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On a mission is to foster a healthy society

Interview - January 11, 2023

Healios is expanding the possibilities for curing diseases through the development and supply of regenerative medicine products as one of a select group of biotechnological companies revolutionizing medicine

DR. “HARDY” TS KAGIMOTO, CHAIRMAN AND CEO OF HEALIOS K.K.
DR. “HARDY” TS KAGIMOTO | CHAIRMAN AND CEO OF HEALIOS K.K.

Let's start by having you give us a little background information on yourself and your company. What is Healios’ core business and what are the strengths that set you apart?

I am a Doctor of Medicine (MD) and both of my parents were doctors too, in particular, my father was in charge of conducting research. He often told me that he was inventing medicine to cure patients, and he wrote so many papers yet rarely came up with finished medicines or solutions. When I entered medical school I wanted to go one step beyond what he was able to achieve. I quickly realized that the Japanese research level was really high, and some researchers in the past have won Nobel Prizes and have written some very well-known papers. Despite this, regenerative therapy was not coming out of laboratories and I found myself wondering why? I visited Silicon Valley and Stanford University for a while. Coming out of that opportunity I saw so many startups funded by venture capitalist companies. We did not have such a system in Japan. It was this that caused me to realize the thing that we have to enable and achieve in our generation as an industry, otherwise it doesn’t really make sense. In Japan, if you are excellent academic in  the suburbs you graduate and you go to a really good school. You make a decision on your career path, and if you pick science, there’s a good chance you will go to medical school. That is kind of ridiculous because in the Japanese system we just spend tax money and that is it, we don’t create any form of innovation. You might find yourself asking why it is that on an island nation without natural resources we are sending our brightest and most brilliant students to medical school. It really doesn’t make sense. We need to send people somewhere where they can innovate, but we are not doing that. That is the system we have and that is the tendency we have, and all we can do is try to convince doctors to run biotech companies.

I started my first company when I was 28 with my professor from Kyushu University. We successfully developed our first pipeline which has now been approved by the FDA and EMA. That was a successful experience for me and I felt that we could successfully bring Japanese technology to global approval. However, despite this, I wanted to do something bigger, and this was a niche product in ophthalmology. This time I wanted to build an entire industry that no one had developed. This is how I developed cell therapy, and when I think about it, when I was a doctor I was observing patients’ illnesses. All illness is caused by some kind of dysfunctionality of cells, and if you can replace the cells then, in theory, you should be able to cure diseases. If we can create cells and replace them entirely, that is much easier and in fact, it is a whole new and different type of medical concept. With this thinking, we should be able to cure so many different diseases.

I have this vision, and I think that at some point down the road someone is going to nail this market and it is going to become a huge pharmaceutical sector. We were involved in the human trials of the world’s first IPS cells and that was back in 2013, and we took the company public back in 2015. It takes time to develop innovative medicine and we are on track to start official final clinical trials on the RPE cell using iPSC technology with the partner next year. It is good that we are moving forward, but in order to sustain and grow as a public company we wanted to accelerate the development and decided to enter a license agreement for  Somatic Stem Cell therapy which includes therapy for Ischemic Stroke and Acute Respiratory Distress Syndrome (ARDS).



Can you tell us a bit about your pipeline at Healios?

The first area is the pipeline for inflammation conditions using  MultiStem® cells. We have conducted phase 2 and phase 3 clinical trials in ischemic stroke, and we are in discussions with the Ministry of Health on how we can get this product approved. ARDS therapy is an orphan drug in Japan meaning, a pharmaceutical that remains commercially undeveloped. We had 30 patients in the trials, which was enough to get approval, but then COVID-19 came in, and suddenly ARDS became a big issue as it often occurs in the last stages of COVID-19, and once it gets to that stage roughly half of the patients die. We were asked to add more data, and that felt quite difficult. I think we are on the right track however and I think that we will be able to announce the path toward approval pretty soon. Once we are approved I think the market will open up to the idea of the treatment.

The next pipeline is the immuno-oncology pipeline, and this is quite exciting. We have been researching induced pluripotent stem cells (iPSCs) for quite some time now. We can create so many different tissues, but then the question is which are really ready to become commercial products. This is needed to build up our sales and one of the best technologies for that will be NK cells.

Cancer is the biggest cause of disease in advanced countries, and solid tumors are 90% of cancer. Right now there is no clear therapy for that, and while it is true that blood type cancer can be cured but not solid tumors. NK stands for natural killer, which we have. When we are younger we don’t have cancer cells in our body, however as we get older the risk of cells becoming cancerous increases, and as our immune system deteriorates our bodies start to lack the ability to stop the progression of cancer. What if you could create large number of NK cells outside of the body and just give them to the patient? Those NK cells would attack the cancer cells, essentially curing the patient. In a way, it really is that simple.

