President’s Column
In the April 2012 President’s Column, Biomoda President John Cousins discusses the investment outlook for biotech and provides an update on our European patents. We welcome questions from investors. Please submit questions to investor@biomoda.com.
A New Investment Climate in Biotech
We have been focused on identifying new sources for funding that Biomoda must have to complete the clinical research on the CyPath® diagnostic assay for lung cancer and submit our findings to the Food and Drug Administration. New investments also will fund research and development for use of CyPath® in screening and diagnosing other cancers.
This month, we are pleased to report we have added a unique firm to our team that has expertise in strategic planning, technology commercialization and business development for companies like Biomoda. The people we will be working with represent more than 100 years of direct operating experience at the highest levels of biotech management. After a rigorous due diligence process, our new team members have a solid understanding of the technology behind CyPath® and its game-changing potential in the cancer diagnostics arena. They can help us position Biomoda to gain the attention of the medical device investment and business community. They will also help guide the optimization studies for maximum value and secure publication in prestigious scientific journals.
Biotech is a segment with a long development cycle. Prior to FDA approval, valuation models that depend on revenue and income do not apply. Until you have a drug or a medical device to sell, you only have expenses and losses. Investment funds, the cash that runs the company, is largely dedicated to fund the research and development required to achieve the regulatory approval that opens the door to commercial sales. In short, biotech investors in the public equity market sign on to a high risk of failure in return for the possibility of high reward if – and that is always a big “if” – the company actually hits a home run and brings a viable product to market.
In spite of the odds, innovations in the life sciences continue. Researchers in this field continue to aspire to inventions and discoveries that improve health and prolong life. And after a tough few years, we are finding that investment interest in the biotech sector is on the upswing. The NASDAQ Biotech Index was up 18 percent in the first quarter, similar to the broader NASDAQ Composite. According to BioWorld, venture capital financing was up 34 percent in the first quarter over the same period in 2011. We are also seeing some acquisition activity, and there have already been four biotech IPOs this year.
We are hopeful that this new and improved investment climate in the biotech sector will give us renewed visibility and help us find the resources we need to continue our work on the CyPath® assay.
European Patents
One of our top priorities is protecting Biomoda’s intellectual property. The patent portfolio is one of our strongest assets and will be meaningful to potential investors. Last year, the European Patent Office granted our patent application for using CyPath® to detect cancer and pre-cancerous cells in body fluid and tissue samples. That opened the door to several European countries.
In the first quarter of 2012, we validated the patent in 14 European Union (EU) countries. In addition to the US, Australia, Canada, Japan and Mexico, we now have patent protection in the United Kingdom, Germany, France, Spain, Italy, Ireland, Switzerland, the Netherlands, Luxemburg, Belgium, Sweden, Finland, Denmark and Greece. We believe the potential European market for CyPath® is five times the US market. There are 215 million smokers in Europe, compared to 44 million smokers in the U.S. Lung cancer is expected to kill at least 183,000 men and 78,000 women in the EU in 2012.
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