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By Converting Proven Oral Medications to the Aerosol Route, Avalyn Pharma Inc. is focused on developing better Treatment options for Fibrosing Lung Disease

Bruce Montgomery MD


Avalyn Pharma Inc.


Bruce Montgomery MD


Interview conducted by:

Lynn Fosse, Senior Editor

CEOCFO Magazine

Published – May 18, 2020

CEOCFO: Dr. Montgomery, what is the idea behind Avalyn Pharma, Inc?

Dr. Montgomery: Avalyn Pharma is attempting to develop better treatments for fibrosing lung diseases such as idiopathic pulmonary fibrosis, by converting proven oral medications to the aerosol route, where we can get higher levels in the lungs. We are hoping to improve efficacy while decreasing systemic exposure, therefore decreasing adverse effects on the medications.  

CEOCFO: What are some of the challenges in doing so?

Dr. Montgomery: There has been forty years of experience of converting oral and/or intravenous medications to aerosol medications in lung diseases, most asthma COPD drugs given by dry powder inhalers or by aerosol and, in cystic fibrosis, inhaled antibiotics. Therefore, it is generally very successful. The tricky part of this is developing a formulation that a patient can tolerate, a delivery device that is fast and efficient so the patient does not spend all day on it, and then the difficulty in designing clinical trials to prove that you have the better therapy and conduct of the clinical trials.   

CEOCFO: Why is hard to design the trial?

Dr. Montgomery: Everybody nowadays wants a double blind, placebo controlled trial. However, if you have got proven oral therapies out there, you cannot deny a patient a proven therapy. Therefore, how do you design a trial on top of what is already out there and still see a signal of better efficacy or if the other agent is causing a wide variety of adverse effects. How do you separate the adverse effects from the background therapy from the new therapy?

CEOCFO: Where are you today in the process?

Dr. Montgomery: We have an ongoing efficacy trial which is fully enrolled and we are looking at two different doses of our lead drug, which is an aerosolized formulation of pirfendione. We will get a read out this fall on how it is doing.

CEOCFO: How are you going to differentiate in the results from what someone might already be using? How are you going to prove the effectiveness?  

Dr. Montgomery: As noted before, it is difficult if you add it onto other therapies. Therefore, we went after a population of patients that cannot take, for a many different reasons, a standard therapy. This leaves them currently untreated. We decided not to proceed with placebo control trial, but we have proceeded with a dose response trial, with a low dose and a high dose. Since the natural history of this disease is extremely consistent and unfortunate, you have progressive loss of lung function on average of about two hundred milliliters a year; we could look over a six month period and ask, “Are the patients doing much better than that.”

The standard oral therapies decrease that to one hundred millilters on average per year, and then without any background therapy, we can assess the adverse effects. We know that the adverse effects are very common with the oral drugs, so any difference will be obvious. Then at the end of this trial we will find out or get an idea of how good the efficacy of our drug is. If our drug is superior to what has been seen historically with the oral drugs, we could then proceed with a  Phase III trial.     

CEOCFO: What have you learned so far?

Dr. Montgomery: We have learned that our drug is very safe and our adverse effects profile is much better than what has historically been reported. We also learned that we can enroll patients in the trial. We have got full enrollment in the trial. Therefore, we are waiting to see how it reads out on efficacy.

CEOCFO: What, if any, effect does COVID have on what you are doing right now?

Dr. Montgomery: The patients in our trial with idiopathic poly fibrosis are at high risk for COVID, so they are being kept essentially locked up. None of our patients have come down with it, so that has not been an effect, but just definitely a risk. The biggest problem with COVID is that many of the study centers have stopped doing clinic visits, because they are afraid of exposure, bringing these patients into the hospital where there is COVID patients. Therefore, we have had to transition to a lot of home visits rather than monthly clinic visits.

Fortunately, one of our key end points, forced vital capacity (FVC), which is to measure how much you blow out. It is like a birthday candle blowing out maneuver. Every patient has a home spirometer which is recorded to the internet, so we have been able to collect our key data, even though the patients have not been able to come to the clinic at many of our sites over the last couple of months.     

CEOCFO: Would you tell us about Avalyn’s recent funding?

Dr. Montgomery: We had a series A, which was three years ago, in which we raised three tranches, which all them raised $63 million. We did a series B funding, which was closed last week. That is for another thirty five and one half million dollars. The series B funding is to expand our portfolio from just working on idiopathic pulmonary fibrosis. We have the addition of two new programs. One is to use our AP01 Pirfenidone drug, which is also conduct a clinical trial to prevent rejection in patients who have received a lung transplant.

We also have another drug entering the clinic and Phase I study towards the end of the year; a version of the other approved oral drug for IPF. We have developed an aerosol version of it. Therefore, the money was raised to work to expand the operations of the company and to have more shots on goal.

CEOCFO: How many people are affected with the conditions you can improve?