Here at Healious we can create so many different types of cells, but on top of that we have gene modification technologies, which is unheard of, and if we combine both we can create any type of cell as well as augment certain features of the cells. When you think about it, as far as embryos go, we don’t touch them, if you want to make your child super smart before birth, it isn’t something that we can do, on top of the ethical implications such treatment might breach. However, when it comes to curing diseases, we can do whatever we want. We have tried various different types of animal models with human tumor tissue, and basically, those NK cells just eat and eat cncer cells.

 

In the field of immuno-oncology, there are many treatments that are also in development on T-Cell therapies. Can you tell us the advantages of your NK cells over more traditional T-Cell treatments?

T-Cells are like sharp knives, but at the same time also fragile and weak. They get tired very quickly. If the target is like a blood cancer then the type of cells is limited and the type of cells is homogeneous. Basically, you can kill all of the cells and that's it. NK cells are more robust and full of stamina. I think that is the key difference.

Tumors are surrounded by different types of cells and those cells are different from inside to outside. Unless the cell has the ability to penetrate inside cancer it cannot cure solid tumors. NK cells can do that, and I think that is the beautiful nature of them.

 

A keyword when it comes to Healios is commercialization, but developing cells has long lead times. When we talk about iPS cells they are often touted as a miracle innovation in medicine, however oftentimes clinical trials fail even if they are promising in preclinical development. Why do you believe that is? Why do these lab-based trials go so well but fail when it comes to human-based trials?

There are two elements. efficacy and side effects. With small molecules, toxicity is an issue basically because small molecules are a substance which don’t exist in the body. You really cannot predict the toxical profile unless we want to give it to the patient. That is why the success rate is so low. The risk of the safety profile improves from small molecule to protein therapeutics because proteins do exist in our bodies. The side effects are known to some degree. When it comes to cells, however, that is what we are made out of, and if you augment too much there will be some clear side effects. They might cure the target cells so quickly that it can cause side effects easily, however, I guess it can be perceived as a sign that it is working well. Other than that, however, cells themselves are not toxic because they are the makeup of our entire existence.

Let's remove the risk profile of side effects, and with that NK cells are very safe, as is somatic stem cell. We have given animal therapy testing on more than a few hundred patients, and there are no cell therapy-related side effects so far. Essentially if you are using bone marrow cells, those things are plentiful in your body, it isn’t a foreign entity. I think that is the beauty of it.



The other side is efficacy, and with small molecules, animals and human beings are so different. You can’t really predict; you could cure thousands of mice but you are not really sure if it will work on humans, as the differences are so big. With the protein therapeutics, the success rate went up because of your designed protein therapeutics based on human protein. When it comes to cell therapy the success rate goes even higher because of what I’ve just explained; we are made of cells. Essentially it is like a transplant but on a really small scale.

For something like a liver transplant, the biggest risk is the rejection rate, but if you can overcome it the success rate is so high. That is why cell therapy is so innovative and has such a huge future, but the biggest obstacles are immune rejection and mass manufacturing. As long as we can master these areas, there is a bright future for cell therapy.

I would like to talk about replacement therapy now. We were involved in the world’s first human research using autologous iPS cells to cure patient age-related macular degeneration (AMD). That was an autologous approach, meaning that we took the cells from the patient, differentiated iPS cells, and then put them back into the original person on the field. It took several months and large amount money per patient, that's a lot, sure it looks like a great scientific experiment but things need to be improved. In order to successfully commercialize this technology we need to come up with a cell line that won’t be rejected by any person on this planet, one product should be good enough. We need what we call universal donor cells (UDC) and that will be a necessary technology.

Thanks to innovation,  gene editing technologies are moving forward, and we have identified which molecules we should eliminate as well as augment. We have established universal donor cells which we can now differentiate into several different cell types. The company is collaborating with more than a dozen organizations globally that know that they have to use a universal donor cell for successful commercialization. Honestly, the data is looking really good right now. Now that we have overcome the biggest hurdle since establishing the company, why don’t we stop? I think it comes down to wanting to fight these diseases. 

 

It is interesting to see a number of pipelines, including Heal’os' ischemic stroke study, have been designated here in Japan under this SAKIGAKI system. One of the big criticisms of the Japanese medical sector because it is slow, often burdensome, regulatory processes. We have seen some changes since 2012 with the SAKIGAKI system. From your point of view how would you rate Japan’s regulatory framework, and what are some of the key things that you would like to see change?

