Interview: San Francisco Business Times

By Ron Leuty  – Staff Reporter, San Francisco Business Times

Jun 11, 2020, 3:02pm PDT Updated Jun 11, 2020, 4:54pm PDT


For Nevan Elam, the path toward a drug has been a winding one that could culminate in his small Peninsula biotech company securing a lucrative voucher and saving the lives of kids with a potentially fatal disease.

Even in the meandering world of drug development, Rezolute Inc.'s route is unusual. It includes the experience of Elam developing Exubera, an insulin powder developed at Nektar Therapeutics Inc. designed to load into a bong-like inhalation device, a merger with an Israeli-based shell company and a deal with Xoma Corp. for what now is Rezolute's lead drug to treat congenital hyperinsulinism, a genetic condition in which the pancreas overproduces insulin in young children.

Rezolute (OTCQB: RZLT) this week said its drug, called RZ-358, qualifies for a rare pediatric disease designation, an incremental step. That could lead the Food and Drug Administration to award a voucher that the 25-person, Redwood City company could sell to another company for millions of dollars or use to accelerate the FDA's review of Rezolute's next drug.

The chain of events around a voucher for RZ-358, however, depends on the FDA approving the drug. Right now, the drug is in a Phase IIb trial, a step away from a potentially pivotal study, that won't produce data until next year.

For now, Rezolute and CEO Elam are concentrating on seeing through the mid-stage trial during the Covid-19 pandemic. The viral outbreak, which has infected more than 7 million people globally, emerged just as Rezolute unveiled its trial in roughly two dozen congenital hyperinsulinism patients across 15 sites in 10 countries.

"In January, we would say that the goal is to complete the study in 2021," Elam said. "But that's still the goal."

Elam was a senior executive at Nektar (NASDAQ: NKTR), then based in San Carlos and now in San Francisco, who ran the company's pulmonary group and was in charge of the Exubera program. The drug-device, once seen as a breakout product, was handed off to Pfizer Inc. (NYSE: PFE) but struggled to capture 1% of the insulin market and ultimately was dropped in 2007.

Meanwhile, Rezolute's chief scientific officer, Sankaram Mantripragada was working for a Canadian company on other drugs, including intranasal glucagon, the first potentially needle-free rescue treatment for severe hypoglycemia that was bought in 2015 by Eli Lilly and Co. (NYSE: LLY).

Elam and another former Nektar executive, Hoyoung Huh, eventually left Nektar and founded AntriaBio to pursue other insulin drugs. Mantripragada soon joined them as AntriaBio in 2013 merged Fits My Style Inc., an Israel-based shell company billed as a web services company, allowing the company to go public.

The company later changed its name to Rezolute and concentrated on a preclinical once-a-week injectable basal insulin product. But Rezolute's big clinical shift occurred in 2017, when it licensed a fully human monoclonal antibody — the current RZ-358 — from Emeryville's Xoma Corp. (NASDAQ: XOMA).

Xoma, a longtime Bay Area drug developer, had done early safety studies of the drug in healthy volunteers and some patients. But Xoma was undergoing change, shifting to a financing company for drugmakers, and Elam saw promise in the drug's potential against congenital hyperinsulinism, a rare disease that strikes one in every 25,000 to 50,000 babies.

The condition is caused by at least 10 genetic mutations that cause overproduction of insulin by cells in the pancreas. Left untreated, it can be fatal. Even with treatment to stop production of insulin, many patients are left with neurological and developmental complications, and those drugs have serious side effects, Elam said.

RZ-358 is designed to dim the signals that overproduced insulin sends out to other parts of the body, so then cells don't take up the insulin and set off hypoglycemia.

"We are agnostic to the different genetic causes," Elam said.

By the drug receiving rare pediatric disease designation from the FDA it could qualify for the voucher, part of a program designed to provide an incentive for companies to develop drugs for rare conditions that strike children.

But RZ-358 is just the start for Rezolute, which had an accumulated deficit of $143.7 million and cash and equivalents of $14 million at the end of March. It plans to take its other drug — an oral therapy for the most common cause of blindness, called diabetic macular edema — into the clinic later this year, and Elam hopes to shift Rezolute's stock from an over-the-counter stock to the main NASDAQ market.

"This is our breakout time right now," Elam said.