Good morning, everyone. The clock has now ticked past 10 A.M., so we'll get started with today's special investor briefing with Pharmaxis CEO, Gary Phillips, who will provide a clinical trial program update, which continues amid a company restructure. My name is Alfred, and I'm from the investor relations team, and I'll assist with running today's briefing. Just a quick run through the formalities. After the presentation, Gary will be taking questions from attendees. If you do have any questions, Gary, there's a button at the bottom of your screen which says Q&A, which has the little speech bubbles. You can just enter them there, and we'll read them out after the presentation. It's very busy down the ASX for investors. So look, I won't take up any more of Gary's time.
Gary, let me hand over to you.
Thanks, Alfred, and good morning, everybody. Thanks for joining us. Quite a lot of the content I'll be presenting this morning is something we put out a few weeks back when we announced the restructuring of Pharmaxis. So I won't spend too much time on my presentation and leave plenty of time for questions. So the first slide is obviously the, you know, the new under the new company masthead, Syntara. So let's crack into that. Okay. So just as a prelude to, you know, giving you an introduction to Syntara and the launch of the new company, I just wanted to spend just a couple of minutes on reminding people on what we've done.
So, you know, we have sold off the mannitol respiratory business to a company called Arna Pharma. The employees that were with Pharmaxis in the mannitol respiratory unit are now working on behalf of Arna Pharma. And we closed this two weeks ago. So the employee numbers going into Syntara dropped from around 70 to around 25. It means that we have a much reduced lease over the research labs and a small corporate office that we'll have. We've downsized all our corporate administration requirements and removed all of the direct and indirect costs associated with operating a global pharma distribution business.
I think it's worth noting that, you know, this is the basic premise for the restructuring, is that running a pharmaceutical company which is manufacturing and has to comply with good manufacturing practice guidelines and be audited by the TGA, the FDA, European authorities and other regulatory authorities worldwide, carries a huge cost burden. And that the new company, Arna Pharma, taking on the mannitol respiratory business, is well placed to manage that with a lot of additional products it's gonna be putting through its factory, which reduces the overall overheads in running that and will turn the mannitol respiratory business into a profitable business. Likewise, the new company, Syntara, being focused on clinical development, isn't carrying all those additional costs that were a part of that business.
So it allows a significant reduction in cost, and we've tried to show that graphically on the right-hand side here. With the cash expenses, excluding clinical trials, if you look at sort of core expenses that take away all of those clinical trial costs, the external ones and the external drug discovery costs, then the core expenses drop from AUD 23 million per annum on a pro forma 2023 financial year, down to AUD 9 million. So that's a saving of AUD 14 million going forward from this point, going forward. So it makes a massive difference and gives us the new company, Syntara, a very strong starting position. So, you know, what is Syntara? What are we about?
Well, the first thing to say is that we have a smaller and very focused board and a new leadership. I'm joined by our Chair, Kathleen Metters. Kathleen's had a stellar career with the head of basic research at Merck for four years, also ran a US biotech that exited to Celgene. So she really understands our business model. She understands our science very well, having been a non-executive director with us for a number of years now, and I'm delighted that she accepted the Chair of the new board. The science within Syntara has been well and truly validated.
We've got a science platform that leads the world in its field, and we've been internationally acknowledged and acclaimed now, but also with three recent Nature publications in the last two years from three different collaborators who've been working with us for a number of years and then published their research. And to get a publication in Nature is no mean feat, and it means that the science behind it is both novel, interesting, and also very well validated as well. The new company also starts with a very strong pipeline of clinical stage assets, and our lead program is in forms of blood cancer and hematological malignancies, which I'll go into briefly the study that we're about to start.
And, so that company, those 20-25 people with a new board, really well-validated science, has the potential for five phase I-C or II studies in markets with a high unmet need, significant potential from a market perspective, and also high-value exit opportunities. All of them due to generate data in a nine-month window from the end of 2024 through to the middle of 2025. So that's, you know, a really valuable proposition with the-- for the, for the new company starting off. And that study I mentioned in myelofibrosis, a rare form of blood cancer, is due to start recruitment in this quarter after getting the go-ahead from the FDA in the last quarter. We've made really quick and speedy progress on that.
So that study is now our drug, PXS-5505, being used in combination with standard of care in myelofibrosis, which is a JAK inhibitor. In this case, we're using the market-leading JAK inhibitor called ruxolitinib, which is used by the vast majority of myelofibrosis patients. Ruxolitinib is a very good drug at controlling the symptoms of myelofibrosis, and in this case, we'll be looking to recruit patients who are on a stable dose of ruxolitinib, coming into the study. And then we'll be adding PXS-5505 onto that. Because of the good safety profile we've had running up to this point, we're able to go straight in at the dose we used in the monotherapy study, which we know inhibits the lysyl oxidase enzymes more than 90% at trough.
