Novogen : Unacceptable Behaviour (Part II)

In this continuation of my prior rant about Novogen CEO Graham Kelly’s questionable interactions with shareholders on HotCopper, I want to specifically review each of the “questions” that appeared on HotCopper and perhaps share some perspectives that will help you to understand why I really despise this kind of informal chit-chat. I note that I have included a PDF of the transcript (above) because it is my personal opinion that HotCopper should take down the thread as it is inappropriate.


To be quite honest with you, I don’t even understand what this means. Genentech is part of the Roche Group. Back in the day when Genentech was more independent than it is now (though it still has a “Chinese wall” within Roche) it had no choice but to manufacture its antibody technology because nobody else could. The world has moved on quite a bit since then. Novogen is not Genentech, and its product is not a biologic, so this analogy is mostly irrelevant.

Whether Novogen builds a “plant” or not to manufacture its products has no real impact on the valuation of the company, especially at this stage. At the time of product release (well, commencement of Phase III because scale-up and CMC needs to be finalised by then), whether Novogen owns their manufacturing or uses a contract manufacturer, the COGS difference is basically irrelevant because these are small molecule products and fairly cheap to manufacture. This response is just about using the word “Genentech” and “Novogen” in the same sentence.

Frankly, no baby biotechs build plants these days – and the big boys increasingly shy away from it as well.


Aside from the fact that (like the manufacturing issue) I find this hilarious that they are discussing this as a major issue even before they have human data, the whole point of pharma partnering is to effectively use a channel partner to get traction for a drug as quickly as possible,  with as much punch as possible, in a highly competitive market. It’s also about working with a partner that can really access patients (more on this below).

To be fair, Graham is only talking about investing out to the end of marketing approval – not building a sales force (if he did, then we would question sanity). But the main reason why you at least keep open the option of partnering is to reduce the risk of commercial development (i.e. risk share) and to increase the likelihood that there is a return to investors sooner. In my opinion, by talking about this now, what Graham is really doing is simply setting expectations that there will be no partnership announcements in the near term.

You’re just going to have to wait a decade and hope that the company doesn’t turn into another Alchemia. It’s called risk vs. NPV. A partnership at year 5 vs. year 10 has very different math.


This is not an accurate statement.

Ascites are not a function of “filling the abdomen with cancer” – it is a function of filling the abdomen with fluid because the peritoneum is inflamed or lymphatic drainage is blocked. In a cancer patient, you can have effective management of ascites (drugs, drains) and still have plenty of cancer left behind. To be clear, whether in an animal model or a patient, leaving 5% of the cancer behind is not a slam-dunk and controlling ascites is not an indication that you have effectively treated a patient. Cancers like late-stage ovarian cancer are extremely aggressive and many drugs de-bulk the cancer sufficiently to improve ascites, but still leave plenty of disease behind.


I think this is a reasonable question for a shareholder to ask, and I also think this is a reasonable answer. However the problem with this overall topic is that it is commercially sensitive and despite the informal nature of the interaction, there is the timbre of “guidance” in here. In a gentle way, Graham is setting expectation that February is a distinct possibility. No new information is really disclosed, but the CEO is clarifying a commercially significant transition point for the company and this doesn’t belong in a trading forum.


This is a completely rubbish statement.

Firstly, the dosing levels of microtubule inhibitors are what they are because of the kinetics/clearance of a drug and a level of tissue perfusion/dose required to have efficacy. Anisina may increase the efficacy of some other kind of anti-mitotic drug but there is nothing in the data or experiments that Novogen has conducted to date (as far as I can see) that validates the claim of a reduction in dose of a “companion” anti-mitotic. In vitro experiments on cells don’t count.

To be clear, vinicristine is a very good drug. It is in the WHO list of essential medicines and it has had a huge impact, both alone and in combination with other anti-mitotic drugs (i.e. CHOP), on childhood and adult cancers. Mostly, vinicristine is a well tolerated drug considering what it accomplishes and the “leaving kids with lifelong problems” is a huge generalisation designed to emotively communicate an unsubstantiated benefit for Anisina. I am not saying that there are not latter effects of therapy, there can be, but you have to remember we are talking about treating a life-threatening disease in an extremely aggressive way.

Let’s also be clear, notwithstanding that Anisina kills cells in a “petri dish” (hooray!) and maybe a mouse model (double hooray!), the company cannot make any claims whatsoever about the safety profile of this drug. Even the May press release that disclosed “no observable” toxicity is simply misleading. Until a proper toxicology study is performed and a safety study conducted in patients (because rats are not people), this statement cannot be made.


