Advancing a New Treatment Path for Gout featuring James Mackay

85% of Americans with gout have no treatment. Could getting the band back together be a solution? Find out today. Welcome to The Connect Current, the flow of innovation in San Diego. We bring you the founders, investors, and leaders building the future across life science, tech, climate, defense, AI, and more. This is where San Diego's next chapter takes shape. Welcome to the Connect Current, the flow of innovation in San Diego. I'm your host, James Zanewicz. This episode is being recorded at Kiln Rancho Bernardo. We want to thank them for that support. Kiln is the new home for Connect's second office space, and we hope to see many of you here. But today I'm joined by James McKay, PhD, President and CEO of Crystalis Therapeutics, who also happens to serve as Chair of the Connect Board of Directors. Crystalis Therapeutics is San Diego-based A clinical-stage biopharmaceutical company working to transform the treatment of gout. The company is advancing dotinurad, a next-generation, once-daily oral urate-1 inhibitor being developed as a potential second-line therapy for people living with gout. This is an especially timely conversation because Crystalys recently announced $130 million Series B financing to support late-stage global clinical development and commercialization preparation. The financing supports the company's ongoing clinical program, including 2 Phase 3 registration-directed trials, Ruby and Topaz, as well as the Phase 2 Amethyst study. James brings more than 4 decades of drug development and commercialization experience across the pharmaceutical and biotech industries. He's helped guide multiple drug products through approval, held senior leadership roles at major life science companies, and has been deeply involved in San Diego's innovation ecosystem through his leadership with CONNECT. That makes this a great Connect Current conversation because it brings together patient need, clinical stage biotech execution, capital formation, commercialization strategy, and San Diego's strength as a place to build serious life science companies. But today's conversation is about the company and why gout remains an area of significant unmet need, how Crystalys is working to advance zotinirad, what this financing enables, and what it takes to move a therapy from late-stage development towards potential real-world impact for patients. So James, welcome to the show.

Thank you, James. It's a pleasure to be here.

Yeah, JZ and JM, so very simple. We got this down. But for listeners who are first meeting you and hearing about Crystalys Therapeutics, which is probably unusual given the media tour you've been on the last 2 weeks after your Series B, but if someone doesn't know about Crystalys yet, what are you building at the company? What problem are you solving? And why is gout an area where you saw the need for a new treatment?

Yeah. So I've worked in the gout space for many years. It was actually gout that brought me to San Diego. So way back, maybe 12, 13 years ago, I led an AstraZeneca business development team that acquired another biotech here in San Diego called Ardea Biosciences, who were developing treatments for gout. And after we did the acquisition, the AstraZeneca board asked me to come to San Diego, which of course was one of the best decisions of my life.

Mm-hmm.

Been involved in this space for a long time. Gout is a very misunderstood disease. Many of your listeners may think that gout doesn't exist anymore, but it's actually the most common form of inflammatory arthritis. It's the most common form of inflammatory arthritis. It's more common than rheumatoid arthritis, osteoarthritis, and affects about 13 million patients in the US.

Oh, wow.

So it's really quite a common disease. The disease itself is— the biology is relatively simple. It's caused by excess uric acid in the body. And that can result from both or either the production of uric acid, which is related to diet, or more commonly, the lack of ability of the body to excrete enough uric acid. And that's really where we are trying to target treatments for the disease.

What made this particular opportunity so compelling to build a company around it for you?

So I think we really felt that this was unfinished business for us because the team that I've reassembled at Crystalis has basically the team that developed our previous molecule that we got approved for, larcinurab or Zurampic, at Ardea Biosciences. And although we got approval for that molecule, there were some challenges. It had a renal tox liability, which somewhat limited its commercial success.

Mm-hmm.

So when investors came back to us and said, you know, we're really interested in gout, and you and your team have got maybe more gout drug development experience than most people on the planet, it really felt like unfinished business and that we should get the band back together again, which is exactly what we did.

And gout, correct me if I'm incorrect, but I feel like it's something that's been around for centuries and still very underserved.

Yes. Been around for a long period of time. Actually, very nasty disease. I mean, people suffer from 2 main symptoms of the disease. They suffer from what's called an acute gout flare. It's a sudden intense attack of pain and inflammation, normally focused on the joint. lasts for 10 to 14 days, often results in patients having an emergency room visit because the pain is so bad that they actually think they've broken a bone in their body. And the second symptom is really when patients have been uncontrolled for a long period of time, and there's this excess uric acid in the body, and it deposits on the joints and indeed in other tissues throughout the body. And it causes what are called tophi, which are just lumps of uric acid on the joints, which are very painful. Painful, very disfiguring for the patient. So pretty nasty disease, to be honest.

Has there been any kind of treatment up to this point, or is it just that it's for limited amounts? Kind of what has existed in the history of treatments for gout?