We haven't got to go through a dose escalation phase of using a lower dose first. We can go straight in. We're looking to see in this study. We're gonna track these patients for 12 months. It's an open label study, so there will be news flow going through the middle and second half of next year when we start to see data coming out. It will be a study which we believe will be fast to recruit. We're looking for... The FDA would like us to recruit 15 patients. We've actually got 20 clinical trial sites open in Australia, South Korea, Taiwan, and the U.S. Those sites are already operational and already looking for patients now.
So we start, as I said, we aim to start recruiting this really quickly, and we expect to see recruitment of this be finished by the first half of next year. And we would have significant data coming out towards the end of 2024, with those patients with six months' worth of data. Now we're gonna keep those patients on and look at them for 12 months, because looking at the monotherapy study, which we're, you know, we're just winding up now, we believe that at the end of 6 months, these patients have still got some improvement left to go. So the drug is still increasing its effect at that point, so we're gonna track them out to 12 months as well. So the full data set would be available by the middle of 2025.
But as I said, that's a really important interim data set towards the end of 2024. So yeah, we're really excited about the study. And the investigators that we've got working with us are all very keen as well. The mode of action of this drug is a novel one. And certainly we've got a lot of support from international key opinion leaders who believe that there's a place for 5505 in myelofibrosis used in combination with the current standard of care. So I guess the other reason I mentioned, you know, was the exit values, and this is a table just put together to demonstrate, you know, the number of companies and deals that have been done in myelofibrosis in the last couple of years.
And certainly, CTI BioPharma was bought by Sobi in June of this year, and then in the middle of last year, Sierra Oncology was bought by GSK. Now, both these acquisitions well north of $1.5 billion, for drugs which have phase III data, or in the case of CTI, had one on the market. Other examples as well of drugs going with phase II-B data, with exits north of $1 billion. So I think it, you know, we've seen personally the level of interest in the program that we have and the early data we've got. We're planning on giving an update at the American Society of Hematology in December, in a month, with the data we've got from the monotherapy study.
And again, I expect that to attract significant interest from other companies that are active in this area, that are on the lookout for assets to take advantage of the unmet need that's here and try and bring more benefit to patients. So I mentioned the five studies. You know, those are spread across... So there is a focus within Syntara, you know, the investment that we're placing is largely in those kind of blood cancers. Myelofibrosis is the lead indication there, and one where the studies are all underway. We're looking at myelodysplastic syndrome, MDS, is another disease where there's a high unmet need, where we think 5505 has a good rationale. It was the subject of a Nature publication at the beginning of the year.
So that protocol is being reviewed at the moment to see whether there's an opportunity to go ahead there. And then in the scar prevention things, working with Professor Fiona Wood in University of Western Australia over in Perth. You know, we're about to go into a study in scar prevention, which will be a placebo-controlled study in patients with burns, where they have a greater than 5% body surface area. And so these are patients with significant burn injuries. And listening to Fiona Wood, you know, it was clear that there is a large unmet need. These patients often have bad scars, when there is a large body surface area that's involved, and there's nothing really they can do for them at the moment.
So using a pan-LOX inhibitor here is a very attractive proposition and one that we'll be commencing very shortly. We'll be announcing more about that study in the next couple of months as the recruitment gets underway. And we're also looking at modification of established scars based on that earlier study we reported in this year with a topical agent. Again, we're looking at different kinds of that and the endpoints we can use to get to a study which really demonstrates great clinical proof of concept in that one. And lastly, but not least, PXS-4728, which is about to start a study in IRBD, a sleep disorder which is associated with Parkinson's disease. Again, another placebo-controlled double-blind study.
First patient is, we expect in this quarter, with data coming in the first half of 2025. And again, a big market opportunity as well. So if you're looking around, biotechs, with valuations where we are, with this number of shots on goal in the next 18 months, then, it's a very small list, and this is a, you know, we're really excited about the launch of the company with this potential, with this many shots on goal, with this number of clinical studies that are due to report. And just to add that the scar prevention and scar modification studies are investigator-initiated studies.
They're not. The company is not investing a huge amount of its cash in these, and the Parkinson's disease study is majority funded by Parkinson's UK. So as I said, the majority of the investment going into the blood cancers from the company's focus. And newsflow, all important, I think, in today's market, that companies are able to keep up a continuous flow of updates to the market. And you can see that in this quarter coming, in this quarter now, we'll be announcing the start of three separate studies: the myelofibrosis combination study with a JAK inhibitor, the scar prevention study for burns injuries, and the Parkinson's disease IRBD study as well.
