This article has been revised and corrected from the original version.

Duarte-based Prolacta Bioscience Inc., which supplies a human breast milk-based nutritional product for premature and critically ill infants to hospitals, is getting into the pharmaceutical business.

The company has spent the past several years researching and developing what it claims is the first drug made from human milk. The drug aims to boost immunity in patients who have undergone stem cell transplants to combat blood cancers.

Last month, Prolacta announced that researchers at nearby City of Hope – also based in Duarte – had dosed the first patient with the drug to initiate a Phase 2a clinical trial. It’s a major step in what will likely be a years-long process costing well over $100 million to bring the drug to the U.S. Food and Drug Administration for approval and eventually to market.

“Stem cell transplant patients endure extreme health challenges, and we believe this therapy may provide a positive impact with safe, effective microbiome restoration, which could help improve outcomes of these critically ill patients,” said Greg McKenzie, Prolacta’s vice president of innovation.

Long path

While the transition from manufacturing what is essentially a nutritional supplement product to drug development with its complex clinical trials and numerous regulatory hurdles might seem daunting, Prolacta has had experience in this arena. That’s because its human milk-based nutritional product is classified as an exempt infant formula food product, which

requires clinical trials and approval from the Food and Drug Administration.

Indeed, Prolacta executives regard drug development as a logical next step. Company researchers have spent years studying the science of how human breast milk can benefit the immune systems of premature infants.

Prolacta is the brainchild of serial entrepreneur Elena Medo, who has devoted much of her life to improving care for premature and critically ill infants. The company collects human breast milk from donors who use breast pumps to generate surplus milk. The breast milk is then transported to Prolacta’s manufacturing facility next to its Duarte headquarters where it is concentrated into a nutritional fortifier. The company’s main market has been critically ill and premature infants in hospital neonatal intensive care units.

“From the very beginning, our mission has been dedicated to advancing the science of human milk for the benefit of fragile patient populations,” said Scott Elster, Prolacta’s chief executive. “This (drug development effort) is not a departure or transformation for the company.”

McKenzie added that many of the researchers that helped launch the company came from pharmaceutical companies and brought that ethos with them.

Good bacteria

A key difference between the nutritional supplement sold to neonatal intensive care units and this new drug candidate is the addition of a strain of bacteria found in the gut of nursing infants. These bacteria boost the immune systems of infants; researchers at Prolacta and City of Hope want to convey that immunity to stem cell transplant patients.

“Patients undergoing stem cell transplant often have disruptions in their gut microbiome, including an increase in potentially disease-causing pathogens and an overall loss of (bacterial) diversity,” said Karamjeet Sandhu, assistant professor with the department of hematology and hematopoietic cell transplantation at City of Hope, which is one of 56 designated comprehensive cancer centers nationwide. “This leaves patients prone to opportunistic infections and graft-versus-host disease, which can result in multi-organ attack and death.”

To create the drug therapy product, these bacteria are combined with human milk sugars in the fluid that is condensed out of the nutritional supplement product during the manufacturing process.

The goal of the clinical trial, Sandhu said, is to “measure how well the human milk-based therapy helps establish a healthy microbiome in patients with blood cancers, like it does naturally in the newborn gut.”

Funding advantage?

Most pharmaceutical startup companies have to obtain millions of dollars in seed funding just to get their research to the point of clinical trials. But because Prolacta has a fairly steady revenue stream from sales of its nutritional product, it has a built-in funding advantage. McKenzie said the company has used those revenues to cover most of the drug development costs to date, though he and chief executive Elster declined to say how much money has been pumped into the drug development effort – or even how much revenue Prolacta brings in annually.

But as the company starts its more extensive Phase 2 clinical trials, the costs of these trials far exceed the company’s cash on hand, meaning the company must raise millions of dollars from outside investments.

McKenzie said that’s a major reason why the company has decided to go public now with the announcement of its progress on the human milk-based drug therapy.

“We’re open on the type of investments that come in, whether from other pharma companies or from investors,” McKenzie said.

He declined to say how much investment the company is seeking at this stage. But he did give a sense of the scope of the total amount the company will need to raise to bring the drug to market.

Pharmaceutical products must go through at least three rounds of extensive double-blind clinical trials to prove that they deliver positive results in treating a disease and condition over and above a placebo baseline. Any adverse effects that emerge must be extensively documented and minimized to whatever extent possible. Only then can the drug candidates be submitted to the Food and Drug Administration for approval and permission to bring the drug to market.

This process takes several years and all the costs must be borne by the drug developer. Most drug candidates never make it through to the end: they either cannot show the necessary degree of positive results or the companies developing the products run out of money.

“The total cost to develop a new therapeutic ranges from $100 million to $1 billion,” McKenzie said. “To date, we’ve invested a fraction of that.”

One thing that might help is if the company can get its human milk-based drug candidate designated as an “orphan drug” by the Food and Drug Administration. That would open the way for expedited drug approval and possibly even direct financial incentives.

To obtain orphan drug status, the target disease or condition must affect fewer than 200,000 people in the United States, with the idea being to incentivize drug development for small patient pools that otherwise would present limited financial appeal for pharma companies.

In recent years, the number of patients receiving the type of stem cell transplants the Prolacta drug would target has fluctuated between 20,000 and 22,000 per year, according to figures from the federal Health Resources and Services Administration. That would place it well within the limits for orphan drug status.

Future spin off?

Prolacta’s announcement also raised the possibility that the pharmaceutical development unit might eventually be spun off into a separate company, though no timetable was given.

“We would entertain a partnership that could include spinning out a startup pharmaceutical company as a standalone company,” McKenzie said.

Elster elaborated a bit on the rationale for such a move.

“Now that the initial microbiome trials have shown promise, spinning this off will allow us to remain focused on critically ill babies, while assembling a highly specialized team dedicated to the therapeutic pathway,” Elster said.

“Importantly, whether the therapeutic business is spun off or not, the Prolacta team will continue to play a pivotal role in the development of this product,” he added.