VERNX BIOTECHNOLOGY INVESTOR UPDATE

VERNX BIOTECHNOLOGY INVESTOR UPDATE

Vernx co-founder and chief executive Dr Craig Patch discusses the company’s outlook with journalist Anthony Black.

Biotechnology company Vernx is making rapid strides towards commercialising its first product to improve gastrointestinal health.

The company’s branched fat patented technology platform will lead to the development of three distinct products with a focus on specific applications - dietary supplements, infant formula and pharmaceuticals.

Branched fats are a vital fatty acid found in human vernix caseosa and breast milk. It plays an important function in the developing infant gut epithelial, regulating immunity and seeding a healthy microbiota.

Dr Patch says any condition where the gut microbiota is disrupted, for example antibiotic, could benefit from branched fats. In addition, preterm infants and formula fed infants are deficient in branched fats, which has significant negative effects on gut health and immunity.

OPPORTUNITY

Dr Patch says Vernx Biotechnology will supply the global pharmaceutical, infant formula and supplements market with its proprietary branched fat active ingredients.

About two months ago, Vernx secured its first round of seed funding from investors outside founders Dr Patch and Sarah Crennan and scientific adviser Professor Tom Brenna. Vernx has since been engaged in a discovery program with Latrobe University and the University of Texas in Austin.

Dr Patch says Vernx is expecting to bring its products to market in the next 18 months.

“We’re definitely targeting the global market,” Dr Patch says. “We have a good baseline of scientific data to substantiate what we’re going forward with. We’ve selected the correct bacterium to ferment to make in to a product and we’re funded to take our first concept, which is a dietary supplement, to market.

“Our products have several potential market applications. So, for example, one application would be for adults endeavouring to recover the good bacteria in the gut after taking a course of antibiotics. Our product would help re-establish the microbiota.

“Also, our product would re-establish the good bacteria in the gut following a cleansing of the gastrointestinal tract for a procedure, say a colonoscopy.”

Dr Patch says substantial scientific evidence suggests a lot of gut diseases are due to a poor environment within the gut that promotes pathogenic bacterium. So the bugs cause disease and inflammation.

“What we’re doing is developing the food, or the nutrient base by which those good bacteria can feed on to produce a healthy gut environment” he says.

“Our products are revolutionary as there’s none like ours on the market. We’re taking the science in another direction. There’s no lipid product that is used as fuel for bacteria other than our product.

“Vernx Biotechnology was founded on the guiding principle of advanced living nutrition. Vernx was established to develop and commercialise a range of novel medical nutrition products.”

Vernx continues to develop its core branched chain fatty acid (BCFA), which is known to have positive effects on the infant gut and appears to provide significant protective prebiotic properties.

THE BCFA TECHNOLOGY

In his breakthrough proof of concept study, Professor Tom Brenna, from Cornell University in the US, has demonstrated that administration of BCFA can reduce necrotising enterocolitis in a rat model by 50 per cent compared to infant formula.

BCFA is naturally found in large quantities in Vernix caseosa that develops on the skin of the foetus in the last trimester. It’s now known that a large portion of the Vernix caseosa sloughs off and is ingested in utero. In fact, it is regarded as a baby’s first meal.

COMMERCIAL POTENTIAL

Vernx was founded on the vision to improve the health of premature infants. About 15 million babies are born prematurely each year, according to the World Health Organisation. Preterm babies have an increased incidence of gastrointestinal problems compared to term babies.

Dr Patch says it’s widely accepted that the best nutrition for premature babies is human breast milk for growth, development and reducing gastrointestinal diseases. Currently, there is a gap between demand and supply and Vernx’s objective is to fill this void.

“Over the next 10 years, there is predicted to be an explosion for human milk derived products for premature babies as well as nutritional interventions to eliminate gastrointestinal disorders such as necrotising enterolcolitis,” Dr Patch says.

INTELLECTUAL PROPERTY ASSETS

Currently, the BCFA intellectual property licenced from Cornell is the core IP for Vernx. As the BCFA project moves forward, there are plans to file patent applications on the method of use as well as any composition of matter.

