Steba research

With its combination medicine and medical device invented at the Weizmann Institute, a father-son team aims to provide a more efficient treatment.

Last month a new treatment was revealed - invented in Israel at the Weizmann Institute - which is making its way to the public. The company leading the commercialization of the technology is Steba Biotech, led by a Jewish father-son team from France who previously owned one of the largest private pharmaceutical companies in the country.

Raphael and Fabrice Harari sold a significant portion of their previous business ventures to fund their vision for Steba; they even rejected, they say, an investment based on a valuation of more than a billion dollars - because of their Zionism.

Small lab

Raphael, the father who now lives in Geneva, has been in the pharmaceutical industry for almost half a century. He and his brother set up a small lab together which later became biotech firm Negma Laboratories. The company had a variety of operations including the acquisition and development of original medicines. When it was sold in 2007 to Indian conglomerate Wockhardt, it was generating $150 million in revenue annually, operating out of two plants with 800 employees. It was sold for $250 million according to sources involved with the deal.

Ten years earlier, Raphael and Fabrice met through family friend Niso Sadik, now a manager at Steba Prof. Avigdor Scherz and Prof. Yoram Salomon from the Weizmann Institute in Rehovot. “We looked at the technology for ten minutes and said, ‘We’ll take it’. Within a month, the deal closed,” says Raphael Harari.

How did you know this was “it” so quickly?

Raphael Harari: “I know pharmaceuticals, I know the market, and I did not use middlemen. We’ve made deals like these in the past under Negma. We bought the European marketing rights for a cholesterol medication developed in Japan. We advanced the product through the clinical trials and sold the rights to Novartis for hundreds of millions of dollars. Novartis did fail with the product at the time, we believe because they conducted a trial with the wrong dosage; but the Japanese company is making a billion dollars a year from it.

“We later bought the rights for a heartburn medication but our timing was wrong. Our product may have been the best in the category, but a generic competitor entered the market as we were preparing to launch. These experiences gave us the confidence to know that we can take a product from the Weizmann Institute and build it into one that appeals to big companies.”

The original goal was to bring the product to Phase II trials and then seek a partner. The Harari family established a lab at the science park near the Weizmann Institute and began working with the center’s scientists on the treatment. In 2004, the project graduated from an academic venture to an actual company: Steba Biotech. Now the company employs 53 people 30 in Israel according to Raphael.

Fabrice Harari: “We reached Phase II trials in 2008, right when the global financial crisis hit. It was a terrible time to raise funds and to commercialize products because so many companies reached dire straits and sold for cheap. We had to decide whether to wait for the market to improve or continue and fund Phase III ourselves. We do not believe in halting mid-work. So we did it ourselves.”

Raphael Harari: “Our independence had other advantages. In the past we saw that big companies often could not figure out how to promote products as well as the original inventor especially a product that is a combination of medicine and medical device like ours. We realized that we could only control it completely if we advanced it ourselves. It is important to us not to make mistakes.”

We heard that during this period you received an investment offer from the government of Qatar.

Raphael Harari: “Yes. They wanted a 10% stake based on a valuation of $1.3 billion, from the Qatar Foundation an institute tasked with diversifying the country’s income beyond oil. We decided a partnership between Qatar and Israel though the company is not officially registered in Israel would not work in this case.”

How much have you invested in the company?

Raphael Harari: “Hundreds of millions of dollars. Our wish to fund our own operation was one of the major reasons we sold the family company, Negma.”

Did you consider going public? The market has been favorable in recent years.

Raphael Harari: “After we decided to gamble on the product and pass the Phase III trials on our own, we were no longer interested in an IPO before the product launch; we wanted to maintain our hold over the company.”

“Difficult for patients”

Their product is a combination of an optic fiber cable and a medicine which is activated by light exposure. The mechanism assures the treatment is administered accurately to the malignant tissue only in the area where the optic fiber and the medicine intersect.

Competing prostate cancer treatments also attempt to accurately target the malignant tissue using various approaches: freezing with a gas streamed into the center of the growth (practiced by Galil Medical, which was recently sold); radiating via “seeds” that are implanted in the center of the tissue; and focusing ultra sound radiation on the targeted area.

Are you not concerned by the competition in the field, especially since your product is a combination of medicine and medical device?

