Transcript Interview with WallStreet.net

WallSt: This is Casey Rittenhouse for WallStreet.net. Today we welcome John Cousins, President and CEO of Biomoda Inc. That’s ticker symbol BMOD on the over the counter bulletin board. Welcome Mr. Cousins.

Cousins: Thank you Casey. Thank you for having me today.

WallSt: You’re welcome. Thanks so much for joining us. Up first off, can you give us a brief overview of the company, what you do and your target markets?

Cousins: Sure. Thanks very much. Biomoda is a Medical Diagnostic Company headquartered in Albuquerque, New Mexico. Our company has patented breakthrough medical diagnostic technology. It originated at the national laboratories and we are applying it in the fight against lung cancer. Against cancers in general. We are developing In-Vitro Diagnostics which are tests done on outside the body. And our company offers non-invasive testing for cancer at the cellular level, which is the earliest stages of cancer and detecting it then is where they have the best chance of long-term survival and cure. The technology is simple, it’s non-invasive, our internal studies show it is highly accurate and it takes about an hour to administer in an out-patient clinic or physicians office.

Biomoda’s technology is based on a patented porphyrin molecule that preferentially binds to cancerous or pre-cancerous cells that are extracted from body fluids such as lung sputum or blood or urine. And the porphyrin compound attaches to cancer cells, and the cancerous cells glow red under fluorescent light to allow detection under a microscope, or in an automated cell counting machine. Normal cells don’t fluoresce.

Biomoda’s work is especially exciting because the slides can be “read” by automated equipment. A test slide that had red cells would be marked for further study and patient follow-up. This will allow for large populations to be screened for cancer at a reasonable cost with high accuracy.

Our technology was developed at Los Alamos National Laboratories, with whom we have a licensing agreement and who are also shareholders in Biomoda. Our first application will be for lung cancer – lung cancer is the leading cancer killer in the United States. More than one million Americans are estimated to die from lung cancer in the next six years, and that’s largely because lung cancer currently is diagnosed in the later stages, in stage III or IV of its development, when there is little hope of survival. Biomoda’s technology is poised to change those dismal statistics by finding the cancer early when survival is possible. Our immediate goal is to reduce the mortality rates from lung cancer.

But we’re not just looking at lung cancer, although that’s very significant. Biomoda’s technology can also diagnose other cancers like bladder cancer, cervical cancer and breast cancer. It works on any body fluid or tissue sample to detect cancer. We focus on body fluids, sputum and urine, in the case of breast it’s a lavage technique, because of the non-invasive nature of collecting them.

Now you asked about target markets. A major initial market for our test, a major initial market, is the military and veterans. They are a high-risk group for lung cancer. You only need to look at the front page of the New York Times or the Wall Street Journal, but The New York Times to understand why we’ll be tackling lung cancer first. Last Saturday’s New York Time’s front page photo, printed in color above the fold, was a picture of two American soldiers hunkering down in a bunker. And guess what? They were smoking. You could see the smoke floating in the air. And it’s not just about today’s soldier in Iraq, though. More than 70% of Vietnam veterans smoked, and they are now reaching the age of 60, when cancer starts to present itself. According to Department Of Defense: the military has a 25% higher incidence of lung cancer than the general population. And that’s saying something. In the general population, lung cancer is the leading cause of cancer death, responsible for 30% of all cancer mortality, that’s more than breast, prostate, colon, liver, melanoma and kidney cancers combined.

Let me give you a little idea of how our test is administered, because it will make it a lot easier to understand why Biomoda has such great potential. In the case of lung cancer, a patient would be asked to spit or cough up sputum that comes from down in the lungs into a cup. Many smokers cough up the sputum all too regularly, especially in the morning, while non-smokers can have it induced with a mild saline spray. The contents of the cup is placed on a microscope slide and mixed with Biomoda’s patented porphyrin solution that preferentially binds to cancer cells. The porphyrin is a fluorescent, meaning that any cancer cells in the lung sputum exposed to the porphyrin glow red under fluorescent, under ultra violet light, to allow detection. The collection process takes less than an hour and can be done in an out-patient clinic. The sample goes to the lab, the lab runs the test, and the results are sent back to the physician.