They are trying to promote it, but they have to deliver what they have promised. There are some frustrating elements, and I believe that you spoke to another Japanese company’s example, who are particularly frustrated with the pricing and approval model. However, I think the pharmaceuticals and medical devices agency (PMDA) is genuinely interested in promoting cell therapy. They gave their approval for several products but unfortunately, those products were not that successful. Also from an international perspective, they did not have enough impact. They received harsh criticism and I think that is why they are moving towards being a little more conservative, which honestly, I can understand to some degree. However, saying that, in order to promote industry you have to keep going and keep pushing. Of course, there will be failures along the way but if we can just make one out of ten a successful product, that is enough.

20 years ago a Japanese academic company was quite advanced with protein therapeutics, but they didn’t follow through and there were issues such as the difficulty to manufacture. American companies like Amgen or Genentech raised money from venture capital, and while the issues were still there the price went down. My biggest concern about Japan is that we may not have enough guts to follow through. With most big companies, leadership changes every 3-5 years, so they don’t actually want to see the product through approval, so they just stop. New generations of leaders should push things all the way and not give up. We have to fight, otherwise, there is no future.

Japan as a nation needs to shift its focus and export more products in highly profitable markets where we can add value that no one else can, otherwise there is no place for Japan in the global arena.



We know that earlier in the summer of 2022 you conducted a trial called TREASURE Study for Ischemic Stroke with MultiStem®. Could you give us your take on the results of that trial?

It comes back to the challenge of efficacy, essentially the effectiveness of the product. In order to really understand the effectiveness of the product you have to give it to the patient. We have clearly shown the tendency of efficacy with ARDS, of which trial calle ONE-BRIDGE Study and patients can get rid of ventilator 9 days earlier, and the mortality rate went down from 42.9% to 26.3%. Now we can save patients. We were given 5 patients caused by COVID-19 and there were no mortalities, and the ventilator was withdrawn within 28 days for all patients and in 3 days or less for 3 of 5 patients. This was a clear win, so we expected that one to be approved, but unfortunately they didn’t.

The bottom line is that this product works. The next question then becomes, does the sale work or not? I think it checks the yes box in that respect. Unfortunately, PDMA didn’t want to see more data on this, but when it comes to ischemic stroke the data is really interesting. We found that those that had the therapy saw the efficacy go up over time, and to be honest over such a long period we did not believe that we would see efficacy. We have seen the data from the United States though, that shows efficacy on day 90, and even on the 1-year data point, which by the way showed the effectiveness to be even stronger. Honestly speaking, we found it hard to trust the data, traditionally medicine peaks out, and after that goes down, and we felt like this is what the case was going to be here too. It is real, however, and we have seen it with our own eyes.

If our parents have suffered from a stroke, then the 90-day treatment isn’t going to matter, it is more of a case of long-term management. This is what we have found through phase 2 and phase 3 human clinical trials. Our partner in USA is running the phase 3 trial and they are trying to change the endpoint from 90 days to 1 year. With cell therapy, especially with somatic stem cells, there is a learning process to really find out how the cell works with certain diseases. With ARDS we designed the study to work because we already knew how the cells would react. Ischemic strokes are a more complex disease, and even to this day we still do not know why effectiveness is stronger over one year. This is something we have to learn, but first, we have to get it approved.  

 

Do you have any theories on why this is?

It really is a completely unexpected result, and one theory we are discussing has no data to back it up. Basically, our immune systems are controlled by the bone marrow, which is where all the related cells are. These trial cells were taken from young bone marrow, and then we mass manufacture the cells. It is probably affecting how the whole immune system is functioning for the patient and maybe that is why they are doing better. It is not only working for the brain and the immune system, it is doing something else. The question is, however, what is that something else? The one thing we do know is that the amount of cells we are injecting is way larger than any competitor.

 

You’ve alluded to the success you’re seeing in treatment for ARDS having to do with immunosuppression, and that you were very happy with the results. It comes at an interesting time with the advent of the COVID pandemic and ARDS being the final stage before death. Can you tell us a little more about how COVID happening when it did impacted the direction of your research?

Before COVID everything was quiet around ARDS. In Japan, on paper, there are only 10,000 patients per year maximum. In China, they say that they have 600,000 patients per year. In the US they are saying around 200,000 patients per year. These are all very small numbers, so it took a long time for us to recruit the patients, and that is why we had the designation of an orphan drug. Back in the day trials had way weaker data than we have yet they still would get approved. Even though it is an open-label controlled study it is way better designed than any other past clinical trial or cell therapy trial.

COVID-19 then became a big issue, and mega pharma runs thousands of patient trials every year. This is such a critical disease right now. We are now spending so much money on injecting antibodies into ourselves, but the thing with diseases and antibodies is that they adjust. That antibody’s efficacy is going to wind down, so then I find myself asking; what’s the point? It is better to develop a therapy than an antibody to some degree. Once we nail down the patients that need the therapy, we can then prevent 40% of those patients from dying. It is way more effective in so many ways. From PDMA’s perspective, they want to see more data because, to be frank, they are very careful. That is a big source of frustration for us. Japan has no products for COVID; domestic companies were not successful. We have shown clinical benefits.