Dr. Montgomery: It is totally surprising! Most people have never heard of idiopathic pulmonary fibrosis. There are approximately eighty thousand patients per year who are diagnosed. It is a disease that you get about the time that you get social security and generally if the course is untreated you die within two to five years of progressive loss of lung function. Unless you die of something else, or get a lung transplant, it is essentially one hundred percent fatal.

An eye opening fact is that last year, in the United States, approximately forty four thousand women died of breast cancer, and yet idiopathic pulmonary fibrosis actually kills more people a year than breast cancer in this country; yet it is relatively unknown. Idiopathic pulmonary fibrosis represents half of the different types of pulmonary fibrosis and these patients also need new treatments. There is another perhaps fifty to eighty thousand people in this group.

Currently, in this country there are probably about ten thousand people with lung transplants and about half of them have rejection and the rejection in lung transplant proceeds fairly rapidly. Median survival after lung transplant is a little less than six years and most people die or rejection. Therefore, there is a large unmet need in that group. However, it is a much smaller group than in an idiopathic pulmonary fibrosis or other interstitial lung diseases.         

CEOCFO: Has it been difficult to get funding as it is not so commonly recognized as a danger?

Dr. Montgomery: What gets VC’s to fund a biotech requires a checking off a series of boxes. First, they want to see a proven team that has gotten multiple drugs proved and knows what it is doing. Second, they want to see a large enough market that will justify the investment and just giving the numbers I gave before met that criteria. Then they want to see, “Does the idea make sense? The consensus analysis was, “You have already proven the oral drug works; you are just giving a higher dose in the right place and you should decrease the side effects”. The final box is having adequate intellectual property protection, to protect your idea, by either orphan drugs or issued patents, of which we have both. Therefore, if you line all of these up, then it is fairly straightforward to raise money.  

CEOCFO: Would the ultimate dosage be the same for everyone? Should it vary for individuals?

Dr. Montgomery: It’s is a little interesting. I once developed a drug for cystic fibrosis and we treated people as young as six months and as old as seventy years old with the same dose and everybody kind of shakes their head like “WHAT?!” The whole point is that the amount that you breathe depends on your weight. Therefore, if you are breathing a fixed cloud and you are a small person, you breathe less, so you get a lesser dose. If you are bigger person and you breathe deeper and you have more, you get more of a dose. This means we do not have to change dosing for body size.  

CEOCFO: What is the potential timetable for you?

Dr. Montgomery: We get a readout of our initial efficacy study later this year. Then at that point in time we have to figure out how we are going to fund a Phase III program. We have a bunch of options there. We can do a pharma deal, a large private round or initial public offering. Our CLAD for study in lung transplants, which the disease is called CLAD or Chronic Lung Allograft Dysfunction (that is the acronym), will be starting this fall. It will take about a year to enroll and another year to see results, so that will readout in about two years and for months. Those are the key milestones that we have facing us.       

CEOCFO: Would you tell us what is the idea for lung transplants? How would your product be used there?

Dr. Montgomery: The drug that we are using, Pirfenidone, is not only an anti fibrotic drug; it is actually a very good anti-inflammatory drug. Some people with lung transplants, recognizing that, have tried to treat patients with rejection and fairly successfully, with the oral approved drug and have had pretty good results. Unfortunately, the adverse event or the side affect profile of the drug is very bad and you add that to all of the side effects from all of the anti-transplant drugs and it is a nightmare!

If you have a drug that can eliminate the systemic side effects and get the efficacy, and we already know, it is pretty well documented that the oral drug works, except you just cannot tolerate it and we now the mechanism action, being an anti-inflammatory drug; it should work against the rejection process. Furthermore, the rejection is going on right in the airways and the aerosol route will get high doses of drug right to where it needs to get.   

CEOCFO: There are so many new ideas and so many attempts at making things better. Why look at Avalyn Pharma?

Dr. Montgomery: The problem with startups in drug development is that our success rate is pretty low. If you take a drug to the clinic, even after doing all of the pre-clinical studies in which you have funneled down in hundreds of compounds to just one, your chances for approval are about one in thirteen. If you are a major league baseball hitter, if you are hitting .069, you generally do not last long. That is kind our batting average in the industry. The switching from a different route of delivery of a drug which has already proven to work, where you are getting higher levels right to the lung, has a much higher batting average chance of success.

An aerosol drug that is worked on would be the fit approved drug that I have and that you are lucky in the pharmaceutical industry to have one or two in your whole career. Therefore, we have a much higher chance of success. Because of that, we are probably worthy of some attention. If we are just one of the pack, our chances for success would be small, but the rewards would be large. However, in this case we have a higher chance of success and a very large potential market and a huge unmet need and we could help a lot of people.

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“Avalyn Pharma is attempting to develop better treatments for fibrosing lung diseases such as idiopathic pulmonary fibrosis, by converting proven oral medications to the aerosol route, where we can get higher levels in the lungs. We are hoping to improve efficacy while decreasing systemic exposure, therefore decreasing adverse effects on the medications.”
Bruce Montgomery MD