April 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.
March President’s Column
In the March 2012 President’s Column, Biomoda President John Cousins discusses the Company’s strategic plan, our European patents and a well-deserved promotion for a member of the management team. We welcome questions from investors. Please submit questions to investor@biomoda.com.
Strategic Pathway Forward
As you know from previous reports, we have been focused on identifying new sources of funding to continue to move the CyPath® diagnostic assay for lung cancer forward on the path to FDA approval and commercialization. Every step along the way is based on a strategic plan to highlight the unique capabilities of our porphyrin-based compound that binds to cancer cells and causes them to fluoresce under certain wavelengths of light. We continue to make inroads into the scientific and medical communities, raising awareness of the CyPath® assay and its potential as a weapon in the war against cancer. As part of the strategic plan, we continue to look at incentives offered in different states, including Texas, Ohio, Kansas and Missouri. We appreciate input from some of our shareholders who have shared insights into both public and private opportunities for funding and support.
Biomoda is one of many biotechnology companies working on technologies related to the diagnosis and treatment of lung cancer. Last year, radiology received a nod when the National Comprehensive Cancer Network (NCCN) issued guidelines for use of low-dose spiral computed tomography (LDCT) to screen for lung cancer in high-risk individuals. Research is ongoing in the fields of proteomics, genomics, methylation, and, of course, biomarkers. Our pilot clinical study demonstrated that CyPath® is a significant new biomarker for lung cancer. We strongly believe that all these technologies can complement each other and work together synergistically by providing options for screening, diagnosing and treating one of the deadliest cancers.
CyPath®’s clear advantage is that it is a simple, non-invasive, inexpensive stand-alone early-stage diagnostic tool which will help healthcare providers determine whether more expensive and specialized tests are warranted. Our product can be highly valuable to physicians by optimizing and expanding current medical practices by offering a simple, non-invasive diagnostic test to detect cancer.
European Patents
Biomoda’s patent portfolio is one of our strongest assets. In addition to U.S. patents, we have foreign equivalents in Australia, Canada, Mexico and Japan. 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. We are preparing to finalize the paperwork to extend patent protection in several European countries, including the United Kingdom, Germany, France, Italy, Poland, Greece, and throughout Scandinavia. Based on the number of smokers, the potential European market for CyPath® is five times the U.S. market, and we hope to move ahead with plans to offer CyPath® for lung cancer screening in the European market.
General Counsel Timothy Zannes Named VP
In recognition of his commitment to Biomoda and the caliber of his work as General Counsel, the Biomoda board of directors promoted Tim Zannes to Vice President. I know first-hand how important Tim’s work has been to Biomoda, not only for his legal acumen but also for his contribution to our overall strategy. Tim’s insight into both the science and the business sides of what we do has helped us keep the Company focused on the road ahead. He is personally committed to seeing that CyPath® makes a difference in the lives of people who may be able to discover a potentially deadly disease in its earliest stages when it is most treatable and curable. I want to personally thank him for the work he does on behalf of Biomoda and our shareholders.
February President’s Column
In the February 2012 President’s Column, Biomoda President John Cousins discusses publication of research results and the Company’s ongoing efforts to raise funding. We welcome questions from investors. Please submit questions to investor@biomoda.com.
What is the status of the final research paper on the pilot clinical trial?
We have submitted the paper, “Sputum Labeling Utilizing Synthetic Meso Tetra (4-Carboxyphenol) Porphine (TCPP) for Detection of Lung Cancer,” to a peer-reviewed journal for consideration. Dr. Thomas Bauer, Principal Investigator for our pilot study, is the principal author. Although we can’t predict how long the review process will take, we feel confident that we have provided a comprehensive summary of our pilot study demonstrating that CyPath® is a significant new biomarker for lung cancer.
Biomoda is extraordinarily gratified to have a physician and researcher of Dr. Bauer’s caliber leading our research team. In addition to his work as chief of thoracic surgery at Christiana Care Health System in Delaware, Dr. Bauer has also led research on epidemiology and treatments for lung and esophageal cancer, advanced 3-D medical imaging and virtual bronchoscopy.
Other members of our research team took valuable time from their busy schedules to vet the paper, offering additional insights and thoughtful edits. Our thanks extend to Dr. Timothy Kennedy, Dr. Lara Patriquin, Dr. Daniel Merrick and Dr. David Hill. We also want to thank our team at Quintiles, Dr. Richard Holcomb, Dr. Richard Phillips and Dr. Dino Vallera. We will, of course, keep you updated on the paper’s status.