Fabrice Harari: “We analyzed the market and we know exactly what market segment we are seeking. In the past 7-8 years, doctors have divided prostate cancer patients into three sections based on a risk assessment high, medium, and low. Some 40% of patients are low risk (400,000 people every year in the US) and as of now they are often told it is best not to try any treatment. Why? Because the side-effects for existing treatments are harsh, because we cannot know how the cancer will develop. Maybe it will worsen. In such cases, if we follow its growth, we can see when it develops and treat it then. In cases that we see the cancer developing quickly, given a high risk assessment we can still take action in time to prevent death but not always. This uncertainty is difficult for patients.

“We say that those who believe that low-risk prostate cancer should not be treated with invasive procedures are right. Which is why we are offering a microinvasive treatment that fits in the middle range where it is unclear whether to undergo treatment or not. We believe in avoiding overtreatment but out treatment does not fall under unnecessary healthcare.

“Our initial client base are patients whose cancer suddenly started developing after years of follow-ups and, though their cancer is still low risk, are worried. They can choose to undergo our treatment, instead of a harsher approach. If their cancer continues to develop, they can still pursue more aggressive measures. There is nothing to lose.

“The best part is the urologist can perform the procedure in his own clinic, without requiring a hospital visit. The urologist is pleased because he does not lose the patient, as he would if he escalated him to surgery.”

Mexican operations

Jack Baniel, head of the prostate cancer center at the Ramat Aviv medical Center, which began performing the experimental treatments with the medicine, said: “The competing approaches are not as precise as the Steba solution, and they are many more side-effects. The new ultra sound treatment, from US-based SonaCare, is promising but it offers its own advantages and disadvantages compared to the Steba treatment. It is too early to pick which is better.”

Baniel accepts the marketing strategy taken by Fabrice Harari. “Of the 30% of prostate cancer patients that we follow up without treatment, nearly half are older with early-stage cancer; it is better for them not to try treatment. The other half are young or very worried, and they would benefit from this approach. It’s about 15% of all prostate cancer patients.”

How far along is your product?

Fabrice Harari: “We held a major efficacy trial in Europe that achieved positive results; the product is now awaiting EMA European Medicines Agency approval, which we will likely see in 2017. Meanwhile, we received permission to treat patients in Israel; we have already treated a few dozen patients. We have also started selling the treatment in Mexico.”

Why Mexico?

“The association of Latin American urologists turned to us. In Latin America, most men choose to treat the cancer even if it is low risk but they prefer a treatment with fewer side-effects. The association advanced the trial which is it wrapped up relatively quickly, before the US and Europe. Based on the results of the trial, the Mexican health ministry approved the product in November 2015.

“Meanwhile, the product is not covered by insurance in Mexico; it is offered to patients with private insurance. The rate of prostate cancer in Mexico is relatively low we think it is because of underdiagnosis, and we hope to change that.”

Where do you go next?

Raphael Harari: “We reached the marketing phase; the question now is whether we take Europe by storm or by country, we need to consider that. We can have an efficient and successful launch in Europe for $50 million and we are raising funds based on that figure, based on a billion-dollar valuation. Based on the results in Europe, we will begin taking the steps to receive regulatory approval in the US starting next year, along with a few other projects in the pipeline. In the future, we could go public for billions of dollars.”

Fabrice Harari: “Our technology can also work with other types of cancer. We have entered clinical trials for esophageal cancer, advanced prostate cancer, bladder cancer, and other cancers which do not respond to existing treatments. We can perform the treatment in any scenario where there is a growth within a hollow space.

“We have a joint agreement with the Weizmann Institute, Sloan Kettering, and the Thomson Foundation which brought $20 million to look into the effect of the medicine on the immune system, both as its own treatment and in combination with PD-1 inhibitors (immunological medicines that have already been approved for several cancer types). Most oncology firms are trying to insert the PD-1 inhibitors into any other cancer treatment in hope of increasing their efficacy, but each additional treatment adds more side-effects eventually the patient collapses.

“Our product has few side-effects, making it an ideal candidate for integration with other treatments.”

Raphael Harari: “At some point, we founders will need to monetize our investment and invest in other projects. We are already looking at additional investments. We have a great connection here with the Weizmann Institute. But we would also like to see other Israel projects. We are experts when it comes to taking clinical products from Phase I to later stages; now we have mastered the entire process.”