with the University of Leicester and the Royal Brompton. AmpliPhi was also the result of acquiring a company called Special Phage Services based in Australia, which is why we have the laboratory still operational in Sydney.

Then, the manufacturing in Slovenia happened purely as a function of looking for how we are going to manufacture our first drug product, and looking at the make versus buy options and realizing that it was going to be much better for us to build our own manufacturing capability. That led us to certain capabilities that already existed in Slovenia, and that made the process of building and staffing a cGMP-compliant facility not only economically attractive but made it possible to do in such a short period of time.

TWST: What should a potential investor in AmpliPhi Biosciences Corporation know today?

Mr. Salka: They should know the opportunity that exists for phage to be developed as a therapy to treat serious infections in humans, and that we have unique manufacturing capabilities and the critical relationships for moving the phage rapidly into clinical development. Again, I mentioned our first study should be up and running before the end of this year, our second study in the first half of 2016 and, then, the third study, which will be the first of the pseudomonas cocktail, in the second half of 2016.

TWST: Is there anything else you wanted to add before we end?

Mr. Salka: Thank you very much for giving us this opportunity to tell our story.

TWST: Thank you. (KJL)

Contact:

Company and Investor relations:
Email: IR@ampliphibio.com
or
Media relations (USA)
Lazar Partners
Danielle Lewis/Glenn Silver
+ 1 212-867-1762
Email: ampliphi@lazarpartners.com
or
Media Relations (Europe and ROW)
Instinctif Partners
Gemma Howe/Sue Charles/Daniel Gooch
+44 (0)20 7866 7905
Email: ampliphi@instinctif.com

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