How is your effort to raise new funding going?
We continue to pursue several avenues of funding for Biomoda. We find ourselves in a “catch-22” situation familiar to start-up companies – we need capital to continue to develop and test our promising technology for the detection of lung cancer but cannot raise revenue from sales until we have FDA approval to market that technology. We continue to talk to potential investors and partners, including medical and scientific institutions in Texas, Ohio and Kansas.
We are pleased with the scientific community’s response to our technology and remain committed to making every effort to secure additional financing to complete our optimization research and launch the pivotal clinical trial in 2012. During this process, we are making many new contacts in the medical community which will be helpful when we are ready to recruit facilities and individuals to participate in our large-scale, multi-site pivotal clinical study.
We also expect to hear something about the two applications we filed for funding through the Small Business Innovation Research (SBIR) program sometime this spring. If we are successful, the grant funding will be earmarked to continue the optimization research that will improve the sensitivity and specificity of the CyPath® assay.
Assuming you can raise funding for CyPath®’s continued R&D, what is the first step?
Our first priority will be to recruit an in-house Chief Scientific Officer (CSO) of the same caliber as our eminent research team led by Dr. Bauer. In our discussions with outstanding medical and scientific institutions over the last several months, we have had the pleasure of meeting brilliant researchers and scientists who recognize the potential of fluorescence in the diagnosis and treatment of cancer. Our intent is to recruit one of the best and the brightest to lead the way to FDA approval and commercialization. The first task of the new CSO will be design, development and completion of our optimization programs that we have targeted. This optimization work will lead to an automated test for use on large populations with greater sensitivity and specificity for detection of lung cancer.
Once again, we appreciate hearing from our shareholders. Special thanks to one in particular who has devoted time and effort to helping us identify potential sources of grant funding. Thank you all for your support.
January 2012 President’s Column
In the January 2012 President’s Column, Biomoda President John Cousins dicusses the Company’s outlook for the New Year and a potential new target for the CyPath® technology. We welcome questions from investors. Please submit questions to investor@biomoda.com.
What are you doing to secure new funding for Biomoda?
Biomoda and the management team have had to deal with financial challenges in 2011 that have slowed down our research and development efforts in spite of the successful completion of our pilot clinical trial. We remain committed to the technology behind the CyPath® diagnostic assay for the detection of early-stage lung cancer, and we continue to receive the full support of our medical advisors and FDA consultants. But it is very clear that we must find additional capital to continue to operate and to proceed with the optimzation research that is essential prior to launching the pivotal clinical study.
As we reported in November, we filed two applications for funding through the Small Business Innovation Research (SBIR) program. We expect a response to our applications this spring. If we are successful, the grant funding would be used to continue the optimization research that will improve the sensitivity and specificity of the CyPath® assay.
In addition, we continue to have discussions with potential strategic investors and partners who can help us move the Company forward. We always enter these discussions with the best interests of Biomoda and our shareholders in mind. There are no guarantees, but we are hopeful that we can reach an agreement in the near term that will allow us to continue the optimization work, launch the final clinical trial and submit our findings to the FDA for approval.
Have there been advancements in research or in securing additional research partners?
Dr. Thomas Bauer recently submitted the clinical trial research paper for publication in a medical journal. Dr. Bauer is the Principal Investigator for the clinical trial of CyPath® completed last year and the Chief of Thoracic Surgery at the Helen F. Graham Cancer Center in Delaware. The paper is awaiting peer review and approval before publication, which could take until later this year. Upon acceptance for publication, we will provide additional news in this column.
We recently met with cancer researchers and businesspeople in Ohio who are interested in the Biomoda technology as both research partners and investors. In addition to such stellar medical institutions as the Cleveland Clinic, Ohio has public incentives programs such as the Third Frontier Fund that encourage job growth in the state by supporting the development of companies like Biomoda. We will continue to speak with Ohio officials and medical professionals about collaborative and investment opportunities. We also continue to investigate funding and strategic partnerships in Texas that will take advantage of our research agreement with the University of Texas Health Science Center in San Antonio.
Our research to date has focused on applying our porphyrin-based assay to the detection of lung cancer. We believe CyPath®’s ability to bind to cancer cells and cause them to fluoresce under certain wavelengths of light is applicable to multiple cancers. A significant target for future research is circulating tumor cells (CTCs), cells that have detached from a primary tumor and circulate in the bloodstream. Research on CTCs has focused on demonstrating the role they play in metastatic disease, carrying cells from a primary tumor to other parts of the body. Although CTCs clearly have prognostic and therapeutic applications, the difficulty has been in detecting them. Generally, there are one to 10 CTCs in a mL of whole blood in a patient with metastatic cancer. For perspective, that same mL of blood contains a few million white blood cells and a billion red blood cells. Finding 10 CTCs among approximately 1,002,000,000 other cells is a challenge. We believe CyPath®’s unique characteristics may provide a very important breakthrough in the detection of CTCs in patients with metastatic breast, colorectal and prostate cancers.
