Crandell Addington, a professional card player turned entrepreneur, had been one of Ozelle's initial shareholders. With 500,000 shares of Ozelle stock he couldn't sell, he began to look for ways to recover his investment and perhaps make money. As Ozelle ran out of money, Addington was prepared to pick up the pieces with his own companies.
Prior to the launch of the Cleveland Clinic Phase I tests, Addington had carved out an agreement with Ozelle. Even though the drug was completely untested in humans, Addington was clearly anxious and eager to start selling it to an uninformed cancer patient population according to documents obtained by the Chronicle.
The arrangement with Ozelle allowed Addington to have exclusive marketing rights for Anvirzel in central America. By 2001, Addington had created "Salud Integral," a self-styled cancer clinic in downtown Tegucigalpa, Honduras. And from there, he launched an ambitious and apparently successful scheme to attract investors and sell Anvirzel as a cancer remedy over the internet.
Origins of a drug scam . . .
For Addington's plan to work, he needed a way to move Anvirzel into and out of Honduras without authorities on either border being suspicious. To do that, he needed to be able to convince the Honduran government that his "cancer clinic" needed to import a drug from the United States. And the drug he needed was Anvirzel.
Honduran authorities were generally uncooperative in piecing the story together, but, Addington left a damning paper trail in Honduras. The timeline framed by Honduran Ministry of Health records show that Addington's Honduran operation began in earnest with the issuance of a "Sanitary Registration" issued to a company called "Laboratory Francelia" on October 5, 1999. The certificate was valid for five years.
Incredibly, it allowed Addington's operation to "import and sell" the drug Anvirzel, but there was a catch: the certificate listed only "Ozelle Pharmaceuticals" as the authorized "manufacturing laboratory." And Ozelle did not have a lab nor approval by the U.S. Food and Drug Administration to sell Anvirzel. In fact, when the certificate was issued, Anvirzel had not even been approved for early stage human testing. Selling it, according to the FDA, would have been a federal felony.
The few Honduran Health Ministry authorities who could be contacted were reluctant to comment. One physician there, speaking on assurance of anonymity, said his recollection of events was that Addington and two local physicians (whom he declined to identify) had represented that the drug was a prescription item from the U.S. and was fully tested. No other source in the Honduran health authority would confirm or deny that claim. When compared to the certificate issued by the Ministry, the claim seems reasonable.
Addington quickly leased space in a Tegucigalpa commercial building and launched an internet presence at www.anvirzel.com, where he offered the drug to the world as a cure for cancer - an operation that has been running for over seven years now. On his website, listed in internet records as being operated from his San Antonio offices, Addington's "Salud Integral" makes a number of astonishing claims about Anvirzel.
Among those are specific claims about the "indications" for the drug. In FDA parlance, "indications" are those conditions for which credible medical evidence, obtained from a series of well designed and controlled clinical trials, supports to scientific certainty, the use of a drug for a particular disease or condition. Before a new drug can be marketed in the U.S. with claims made for its "indications," an FDA panel must recommend, and, FDA managers must approve the drug's "label." Anvirzel, however, lacks all such tests and reviews.
Ozelle Pharmaceuticals decline . . .
Ozelle Pharmaceuticals, by 2003, was more or less inactive according to a former company director, John Burns. By then, he and fellow director Terry Thompson were looking for either a buyer or financing. Although the firm still had an office address in San Antonio, it had no employees, no business and certainly no manufacturing operations.
Other than some rejected batches made by TexTract, the only other FDA registered facility that ever made Anvirzel was a company called BioServ in San Diego, California. So where was Addington getting the "Ozelle Pharmaceuticals" Anvirzel that his Sanitary Certificate specified he could import to Honduras from the U.S.? That question remains unanswered. Certainly though, Addington was getting plenty of something he was selling as Anvirzel, and he was certainly selling it to an unsuspecting public.
Addington's "Addko" sold unregistered Ozelle shares . . .
Texas corporate records show that "Addko, Inc." was incorporated in 1999, about the time that Addington was launching his Honduran operations. Addko was formed by Lou Kost, Jr., and Crandell Addington and now operates from the same address as a company Addington calls "Phoenix Biotechnology, Inc.
Sometime after it began, Addko sold shares of Ozelle stock to Texas investors. In an October 7, 2003 letter signed by Kost on Phoenix letterhead, he solicits an Ozelle shareholder that had purchased 1,500 Ozelle shares from "Addko" to participate "in our 'Latin America' operation."
The letter boldly claims that Anvirzel was approved not just in Honduras, rather "Central America." Kost's letter makes reference to a "Confidential Private Placement" and offers to "give" shares to former Ozelle investors. Attached to Kost's letter was another letter penned by Crandell Addington, as president of Phoenix. In Addington's letter he refers to an "Executive Summary" of PBI (Phoenix Biotechnology Inc.) "as well as the current brochure of Salud Integral, a Honduran subsidiary."
Kost's letter to the Ozelle shareholder began by referencing 1,500 "Ozelle Shares Purchased Thru Addko." Texas securities officials say Addko was never registered as a broker-dealer for securities in that state. They deny that Addington or Kost were ever licensed to sell securities. NASD records do not indicate that Addington or Kost were ever registered there. Ozelle shares have never been registered with the State of Texas or the Securities and Exchange Commission, according to records at both agencies.
The rise of Phoenix Biotechnology, Inc. . . .