All three of those due to start in the next couple of months, plus, the company presenting at ASH, American Society of Hematology's data. First half of next year, we'll see completion of recruitment, we expect, of the combination study in myelofibrosis, potentially the start of a study in MDS, and us giving a further update on the clinical development plan in skin scarring as well. Then towards the back end of next year, the second half, data starting to come out, which we expect to be, you know, real value drivers of the stock. So I'll just finish up just on the cash. So at the end of September, we had AUD 7 million in the bank.
I'd just note that there's also about another just short of AUD 1 million to come in from an R&D tax credit. We've advanced some of it through a loan, but the rest of it, the balance of it, is due in this quarter. We also expect about AUD 1.7 million to come from Parkinson's UK when we dose the first patient in the IRBD study as well. So, that plus obviously the impact of exiting the mannitol business unit, which means that there's these enormous cost savings, which I pointed to, and obviously that means a much reduced cash burn for the ongoing business going forward. So Alfred, with that, I'll leave it there, and I'm very happy and open to take some questions.
Excellent. Thanks, Gary. We've had a few questions come in, which we'll start answering in a moment. If anyone does have any more, please pop them into your Q&A box. I can see a few questions are coming in multiple times, so I'm gonna lump a few together. The first question is from Jawahar. The LOX inhibitor trials for anti-scarring or scarless healing have revealed excellent results so far. Now, that you've reorganized the company, is it possible to commit more resources and expedite these trials?
Yeah, I think, clearly there, we, we see a lot of potential in that area. The, the mechanism I think we've demonstrated does work. I mean, we showed a 30% reduction in collagen, content in the scars from a three-month treatment with a topical agent. I think you'll see with the, scar prevention study, we, we're, we're going for burns injuries. It's a, it's a severe scarring process. We think that, that the, you know, a double-blind, placebo-controlled study there, done in two centers in Australia, where we'll give more details about the protocol when we, when we recruit our first patient. I think it's a, a, an excellent way of demonstrating the efficacy of the drug and, and what it's capable of.
With scar modifications, yes, the company is investing at the moment in trying to understand which are the particular forms of scarring that the drug will be best suited for. And in particular, what are the endpoints that we can use in order to make sure that we can demonstrate both an appearance and functional change in the scars, which are valued by patients.
I think, you know, the study that we ran earlier in the year, the endpoints in that, you know, we learned a lot, and I think, we're very conscious this time to just work with, and we're talking to both dermatologists and plastic surgeons globally across all continents, to get their read on what are the scar types that we should target, and what are the endpoints that we should be using that would be valued by clinicians, by patients, and also regulators as well. So there'll be an ongoing discussion with the regulators.
So yeah, certainly the review of that and announcement of more detailed plans in the first half of next year, we'll see the company moving forward as quickly as we can in that area.
Thank you, Gary. Jawahar, that also answers your other question about using additional medical centers as Gary's talking overseas as well. Question from Mariana. How much was the mannitol respiratory business sold for, and can you elaborate more on the agreed royalties?
Sure. Yeah. Yeah, with the, so the mannitol business unit, you know, I think we put this out in the announcement, you know, a few weeks ago, had been losing cash from a, you know, from a segment perspective, you know, in EBITDA, we, for the last three years, you know, we're losing on average around about AUD 5 million a year. And on top of that, there was also the rent that was associated with the facility... that we use to produce the mannitol, the factory as well. So, in moving to the future, what we've been able to do is to exit that business. The costs of exiting in the next, in this financial year, we're still forecasting as being less than AUD 1 million.
There is no upfront cash coming in for a business which is making a loss at the moment. What we do get is a reimbursement of a lot of the expenses that we're incurring in the mannitol business unit, which will lead to, as I said, to an overall exit cost of less than AUD 1 million. And we've converted that loss, you know, of AUD 5 million plus, the rent, into a positive royalty stream going forward. From the mannitol products, so Aridol, which was an asthma diagnostic, and Bronchitol, a therapeutic for cystic fibrosis. The company will receive high single digit royalties on the net profit of Arna Pharma from producing and selling those drugs.
The company will also receive mid-single-digit royalties on the net profit of all other Arna Pharma products produced in its facility, you know, in Sydney, going forward as well. Both of those royalty streams go for eight years from the date that we close. We've converted a loss situation into one where the company's immediately gonna be in the black and making money from the royalties on it. It's a little bit difficult to be more specific about the values associated, particularly with the Arna Pharma products. Once we understand more about the products and the facility and the likely profit levels, then we can give more guidance to the market.
But at the moment, high single digits on the mannitol business profits and mid-single digit royalties on the Arna Pharma product net profit.
Thank you, Gary. Question from Angus. Can Syntara speed up any of these clinical studies to bring commercial deals to the nearer term? And when might we expect such a commercial deal of note to take place?