What are the Company’s prospects for 2012?
The short answer is that we cannot predict our future. We continue to believe the current share price does not accurately reflect the value of our technology and its potential to improve the survivability of a lung cancer diagnosis. Maria Zannes, our Chief Executive Officer and Chairman of the Board and I, along with key executives remain steadfast in our commitment to bring CyPath® to market.
We remain grateful for the support of our shareholders. We hear from many of you that your investment in Biomoda was inspired by personal experience with cancer and the potential to diagnose the disease early in its progression when it is most treatable and survivable. Thank you again for your support. We wish you all a very healthy, happy and safe New Year.
November 2011 President’s Column
In the November 2011 President’s Column, Biomoda President John Cousins discusses the possibility of new federal funding and the status of ongoing optimization research on the CyPath® assay. We welcome questions from investors. Please submit questions to investor@biomoda.com.
Is Biomoda pursuing additional federal grants or funding?
A year ago, Biomoda received nearly a quarter of a million dollars in federal grant funding under the Qualifying Therapeutic Discovery Project. We hope to have similar success with the Small Business Innovation Research (SBIR) program, a federal program that provides support for research and development of new or improved technologies with the potential to succeed as commercial products.
Earlier this month, we filed two applications for SBIR funding to continue our optimization research to increase the sensitivity and specificity of our CyPath® assay for the detection and diagnosis of lung cancer in its early stages.
We are seeking funding on two fronts. The pilot clinical study demonstrated that CyPath® is a significant new biomarker for lung cancer. In the pilot study, 12 microscope slides were prepared from each sputum sample, labeled with CyPath® and read under a fluorescent microscope. Those 12 slides represented about 600,000 cells. We believe that by adapting the technology to a liquid-based assay that can be read in a flow cytometry system, we can examine the entire sputum sample, or three to five million cells per sample, and increase both the speed of cancer detection and the accuracy of the test. Funding of this proposal will allow the Biomoda laboratory to increase the sensitivity and specificity of CyPath® by improving measurement consistency and increasing the ability to identify cancer and pre-cancerous cells by differentiating between cancer cells and the so-called debris, artifacts, dysplastic or inflamed cells that can be found in all sputum samples.
The second funding proposal is related to Biomoda’s recent patent application for our proprietary invention that refines the use of fluorescent microscopy to achieve the same goal – an increase in the sensitivity and specificity of the assay. The patent covers an innovative stable, narrow-band light source to excite fluorophores like TCPP, the active ingredient in CyPath®. We are seeking SBIR funding to continue our studies on stabilizing the excitation mechanism and reducing variations in the way we measure photonic emissions from cells.
The Small Business Administration’s SBIR program distributed more than $1 billion in research funds in 2010. Biomoda submitted strong proposals for funding under the program. Both of the company’s optimization projects will help us to adapt the CyPath® technology to efficiently and economically screen large populations for lung cancer. We will keep you apprised of the status of our funding applications.
Are you looking for partners that can help with your research?
In addition to our relationship with the University of Texas Health Science Center at San Antonio, we are looking for research partners who can help with our optimization studies. We propose to collaborate with one such company, ApoCell, Inc., in Biomoda’s SBIR proposals. ApoCell is a molecular biomarker development, services, and diagnostics company headquartered in Houston that works actively in oncology, diabetes, and molecular diagnostics and drug development. ApoCell’s facilities are CLIA-approved and FDA-compliant, and its research team can be of significant value as we complete the optimization research and prepare to launch the pivotal clinical trial.
What are the Company’s financial prospects?
Biomoda continues to face financial challenges. We do not believe the current share price accurately reflects the value of our technology and its potential to improve the survivability of a lung cancer diagnosis. Our task now is to continue to seek financial backing from investors who understand the biomedical sector and appreciate what we are trying to do. We continue to meet with potential investors and examine every proposal from the point of view of our shareholders. Until we are able to generate revenues from sales, we are at risk. But the management team remains committed to pursuing every avenue to move forward with our research and bring CyPath® to market.
In spite of our challenges, we are grateful for the promise of this technology and wish you all a Happy Thanksgiving.