THE VERNX LEADERS

DR CRAIG PATCH (CEO/CO-FOUNDER)

Dr Patch is a nutrition innovator with more than 20 years experience dedicated to improving the health and wellness of infants. He was instrumental in the identification, protection, in-licencing, development and spinning out of intellectual property from the Women’s and Children’s Hospital Adelaide to form Premneo Pharmaceuticals Pty Ltd, where he was the founding VP, Development & Innovation. Under his direction, he formed and led a high performance team to develop a novel DHA product to prevent bronchopulmonary dysplasia that was used in a phase-3 multisite NICU clinical trial involving 1273 premature babies. Furthermore, Dr Patch led the commercial strategy for Clover Corporation Pty Ltd for 8 years, resulting in the launch of many nutritional ingredients for infants sold globally.

Dr Patch has extensive experience in managing sales and marketing activities in nutrition science and biotechnology. Dr Patch is a also co-inventor of three patent applications, has published more than 35 peer-reviewed articles and has been instrumental in the formation of five start-up companies in the area of social enterprise, nutrition, biotechnology and pharmaceuticals. Dr Patch has a Bachelor of Applied Science, is qualified dietician/nutritionist and has an MBA and a PhD in biomedical science.

SARAH CRENNAN (DIRECTOR R&D/CO-FOUNDER)

Sarah is an innovative product developer in the area of food, medical food and pharmaceuticals, with a focus on the health effects of novel fatty acids. She has extensive research and development expertise in microencapsulation, bio-fermentation, manufacturing, process development, product scale up and dairy processing. She has an established track record in new product development leading to commercialisation. Notably, in her role as a senior member of Nu-Mega Ingredients Pty Ltd R&D team, which delivered new nutritional products for infants sold globally. Ms Crennan, is the co-inventor and lead product developer on a number of patents, including a novel DHA product to prevent bronchopulmonary dysplasia in premature infants that was used in a phase II (n=30) and phase III multisite NICU clinical trial (n=1273). This is the world’s largest nutritional intervention trial targeting premature infants and was also awarded GRAS status in the US in 2014. In 2015, the DHA product and associated intellectual property was spun out into a new entity Premneo Pharmacuticals Pty Ltd, of which she was founding senior scientist, R&D. Ms Crennan has a Bachelor of Food Technology (Hons), and is a PhD candidate investigating “The use of novel fatty acids for the prevention of Necrotizing Enterocolitis in premature infants”.

PROFESSOR TOM BRENNA (CHIEF SCIENTIFIC OFFICER/UNIVERSITY OF TEXAS/CO_FOUNDER)

Professor Tom Brenna’s research couples nutrition and chemistry in a broadly interdisciplinary program. He is a member of graduate fields in Cornell’s four large colleges: Nutrition (CHE and CALS); Food Science and Technology (CALS); Chemistry and Chemical Biology (Arts); Geological Sciences (Engineering and CALS), and in a long-standing collaboration with a prominent former member of Cornell's College of Veterinary Medicine. His research group has been funded by institutes/centers at the NIH (NIGMS, NEI, NICHD, NCCIH) and has included at least one active R01 continuously since 1992. These grants have supported fundamental work in the nutrition of polyunsaturated fatty acids, and development of advanced mass spectrometry instrumentation and techniques.

Most of the work of the Brenna Lab is translational, tying basic research to biomedicine and human nutrition. Some studies are designed with particular, topical human health questions in mind, and these studies have occasionally had immediate implications. The most prominent examples of this work are animal studies to evaluate the efficacy, safety, and metabolism of food sources of polyunsaturated fatty acids. This work often employs stable isotope tracer techniques and molecular or isotope ratio mass spectrometry to probe metabolism. Other projects, particularly those that develop instrumentation and methods for mass spectrometry techniques, have a longer term payoff. They are sometimes undertaken for the challenge of making measurements that have never been possible previously, with an eye toward eventual applications. An example of this area is the development of a novel gas phase reaction for derivatization of polyunsaturated fatty acids for facile determination of double bond structure, which has found applications associated with safety of edible oils, including detection of trans fatty acids. More recent research is on nutrition of saturated branched chain fatty acids, a neglected class of dietary fatty acids. Recent work involves development of methods for more precise and rapid detection of endogenous performance enhancing drugs, particularly testosterone, as well as methods for detecting exogenous drugs.

Professor Brenna has served on numerous national and international advisory panels on human nutrition. He was a member of the 2015 Dietary Guidelines Advisory Committee appointed by the US Secretaries of Health and Human Services and of Agriculture. He is currently President of ISSFAL, the International Society for the Study of Fatty Acids and Lipids.

>Investor update written by journalist Anthony Black, director of BlackMedia. Email: anthonyblack3@bigpond.com or 0418 54 3330

Craig Patch