 

In 2017 you created a corporate alliance with Nikon, which through time was made deeper through capital transfer. Could you tell us a little more about that relationship with Nikon and why you were their partner of choice?

The product has been developed by a Swiss company for a long time now, but in order to promote Japanese manufacturing capabilities we have aligned ourselves with Nikon. Essentially they are practicing for the Japanese supply of the product and they have invested in us.

 

Looking at the future, are you looking for similar types of partnerships?

We are looking for so many partnerships, even for stroke and ARDS therapies. It would be much better for us to have some kind of commercial partnership with a pharmaceutical company for distribution. We are currently in discussions with several partners to make it happen. In terms of NK cells, I think it will be realistic that at some point we come to an agreement with mega pharma, especially in the US market. After that, we can develop the pipelines by ourselves. From the beginning, however, it really is impossible for us to do everything by ourselves, so striking a balance is so critical.

 

One of the obstacles to commercialization is a mass-production scale at an affordable cost. Can you tell us more about it?

Healios initiated the engineered NK cells (eNK cells) production for clinical trial purposes in the in-house cell processing center (CPC). This is the GMP grade facility and is expected to produce approximately 100 billion eNK cells per production batch using our established 3D perfusion bioreactor system, enabling efficient and stable mass production of eNK cells. Scalable mass manufacturing capabilities are the key here. The cells work, so the next step is bringing the costs down. After that, you can create real therapy.

 

Cell therapy and regenerative medicine hold a lot of promise, but to this day the amount of final practical use of it remains somehow limited. Let’s imagine 20-30 years from now, what do you think will be the results of regenerative medicine and cell therapy? What diseases do you think we will have cured by then?

I think our history has been represented by our design pipelines. The immunosuppressive effect is a no-brainer; it’s from bone marrow, it works well, and it was approved by the J-TEC. This is the first generation, and I think the second generation is immuno-oncology because it is big enough. When protein therapeutics became successful there were several blockbuster drugs approved, and that was when mega pharma and venture capitalists started to throw real money into it.

Regenerative medicine sounds amazing, but what is actually coming out? On the other hand, once those products start coming out, it's a game changer. Once that proof of concept becomes an actual reality the world is really going to change. Behind it are 3 major technologies; iPS cell technology, gene modification, and mass manufacturing. We are going to need all of these three in order to break through, but once you have it, that is when it is gangbusters.

I actually think that it may take even longer, and I think you need an additional technology which is the universal donor cell and it has to stay there for more than 10 years. It should not be rejected, it should not turn into 2 cells, and if it does we should be able to kill it. We have developed a suicidal gene type for this exact reason, but we have yet to bring it to clinical trials. I’m sure there will be a learning process and there are many questions we are yet to answer, however, we will do our best. This is going to create a future where we don’t have to worry about getting older in many ways. Our bodies will become like cars. When you wear out a tire you change it, and the same will apply to our cells.

 

There are lots of little venture capital firms with different takes on the three key points you mentioned. To what degree are you looking to expand beyond Japan and collaborate with some of these companies?

The US will be the biggest market for pharmaceutical products, so we have to develop our US operations anyway. We have venture capital and through the investment, we are looking to do exciting platform technologies. There always are and will be new technologies that will change the future of cell therapy or healthcare. We are keen to learn whatever is happening out there. If we need to acquire a technology then we will acquire it. We would like to be right at the forefront of cell therapies and be able to innovate therapies to be approved so that they can complete our ultimate mission; to cure patients. That is our vision and we are fully committed to doing that.

 

You mentioned early on in this interview that Healios is your second venture. Could you tell us the lessons you learned from your first company that you’ve been able to bring to Healios?

There really are so many things. One thing for sure about entrepreneurship is that as you start more new companies you get better and better at it. I learned about partnerships, patents, and global development just to name a few. I had just finished my training as a doctor so I really knew nothing about business. I’ve faced many difficulties but I’m lucky to have very good mentors. It is also important to keep moving forward and keep going. It doesn’t matter if you make mistakes, as long as you learn from them and make your successes bigger to compensate for those mistakes. Don’t be afraid of failures, maybe that is the biggest lesson I learned.

 

Imagine that we come back in 2021 and have this interview all over again. What are your goals or dreams for the next 9 years of Healios?

You know, when I had my first product approved I felt really good. My goal has always been to cure patients and help make people’s lives better, and if I can achieve that then that is groundbreaking. I would be a happy man, and happy to die and go to heaven. I know from my first company that once you have successes you will be given the next challenge, so in that respect, I am looking to our next challenges. One thing we all learn is that we all die one day, so it is important to keep going and keep challenging ourselves until our last breath. 

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