GATC Health Corp. has partnered with Medical and Commercial International Limited (MCI), a liability underwriting company in London, to create the first insurance policy for clinical trials.
Now biotech companies developing new drugs will have the option of being covered in case the trial ends in failure.
Irvine-based GATC is a technology startup using artificial intelligence to increase the likelihood of a clinical trial’s success. GATC says its AI platform can predict the safety and the efficacy of a novel drug before it’s put through clinical trials.
The partnership will utilize GATC’s platform in the underwriting process to help determine whether a clinical trial gets financing or not.
“Since our founding, GATC Health has been focused on changing the way drugs are discovered, disease is predicted and human health is improved, harnessing the power of our proprietary AI,” Chief Executive John Stroh told the Business Journal. “GATC’s platform is making drug development more accurate, faster and safer.”
Reducing Risk
Drug development can be a long and costly process with a low success rate, according to Chief Operating Officer Tyrone Lam.
Studies have shown that it takes more than 10 years and over $1 billion to bring a new drug to market.
The risk for early stage biotech companies is high, with 90% of clinical trials ending in failure.
“So, we’re only getting around 50 new drugs approved by the Food and Drug Administration every year,” Lam said.
Through this new partnership, companies instead can take out a loan that’s backed by an insurance policy, so if the trial fails, the lender is protected.
The insurance policy will cover phase one and phase two of clinical trials, which ranges in cost anywhere between $5 million to $15 million.
GATC’s platform will analyze novel drugs and send a detailed report to the insurance company with ratings on safety, efficacy and off-target effects, which will be “a major component of whether they get the insurance policy,” Lam said.
Private Placement
Last July, GATC announced a 2-for-1 stock split of the company’s common stock at $5 per share in a private placement, seeking to double its valuation to $500 million.
Shareholders received one additional share for each one they owned due to the split, bringing shares outstanding to 89 million.
Lam said there is the possibility of an initial public offering.
“GATC has been audited by a public accounting firm registered with the Public Company Accounting Oversight Board in the event the company decides it wants to go public,” Lam said.
“That’s prepared for due diligence, so if the opportunity presents itself, we’re absolutely ready,” Lam said.
Partnerships
GATC recently completed preclinical testing for a novel opioid addiction treatment. The company partnered with Christie Fowler, professor of neurobiology at the University of California, Irvine, who led the study.
“Our platform identified unknown targets in the brain that were affected from addiction,” Lam said.
The study found that GATC’s drug candidate was “highly effective” in reducing fentanyl intake in addicted rats.
GATC expects to start clinical trials next year after filing an Investigational New Drug application with the FDA.
GATC West Virginia Inc., a subsidiary of the company, is also partnering with the state of West Virginia, which has the highest death rate from drug overdoses in the country, according to most recent data from the Centers for Disease Control and Prevention.
It received a $5 million investment from the West Virginia Economic Development Authority and West Virginia Jobs Investment Trust board of directors, as well as lab space at the West Virginia University Innovation Center, to accelerate drug discovery in the state.
GATC has raised $40 million since its founding in 2020. So far, it has discovered and tested seven drug candidates and has the capacity to create 10 to 12 drugs each year, officials said.