Yeah. So the standard of care for gout is a drug called allopurinol. It's a xanthine oxidase inhibitor that affects the metabolism in the body and actually results in less uric acid being produced from the food that the person consumes. That's been on the market for 60 years. And when we developed the previous urate 1 inhibitor at Ardea, that was actually the first new mechanism of action that had been approved by the FDA in over 50 years.

Oh, wow.

So there really hasn't been a lot of innovation in this area. And these patients are actually terribly underserved in terms of the quality of the treatment that they get. And we believe that we've got a drug here that if successful in these phase 3 clinical trials that we're running, will really be able to transform the way these patients are treated.

And so what makes ditinured different from the previous stuff? Why do you think it'll be more successful?

Yeah, so as you mentioned in the introduction, it's what's called a URAT1 inhibitor. URAT1 is a transporter in the kidney, and it's responsible for the reabsorption of uric acid back into the body. And what our drug does is it blocks the URAT1 inhibitor and basically makes people pee out more uric acid. So it's a very—

Oh, so it's that simple?

It's that simple.

What they used to say back in the day, the KISS, keep it simple. When we talked, somebody else said it was stupid back when I was a kid. Apparently there's a nicer term now. This is very, very simple and a way to translate science into something that can't, or that is serving a population that has not been served prior.

And what I would also say, James, is that, yeah, I said there were 2 reasons why people develop gout. One is that they produce too much uric acid, and that's addressed by the standard of care, or they can't excrete enough. 85% of people who develop gout develop it because they can't excrete enough. So the myth that people develop gout because of what they eat is actually not true. It's mainly because their body can't excrete enough uric acid. And that's— we're trying to get to the root cause of the disease with this treatment that we're developing.

So you're getting 85% versus the 15% who can be helped already, which is incredible.

Correct.

When you explain this to someone outside of biotech, doesn't have the background, what is the simplest way you explain to them Why this therapy matters?

I think because it affects the main root cause of the disease. I think the biology is relatively simple here anyway, right? Uric acid is produced in the body. It's a natural product that's produced in the body. If your body can't excrete enough uric acid, then it builds up in the body. And the more uric acid you have in the body, the more it'll deposit on the joints and indeed in other tissues throughout the body. And it causes localized inflammation, which then eventually will result in the acute gout flare, extremely painful. Although the other myth about gout is that it doesn't exist anymore. And clearly that's not true because there's over 13 million patients with gout. But everybody you talk to, I can guarantee that everyone you talk to, they know somebody that has gout, right? You know, has suffered a lot because they can't get enough treatment.

Absolutely. And Chrysalis, while you're approaching gout, is at a very different place than an early-stage discovery-level biotech company, because you're advancing a late-stage program. You have 3 clinical trials underway, Ruby, Topaz, and Amethyst. So what does it take operationally to build a company around global clinical development at this stage?

Yeah, so maybe Alex can explain, first of all, why we were able to go straight into the late stage.

Yeah.

What's unique about ditinurab is that this molecule was actually developed in Japan by a small Japanese pharma called Fujiyakuhin and was actually approved in Japan in 2020. So it's actually been on the market there for 6 years, and there are more than 2.2 million patients have received the drug. It was just never developed in the US and Europe. Fujiyakuhin really didn't have the capabilities to do that.

Mm-hmm.

So we identified the molecule, were able to pick it up, you know, get the US European rights to it. And because of the significant development work and significant post-marketing exposure that there is for the molecule, the FDA agreed that we could go straight into the final stage of testing. In terms of how we do that, I mean, we have a small but mighty team. I think there are 18 of us now. We started off with only 4. So we've nearly gone 5 times the size of the team in the space of a year.

Yeah.

But it's a small team, but very experienced in terms of their ability to run these late-stage trials. So many of the team have done this before at Ardea. As I said, we kind of got the band back together again. And then you have to work closely with partners, contract research organizations and other experts in order to ensure that everything gets done properly. But the team are handling here a tremendous amount of work, but they're very, very capable in being able to do that.

And you're kind of jumping into this. You recently announced that $130 million Series B financing. With support from a strong syndicate of both new and existing investors to fund this work, what does this financing allow you to do in this moment? And what are some of the key milestones ahead that you're looking towards as you develop this?

Yeah, so for the listeners, obviously, late-stage drug development is very expensive. These are large clinical trials. We're studying 750 patients in our Phase 3 program. And these trials last for up to 18 months as well. Very expensive to run the trials. We raised a $205 million Series A back in September. And then we had a lot of investor interest after that, which led us to announce the $130 million Series B a couple of weeks ago. So raised $335 million in the space of 9 months, which is a lot of money.

Your dance card was pretty full.

It was pretty full. But it was really driven by inbound interest. in the company. And it made sense to us to take additional investment right now so that we could support not only the continued and completion of the development of the Phase 3 program, but could also kick off a Phase 2 program looking at slightly different patient population and also start all the work to get ready for commercialization of the product, which again is an expensive endeavor.

