Celtic Pharma And Russia's Rusnano Set Up Pro Bono Bio, A New Firm With Philanthropic Objectives

An Anglo-Russian company, Pro Bono Bio, launches new analgesic and will price its products according to ability to pay.

A new pharmaceutical company, Pro Bono Bio, has been set up by private equity firm Celtic Pharma Holdings in London and a Russian government investment vehicle, Rusnano, and has launched its first product, an analgesic gel, Flexiseq, which works by sequestering arachidonic acid and is approved as a medical device in Europe.

As its name suggests, Pro Bono Bio, which has a number of early-stage pharmaceuticals as well as late-stage medical devices in its R&D pipeline, has set itself a humanitarian target of making free donations of its drugs in Africa that match the volume of sales of its products in western markets.

Pro Bono Bio is owned by Celtic Pharma II, one of two U.K. private equity funds managed by Celtic Pharma Holdings, in which Rusnano (the Russian Corporation of Nanotechnologies) is a major shareholder. Rusnano reportedly has invested up to £300 million ($474 million) in Celtic Pharma II and a related fund, Celtic Pharma III, and is expected to end up with around 40% of Pro Bono Bio. Setting up the company is the culmination of a three-year Anglo-Russian effort, according to Celtic Pharma.

The Pro Bono Bio investment is the second by Rusnano, a multi-billion investment company charged with investing in nanotechnology and biotech, to be announced in the past two months. In August, it was one of the investors in the Russian public-private venture SynBio, set up to develop "biobetters" (Also see "Russia's First BioPharma Public-Private Partnership Eyes Bio-Betters, Attracts $110 million" - Pink Sheet, 29 Aug, 2011.)).

The idea for setting up a company with a philanthropic approach to business apparently came from investors. "During various fundraisings, a number of people had said that they were interested in making a beneficial contribution to society through their investment in health care. That led to the company being set up with a pricing strategy based on a region's ability to pay," said its Chief Operating Officer, Michael Earl.

"Big pharma has donated drugs for a number of years, for example through the Gates Foundation, but we believe that this is the first time a company has had a specific donating objective," he said in an interview.

Of course, pharmaceutical companies make a reasonably high margin on sales, so it probably will still be respectable after the cost of donations are subtracted. And longer-term, an exit for investors might be achieved when Pro Bono Bio taps the public markets. "The intention, at the moment, is to conduct an IPO in four to five years," Earl revealed.

The announcement of the start-up on Sept.12 coincided with a visit by the U.K. Prime Minister David Cameron to Moscow to meet the Russian President, Dmitry Medvedev. It is the first meeting between the countrys' top politicians in Russia since 2005. "The timing of the announcement was opportune, as we were about to launch Flexiseq anyway, and the governments were looking for examples of collaborative U.K.-Russian efforts," Earl revealed.

Non-Drug Mechanism Of Action

Pro Bono Bio's first product, the topical gel, Flexiseq, is a specific formulation of fatty acids, surfactants and other compounds that form vesicles, called Sequessomes, which originally were developed to act as topical carriers for drugs, specifically the generic NSAID, ketoprofen. But it later was found that the carrier alone was as effective as ketoprofen in reducing pain associated with osteoarthritis, and exerted its effect through a physical, not chemical, mechanism, Earl explained.

The product sequesters arachidonic acid and thereby reduces the activity of cyclo-oxygenase (COX), which is associated with inflammation. In a 698-patient Phase III study completed in 2009, Flexiseq was as effective as celecoxib (Pfizer Inc.'s COX-2 inhibitor, Celebrex) in reducing pain associated with osteoarthritis, and was safe and well tolerated. The only side effects were transient, localized skin irritations in a small proportion of patients, Pro Bono Bio said.

The basic technology was licensed from the German company Idea AG some time ago, and developed by Pro Bono Bio executives with external collaborators ([See Deal]).

Following its launch in the U.K., Flexiseq will be launched in Germany in October and in other European markets over the next two years. A Russian marketing application also will be filed, with launch expected there in the second quarter of 2012, where it is expected to be priced at a discount to Western European markets.

In the coming months, variants of the carrier technology will be used in other dermatological products for psoriasis and eczema (Exoseq and Rossoseq). Longer-term, the company also will develop other pharmaceutical assets owned by Celtic Pharma II, including Factor VII for hemophilia and novel antibiotics for the treatment of serious infections.

Pro Bono Bio currently is set up as a "semi virtual" company, led by CEO John Mayo, a founder of Celtic Pharma Holdings, and initially will use distribution and marketing partners for its products, but expects to add personnel and expertise when they are needed.

- John Davis ([email protected])