The "Executive Summary" that accompanied the Kost/Addington letters probably raised the pulse of the investors. It claimed, Phoenix Biotechnology, Inc., a Texas corporation, was geared up for a huge expansion. And the summary probably answers the question of where Phoenix would obtain its "Anvirzel to sell.
"Phoenix's vision is to complete its manufacturing facility in order to meet anticipated demand, mount an appropriate marketing campaign, cash flow the company, and continue to develop successive generations of oleandrin products, as well as other products, with M.D. Anderson's Product Development Center." In the plan, Phoenix managed to leave out a part of the drug development process that FDA officials say is critical: testing.
But the goal of Phoenix was not so much proving the value of the drug as gearing up for a public stock offering. The Executive Summary explained, "After achieving a positive cash flow, our intent is to negotiate with investment banking houses to seek an initial public offering to monetize the value of our positive flow, our continuing product development relationship with M.D. Anderson, our intellectual property, and to conduct clinical trials in the U.S."
In order to pull the scam off, Phoenix made some bold claims in its October 2003 Executive Summary. For example, even though Addington and his staff knew that the "Sanitary Certificate" merely authorized his group to import what he clearly knew as an unapproved, untested investigational drug, he spun to investors like this:
"Anvirzel™ has received a Sanitary Register from the Health Ministry of the Republic of Honduras. This is the equivalent of a New Drug Approval from the USFDA. Phoenix, through its Latin American facilities, is marketing AnvirzelT to international patients, including U.S. patients who import the drug under personal use exemption rules of the USFDA. Additionally, Anvirzel™ has successfully passed a USFDA Phase I study of Anvirzel™ in Patients with Advanced Solid Tumors. The conclusion states: 'AnvirzelT can be safely administered at doses up to 1.2ml/m2/d. No dose limiting toxicities were found.'
"Phoenix owns five Latin American corporations located in Honduras and El Salvador that will integrate the manufacturing, marketing, and sales of Anvirzel™ when our USFDA Class 100 Clean Room, as described under Good Manufacturing Practices guidelines, is complete. The Clean Room should be ready for its first trial run the first week in October. See attached flow chart for more detail."
Even had Phoenix registered, the FDA says that its product, Anvirzel, would still have to undergo a complete new drug application review before it could be marketed or sold in the United States.
Ozelle, but not Phoenix, receives FDA "Warning Letter" . . .
If Addington had been close to Ozelle's operations in 2000, he would have certainly have known of this letter dated March 7, 2000, which the FDA sent to Ozelle, warning them not to do exactly what Addington was then doing:
fda.gov
Joseph B. Nester
President
Ozelle Pharmaceuticals, Inc.
11825 IH 10 West, Ste 213
San Antonio, TX 78230
Re: Anvirzel TM
IND 58,345
MACMIS lD# 8776
Dear Mr. Nester:
It has come to the attention of the Division of Drug Marketing, Advertising, and Communications (DDMAC) that Ozelle Pharmaceuticals (Ozelle) is promoting Anvirzel prior to approval, in violation of the Federal Food, Drug, and Cosmetic Act (the Act) and its implementing regulations (see 21 CFR 312.7).
Ozelle's website makes numerous claims regarding the safety and efflcacy of Anvirzel. These claims are based solely upon preliminary and inconclusive data since the clinical investigation of Anvirzel is in a preliminary stage; neither the safety nor efficacy of the drug has been demonstrated by substantial evidence (i.e., adequate and well-controlled studies). Therefore, the information on the website is in violation of the Act and its implementing regulations because it promotes an investigational new drug.
Following are selected statements from the website that promote the drug as safe and/or effective:
Objective clinical responses in these cases were documented, including complete responses, partial responses, and stabilization of disease.
Anvirzel exerted a very consistent palliative effect on patients treated for four to six weeks. These patients experienced increased energy, diminished pain, decreased need for analgesia, as well as an enhanced sense of well being.
The drug has shown very positive responses in almost all of these cases. Particularly evident has been a dramatic increase in patients' Quality of Life and tumor arrestment.
Experience shows that Anvirzel is a multi-mechanism drug that uniquely modulates the immune system and has cytotoxic activity that attacks cancer cells. Additionally, the drug produces yet unexplained pain reduction and/or pain remission.
There have been no perceived negative side effects noted with the use of Anvirzel to date.
Since a New Drug Application (NDA) for Anvirzel has not been approved for marketing by the Food and Drug Administration (FDA), the dissemination of information by Ozelle that represents in a promotional context that Anvirzel is safe and effective constitutes promotion of an investigational drug, in violation of the Act.
DDMAC requests that the distribution and use of materials that promote Anvirzel prior to approval cease immediately, including but not limited to, removal of violative information from the Ozelle website. Ozelle should submit in writing, on or before March 21, 2000, a description of the steps that will be taken to comply with the above request.
Ozelle should direct its response to the undersigned by facsimile at (301) 594-6771, or by written communication at the Division of Drug Marketing, Advertising, and Communications, HFD-42; Room 17B-20; 5600 Fishers Lane ; Rockville, MD 20857 . ODMAC reminds Ozelle that only written communications are considered official. In all future correspondence regarding this matter, please refer to MACMIS lD# 8776 and IND 58,345
Sincerely,
Jean-Ah Choi, Pharm.D.
Regulatory Review Officer
Division of Drug Marketing,
Advertising, and Communications
Part II: University of Texas, M.D. Anderson Cancer Center lead researcher has links to the Phoenix scam
Tom Winters in Bentonville, Arkansas with Bill Martin in Austin, Texas.
Contact the Writer:
tom.winters@arkansaschronicle.com
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