It’s hard to address this without getting into a lot of science mumbo jumbo, but it’s simply not possible to make the statement that CSCs preferentially express ENOX2 because there is a considerable CSC heterogeneity in most cancers and it hasn’t been sufficiently studied. The statement that all (most?) cells have the capacity to express ENOX2 is probably correct, we know this from RNA profiling. But a lot of normal tissues highly express ENOX2 as well – including worrisome tissues like the stomach and smooth muscle (i.e. your blood vessels). That’s why it is entirely impossible to make a statement about the safety of this drug until toxicology and preliminary patient studies are undertaken, especially for a small molecule drug which is far more likely to have off-target effects (I’ll get to that in a minute). I mean, it’s not even possible for Graham to say that SBPs only target ENOX2 expressing cells because they haven’t done the work to prove it. Graham also admits that they don’t understand the mechanism of action regarding CSCs, so why go there?

Well, because “cancer stem cells” is a sexy term and the punters love it. Sigh.

Honestly, you want to know what pisses me off the most about this whole dialog?

Graham Kelly should just know better, he has the experience to be more cautious and appropriate with his claims. He was a Director of Marshall Edwards Inc (now MEI Pharma – also a crap company) that had a isoflavone analogue called phenoxodiol that failed in Phase III. In fact, phenoxodiol is also an ENOX2 inhibitor (and I believe in-licensed from Novogen no less) with a very similar design rationale. Did you know that quite a few existing drugs that are known to selectively target and inhibit ENOX2 are extremely toxic – like doxorubicin? Oh, capsaicin also downregulates ENOX2, so eat your chilli peppers!


“By knocking out the CSCs, tumor recurrence is automatically blocked”. This is simply not a true statement. What is a true statement, is that CSCs are fundamental to maintaining the plasticity of the tumour microenvironment and are part of the innate resistance/recurrence mechanism of solid tumours. But there are also plenty of other ways that cancer cells “re-wire” themselves and any residual disease will continue to proliferate.

As for ENOX2 isoforms, there are more than 20. This is in the literature, and it is why Novogen needs to do more work to understand how its drugs work before they go into people. Researchers have already done quite a bit of “target mapping” (ENOX2 is expressed as a cell surface protein) so, really, there is very little reason why Novogen shouldn’t be able to understand what is going on. Until they do the work, why the speculation? Actually, as a side-comment, if one really thought that ENOX2 was a compelling target for a cancer drug (and some do), then it would probably be best to see if there are any cancer-specific variants and develop an antibody. It could have a lot more specificity.


I don’t like this statement because as far as I can ascertain, it is new information. This statement sets the expectation that there will be some kind of a new forthcoming collaboration – it is a kind of “heads up”.

What I also don’t like about this statement is that implies that the company is more interested in “sucking and seeing” the drug in the clinic, than it is understanding its mechanism of action before going into patients. While there is no substitute for actual patient experience (and I am personally of the opinion that we should mostly just go and do things in cancer patients rather than animal models) this is a very poor quality communication strategy for the CEO of a biotech company.


I am going to address the BBB study in the third part of this Novogen “series”. It’s too long and complicated to discuss here.


NO THREAT? Is this guy for real?

These “facts” that are presented in this forum are simply incorrect. I encourage you to read Luke Timmerman’s excellent ASCO 2015 roundup for a proper update on what types of cancers are being impact by the world of immuno-oncology. Yes, there are pharmacoeconomic issues, but the clinical science is incredibly promising and far less limited than stated above.

However, the “threat” to Novogen is not about technology or biology, the threat is that cancer immunotherapy has such an enormous amount of momentum at the moment that it is almost impossible to recruit patients into other clinical trials. Graham knows this, it was part of the reason why the phenoxodial Phase III failed (recruitment was crap). If that is not a threat, I don’t know what is. Moreover, there is huge complexity in picking up patients that have failed from other trials (including immunotherapy trials) and enrolling them into a small efficacy study for a drug like this because outcome may not be entirely dependent on the drug under investigation.

Cancer immunotherapy has also thrown a whole new light on the way in which we treat cancer, including why certain chemotherapy drugs have more or less effect under different conditions, and why even things like metronomic chemotherapy may actually work. In fact, cytotoxic drugs (and also radiation, which is why I am very positive about the future of Sirtex in the “immunotherapy world”) are going to be extremely important adjuncts because directing immunotherapies to cancer cells that are compromised in vivo by cytotoxic drugs (or radiation) is quite possibly going to be the way to go (as opposed to Regeneus’ ridiculous excised tumour tissue cocktails)

I don’t know whether Graham is just not up to speed (I thought he was at ASCO?), if he is clueless, or if he is operating under the assumption that whatever he writes here will be blindly believed by punters. What really irritates me, more than anything else, is how the CEO of a pharma company can make a claim about the relative “threat” from a program that doesn’t even have a completed toxicology study.