WallSt: Now what are some trends in the market that you think bolster your company’s prospects for the near term growth and has the company laid the groundwork for long term growth?

Cousins: Oh, thank you Casey. That is an excellent question. It’s important first to point out that Biomoda and the Mayo Clinic in Rochester, Minnesota are currently conducting an independent validation study that will be complete later this year. That news, the results of that study, will be very important to us.

I spoke earlier about, in the interview, about veterans and military because that is one of our focuses. The Department of Defense routinely distributed free cigarettes and included cigarette packages in rations up until like 1976. And they still have subsidized tax-free cigarettes offered in the PXs. Tobacco use is common among troops in Iraq where cigarettes cost less than half of what they do here. But it's not just the smoker who is at risk. A new study from the Journal of Public Health reports that people exposed to second-hand smoke have twice the risk -- that's two-times the risk for lung cancer. And our military is exposed to all different kinds of combustion by-products and propellants and carcinogens on the battlefield that put them at higher risk.

So to that end, to help our veterans in the near term, Biomoda has been working with the New Mexico state legislature to fund a clinical study for state veterans using Biomoda's technology. It's a great effort and although we won't know about the funding outcome for another month or so, the legislature is still in session, the work already has been imminently successful in reaching out and gaining political, business and medical support. We have great support from House and Senate leadership. And our Governor Bill Richardson places great importance on veterans and the military and he understands the necessity for providing the best health care and isn't afraid to push to make the best even better. Our own state Department of Veterans' Services is one of the best in the country. There are a lot of dedicated people that we are working, including the American Cancer Society who has been very helpful with our legislature. So we're bullish on our work to enter the military marketplace with our technology -- not just in New Mexico but nationwide, and we know there is a great need for us nationwide. What we are doing here now, will be a template to be taken to other states and federally.

In the long-term, we'll build on the work with lung cancer to attack other cancers and provide quality testing in the broader, worldwide medical marketplace. Our business model and product development pipeline is designed to provide Biomoda with long-term revenue stability and growth. We'll begin in the U.S., but we're already looking worldwide and building alliances that will help us enter Western and Eastern European, Japan, Russia, India and other marketplaces. We will simultaneously be developing a line of onco-labeling agents and diagnostic tests for other cancers including bladder, cervical and breast cancer.

There is one other thing I want to mention about longer-term trends. There are some very effective, very important voices entering the lung cancer debate. The Lung Cancer Alliance in Washington, D.C. has been a tremendous advocate for early screening, and they are making significant inroads on a national scale to fight for greater funding for lung cancer screening and treatment. The Lung Cancer Alliance was instrumental in last year's U.S. Senate Resolution introduced by Senator Hillary Clinton and Senator Chuck Hagel calling for national, broad-based screening for lung cancer. And we’re lucky to have own U.S. Senator Jeff Bingaman, from New Mexico, on our side who has been very helpful and is a very effective advocate for health care. The fact is, important people who can make a difference are beginning to understand that cancers that have widely utilized screening protocol have the highest survivability rates. The other major cancers had enormous funding pool and screening programs. Consequently, breast cancer now has a 5-year survival rate of 88%; prostate cancer 99% and colon cancer 65%. Given the lack of funding for early detection and research for lung cancer in general, lung cancer’s survival rate, 5 year survival rate, is still only 15%.

But that is changing. (Cousins and Interviewer both attempt to speak – Cousins continues…)

The New England Journal of Medicine recently published the results of International Early Lung Cancer Action Program (I-ELCAP) which study demonstrated that 92% of patients with Stage 1 lung cancer who were treated promptly have an estimated life experience of 10 years. Now that is really important to what we are doing. 92% of the people survive if we catch lung cancer early. Right now, only 15% of people diagnosed with lung cancer survive even 5 years. I think this study represents one of the most profound progresses ever made in lung cancer. The Cornell University researchers that pioneered this study were on the front page of every major newspaper. And they should be. Their work is groundbreaking. It says we can beat lung cancer. This is an important trend. Lung cancer screening programs are getting more and more support, and Biomoda can be a very significant player in that effort.

WallSt: And what specifically do you think gives your company the competitive edge in the market place?