Absolutely. And so if there are investors or strategic partners out there who are listening and Missed out on the Series A, missed out on the Series B. What's the clearest takeaway you want them to have about Kristalys in this moment and any opportunities ahead for them?

First of all, we're a very well-financed company. So at this point in time, we're in control of our own destiny, which is a great place to be if you're a CEO. I think the other important thing is that this is a very de-risked drug that we're developing. It's been approved in Japan, approved in China, several other Asian countries. You know, I said over 2.2 million patients have received it since approval. So it's very well-defined and therefore very de-risked. And you've got a team here that have done this before. So my team are the only team that have ever achieved approval for a Uرات1 inhibitor in both the US and Europe. So they've shown that they can do this. They understand the science. They understand the regulatory pathway. And I think the combination of the de-risked asset, the team that have done it before, is the thing that really attracted the investors to come in and invest in the company.

Yeah, second time's the charm, right?

Yes.

Well, you spent decades in drug development and commercialization, so I'd like to zoom out a little bit because you also play a major role in San Diego's innovation ecosystem as chair of the Connect board, member of the executive committee for Connect, but also just a really, I think, welcoming figure to all. in the San Diego ecosystem. How has this group of experiences shaped the way you think about building Crystalis from San Diego?

First of all, San Diego has a tremendous pool of talent. We've sourced the vast majority of our team from San Diego. We have a few people, I think 3 people that work virtually, a couple in the Bay Area, one in Boulder, Colorado, who have very specific skills and we've worked with before. But the vast majority of the team are here in San Diego. I think also we have a tremendous collaborative ecosystem here. So being a CEO in a biotech actually can be a pretty lonely place at times, right? You have got tough decisions to make. And having other CEOs that may have been through the same situation in the past or can offer you advice and that you can talk to in a safe, confidential way, There are so many people here in San Diego that can fulfill that role and importantly are perfectly willing to do that in order to help their fellow CEOs. So I think this is, for me, it's an innovation ecosystem like no other in terms of the people's willingness to help. And I think everybody wants everyone to succeed here. Even people want their competitors to succeed because it's just good for San Diego.

I agree. Absolutely. Turning to a little more personal note, our Connect Current note, our closing question for everyone: what drives your innovative flow?

For me, it's about making a difference for patients. Always has been. There's nothing better in this business than getting approval for a drug that will then help millions of patients. Tell you a couple of stories to show that. The first drug that I ever worked on, There was a drug called Seroquel for the treatment of schizophrenia and depression, has helped millions and millions of patients. I was in a movie theater a number of years ago with my wife in Philadelphia. We were watching Silver Linings Playbook and Bradley Cooper, who's the lead in the film, had mental health problems. And partway through the film, he actually took out his Seroquel tablets. And honestly, it sent a shiver down my spine.

Mm-hmm.

And I wanted to stand up and say, I developed that drug. The only downside is he went on to say some nasty things about the drug after that.

Yeah.

And then the second thing I always tell my teams, particularly people who are working in biotech, many of whom may never ever have been able to take a drug all the way through to approval, there's nothing better than walking into the pharmacy and seeing the drug that you developed on the shelf behind the pharmacist. And after we got approval for Zirampic at Ardea, I went into CVS Pharmacy in Rancho Bernardo to actually pick up a script for my wife. And the guy in front of me was actually getting his first Serampic script. And the pharmacist was actually explaining to him about the drug and how to take it. I really wanted to tap him on the shoulder and say, I developed that drug, but that would've not been HIPAA compliant for me, right?

Probably not.

Because I shouldn't have really been listening to the conversation. But it was a kind of magical moment. And it's, you know, you know, you're actually going to help people.

Yeah, making a difference is huge. I love that. Well, I want to thank you for taking time. I think it's an incredible conversation, both about what you've been able to accomplish. It shows, I think, the value of team, the value of paying attention to what's out there in science and how you might be able to adapt or repurpose that, and the value of San Diego, quite honestly, in many ways. Because we talk about execution, clinical strategy, capital, commercialization readiness, staying focused on patients. All these things are important, but the ecosystem matters as much, if not so much more. And I think, you know, you've been such a tremendous champion for San Diego and San Diego, you know, as a champion for itself. It just makes a difference and is better here. And it's why we have the website San Diego Is Better Now to highlight things.

Absolutely.

But, you know, I think those things are very important. How Crystalis Therapeutics is advancing that important late-stage program in gout and kind of the next chapter of gout treatment shows how San Diego is the place. where experienced leaders, strong science, and committed investors come together to build companies with real potential patient impact. And we really appreciate you joining us.

No, thanks, James. It's been a pleasure to talk with you.

Thanks for listening to The Connect Current. If you want to learn more about Connect and explore resources across San Diego's innovation ecosystem, follow us on LinkedIn or visit connect.org. We'll see you next time on The Connect Current, where San Diego's innovation story keeps moving forward.

This podcast was edited by Resonate Recordings.