It’s astonishing.


I actually believe this is true. But cytotoxic drugs will become a lot better – and they will be used in tandem with immunomodulatory strategies. 40 years from now? Well, I am not such a visionary as Dr. Kelly. I will quote him on it, I’m sure (if I live that long – I hope he is right).


This only just amused me. Always good to see the punters out there hunting for science that might help “their company”, especially since the good Dr. Kelly has indicated that manufacturing strategy is going to be a point differentiation for Novogen.


Now firstly – where is bullet point 13) and 14)? Is this a typo? Did “Tyler80” not like the answer? Did Graham not like the question? HotCopper editorial privelage? Did I miss something?

Anyhow… back to the topic of patents… Yeah “no way”, but just a reminder that a few weeks back Novogen announced with much fanfare that it had filed a patent, in fact it’s done so a couple of times now (hmmm – note to self, must check if any of the patents relating to prior announcements were actually granted…). So either Novogen cares about keeping its IP strategy under wraps, or it doesn’t. I think Graham actually does care but just wanted to use the word “Pfizer” in a sentence.  You know, awesomeness by association.

By the way, the CEO of Pfizer wouldn’t respond to a shareholder on HotCopper.



Yes. So even though you have been making all kinds of wild claims, including claims about the potential use in pediatric studies (incidentally, that would be a combined agent toxicology study), you actually don’t have toxicology data. By the way, Graham, I am going to tell you in advance, if you finish the tox analysis and file an ASX disclosure the next day that “no toxicity is observed” I am going to ridicule you without remorse.

Either publish the data in a peer-reviewed journal and then announce it – or save it for the announcement that you have been granted the go-ahead by the TGA/FDA for an IND, in which case we will treat the regulator’s acceptance of the toxicology data as a green light.


Nothing really contentious here in terms of information, but why even disclose this?

The details of drug manufacturing should be kept closely held to the company. I will admit that this is not much damning information but it does open the door for other questions like why isn’t the API purified in India? What’s the unique capability in the US (is it the lipid delivery system?). Why do you risk transporting material to Australia for fill-and-finish, just do it in the US? Do you do F&F yourself?

Frankly, this isn’t information that serves the public domain at this stage, so why even go there? The answer should have been “Tyler80, our manufacturing process is something we don’t really discuss in the public domain.” That would have been the grown-up answer. Maybe next time.


Lovely. No genuinely, I love this kind of rapport-building chit-chat and I am a sucker for charisma. And yes, behind every great CEO is a partner that tolerates a lot of hardship. And a dog.

The part of this statement that really gets on my tits is the “overall conviction that we are about to make history” part. Wow. Nothing forward-looking there!? Would you see language like that in an ASX disclosure? No (or at least hopefully not). Would you hear it in an analyst/marketing briefing? I hope not. The FDA even gets stroppy about statements like that.

So, to summarise:

1) The company does not have the mechanism of action nailed, the in vivo data or the toxicology to make the claims that it does for its programs.

2) The CEO has positioned the company’s pipeline relative to other advances in the cancer space, in a factually incorrect and – in my opinion – misleading way. He has also understated the risks of unsuccessful patient recruitment.

3) The content of this “disclosure” may not be complete / may have been edited. This is a recurring issue I have with these kinds of posts.

4) There are comments that contain some new information that, as far as I am aware, has not been previously disclosed, irrespective of its significance. It is always difficult to fully know if it is material or not, but it may impact the perception of the company.

5) There are highly personalised and emotive comments that simply don’t belong in the communication repertoire of the CEO of a public biotech company. I am not saying that Graham can’t talking about a drug being promising, or a pipeline being exciting. In fact, I think that really successful biotech companies are probably about having larger-than-life figures leading excellent clinical science. You might think that I am being petty here (and perhaps I am), but what I want to see is context and justification behind the sweeping statements.

So, you may be asking, what does this annoying bastard want?

Well, I want Dr. Kelly to tell the market “we are excited about the future of this drug because we have seen safety and efficacy in patients”. And not before he has the data to really back it up. I don’t want him to ever talk about “making history” on the basis of a few cells killed in the lab – that’s just unsubstantiated hype.


Because statistically, for a small molecule without toxicology and human data, the only “history” the drug is going to make is to lose money for investors. Above all, I am disappointed in this style of communication because Dr. Kelly should know better – he was a director of a company that has a failure in Phase III for a drug with many of the same characteristics as current Novogen pipeline. I would have thought he had learned from that experience and why setting shareholder and patient expectation in a measured way is so important.

But apparently not.


Image taken from the BBC, video still. Zizi, I still love you.

One thought on “Novogen : Unacceptable Behaviour (Part II)

  1. Pingback: Novogen : BBB Antics (Part III) | The Long Tail

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