Cousins: Well, our technology is unique. It’s non-invasive. It’s fast. It’s simple. It’s accurate. We are competitively priced. And we have a strong patent portfolio: We have patents in 16 countries. I’d say that's a significant edge in the marketplace.

The fact is, the Medical Market place is changing dramatically. Doctors have begun to understand that people respond differently to different therapies, there is a shift in medicine to an individualized approach.

Personalized Disease Management is an overall rubric being adopted within medicine - the medical community - to address risk assessment, diagnosis, treatments and individual responses to therapies. Our technology will enhance this new paradigm in medicine with improvements in early stage diagnosis. We can really make a contribution to healthcare and make money at the same time. This business has big opportunities for public and investor relationships. This is news.

WallSt: (Interviewer and Cousins both attempt to speak) I’m sorry.

Cousins: I just want to say within Personalized Disease Management, our assay is trademarked, is called Cypath, and it has a large opportunity to be adopted by the medical community for screening, monitoring and surveillance of cancers. We see screening as the largest market. But monitoring is equally critical to gauge Individual responses to therapies such as its efficacy and toxicity. And Monitoring programs also mean multiple tests for individual patients. So it is very good for our business

Our Business Model is straightforward and fits with the existing medical infrastructure.

Our customers are Clinical Reference Labs. Their role is to conduct the test and deliver the diagnosis and get paid – largely through insurance company reimbursements. The Clinical Lab responds to a physician's request, a prescription say; they receive the sample; execute the assay and deliver the results to the physician.

Under our current Business Model, we will develop the assay and our clinical labs customers will validate the assay under FDA/CLIA regulations that’s Clinical Laboratory Improvement Act that governs laboratory operations and practices. And then the labs will seek reimbursement from Medicare and private insurers based on existing reimbursement codes.

And we did a reimbursement code survey and there are reimbursement codes in place that are economically feasible for us.

WallSt: And I wanted to switch gears and ask about your management team. Would you say you have the right one in place and can you tell us about a couple of the key executives at the company?

Cousins: Thank you Casey. Yes, we have a very strong management team and that is so key. My undergraduate degrees are from Boston University and MIT and I have my MBA from the Wharton School of Business. Besides myself, I have the pleasure of working with:
Dr. Herbert Whitaker who is Biomoda’s Executive Vice President and a Director. And he has thirty-five years experience, with twenty-five of those years in medical products industry. Besides being an exceptional business thinker, he really has specific industry experience. And he also has a lot of European and Japanese experience. He’s negotiated a lot of deals in both the east and west.
And Dr. Robin Neft is Biomoda’s Director of Research & Development. She has twenty years experience focusing on the early detection of lung cancer. Very strong and specific experience. She has worked for the FDA, and the Center Disease Control.
And Leslie Robins is our Vice President and he has lots of experience developing and running companies and capital markets and developing strategies for supporting stock and creating liquidity. We have an office in San Diego that Leslie runs and he is very active in Southern California Biotech and is looking at Collaborative and Strategic Alliances for us there.

WallSt: And in the next 12 – 18 months what are milestones that investors should watch for?

Cousins: Thank you. Well, first our objective is to achieve a commercial product and sales and grow a top line ASAP. So look for that in the next 12 -18 months. The results of the Mayo Clinic validation work will be extremely important look for those in the next 6 – 8 months. And follow our efforts with the Government and Military. That is just a huge market – a huge initial market and a high-risk group. And it fits very well within out strategy.

WallSt: And do you have any additional closing comments for potential investors?

Cousins: Well, watch the stock and look for a significant funding event. Currently, there is no In Vitro Diagnostic product commercially available for lung cancer. We have the opportunity to be first.

It is the first application of its kind and a breakthrough cancer diagnostic product because of its ease, accuracy and low cost. We are ready to go; we are underway and have a clear path to product and sales.

WallSt: And does your Company have a website where investors can get more information?

Cousins: Yes, it does. It is www.biomoda.com. (Cousins spells out web address).

WallSt: Mr. Cousins, I want to thank you so much for joining us today and we look forward to speaking with you in the near future.

Cousins: My pleasure Casey. Thank you very much.

End interview