So, yeah, a good question. I made a point of talking about the data outcomes from the myelofibrosis study. That is the most mature program, and one which will attract, I think, the most commercial interest in a short timeframe. The data we have from the monotherapy study, so the drug being used in patients who failed a JAK inhibitor, has already generated interest. It's now a proven antifibrotic drug. We've seen more than half the patients that finished the six months of therapy get a reduction in fibrosis scores in their bone marrow, a grade of greater than one.
And my view is that you know, the value of the asset goes up considerably once we demonstrate the data coming from it in the combination setting. You know, the vast majority of patients—only about 15% of myelofibrosis patients are actually not on a JAK inhibitor, and therefore, that previous study was slow to recruit and difficult, and obviously in patients who, on average, had less than a year to live. So that was a challenging study, both to show from a safety and efficacy point of view. But the drug came through with flying colors. We showed great safety and some early signs of efficacy as well. The data that we get from the combination study will be, I think, important in two ways.
One is, I believe that with six months' worth of data, which we believe we will have by the second half of next year, that will be enough data to go back to the FDA and have a discussion about the pivotal study, the phase II-B, III study, that would be required for registration. It's the data from that study that has, in other companies, generated exits north of $1.5 billion. So the value of doing that further study beyond the end of 2024 is obvious for all to see. At the same time, you know, the company will have at that point. It will be, I think, clear that the drug is hopefully producing a benefit for these patients.
We've-- we're, you know, we think from a safety perspective, we don't expect to see issues in this next study. We think we've really proven that the drug is safe thus far. We need to demonstrate that in combination, but we're not expecting to see any problem. It's really the efficacy we see after six months of treatment on these patients that will be enough, we think, for a discussion with the FDA, but also will spark commercial interest in the drug from potential strategic partners. With obviously that, the additional 6 months going out to 12 months worth of data coming in by the middle of 2025. So that, I think, is the point where the company is seeing.
In terms of accelerating it, you know, we've really moved fast. You know, as soon as we had the data, we went to the FDA in quarter two. We got approval for the protocol in quarter three. We're already recruiting in quarter four. We've got 20 sites open. We've been able to not have a dose escalation step so that we can have those patients recruited on the right on the therapeutic dose straight away. So I think that's, you know, the proof now will be in the speed of recruitment, but as I said, we expect to have it fully recruited in the first half and six months data by the end of 2024.
Thank you, Gary. Just another one from Angus. Will Syntara be able to operate within its means to complete these five studies? If not, how does the company expect to finance these studies? And would fewer studies deliver clinical results sooner?
Yeah, so we, the company is focused on that myelofibrosis study. As I said, that, I mean, the study in looking at scar prevention in burns patients, and the further study in scar modification, those studies are coming in at less than AUD 500,000 for the studies. They're investigator-initiated studies. They're not sponsored by Pharmaxis, so that we fully believe in the quality of the studies being run by, you know, the University of Western Australia and other centers which we'll be co-opting. But we run them very efficiently and with a low price ticket because of the way that we're managing them. The Parkinson's study is being largely funded, majority funded by Parkinson's UK.
So again, that's not a lien on the company. So the company can move forward in that area, you know, with very little cash investment. The major cash investment is going to the myelofibrosis study, and we're exploring the myelodysplastic syndrome. We haven't committed to doing that study. We think it's an area that would be of interest to strategic partners, with data coming from that, from a smallish study with a dose escalation step on top of standard, current standard of care, we think is an attractive one for partners, which is why we're exploring, because we think it could add considerable value to the asset. So as I said, majority of the, we're keeping within our means.
It's going after that myelofibrosis study and considering additional ones and thinking about how we might fund that going forward.
Thanks, Gary. Just one more, from Jawahar. Are you looking at any AI tools to expedite and reduce the evaluation time of the human trials proposed or drug discovery?
Yeah, I think the use of AI is a, I think a topic of considerable debate in clinical trial world at the moment. There are certainly some tools which we can use to look at fibrosis and, for example, you know, the bone marrow biopsies that we take and evaluating them. You know, we use you know, central pathology labs to do that, to make sure we have consistency. And I think they've not yet reached the point where AI tools are accepted from a regulatory perspective, and that's really our benchmark. We whilst we think AI can be useful, it has to be acceptable by the regulatory authorities.
But I believe that in the skin scarring area, again, looking at the fibrosis areas and maybe using those tools to give an overall scoring on other assessments of the scars from photographs, from scans, ultrasounds, are all things which are being thought through. And we may well have some exploratory endpoints in those skin scarring studies that have some element of AI in them. But as I said, at the moment, it's very much a nascent field.
Fantastic. Okay, we are now running a bit tight on time, so I'll wrap up the questions there. If anyone does have any further questions, please feel free to email them through. A recording of this webcast will be made available shortly on the Syntara website. So Gary, on behalf of investors and those in attendance, thank you very much for your time today.
Oh, pleasure. Thank you.