Subject: Interview
Date: Tue, Feb 3, 1998 21:33 EST
From: MVitas
Thought I'd share this with the group. Please read very carefully ... sorry if it doesn't format nice.
CLAYTON BROWN, MSNBC BUSINESS VIDEO: I'm Clayton Brown reporting
from Washington. Joining me now is the CEO of Antex Biologics , Dr. Victor
Esposito.
Doctor, thank you for being with us today.
DR. VICTOR M. ESPOSITO, CEO, ANTEX: Thank you for having me.
BROWN: Your company has produced two new exciting technologies that help
prevent infection. They're -- it's called ART and NST. Can you describe both of those
in layman's terms and tell us what part they play in developing infection-fighting
vaccines?
ESPOSITO: Will, I'll start first with the ART which stands for Adhesion Receptor
Technology. And basically what Antex has found, it's developed a technology to
address the very first steps of the infectious disease process. That is, first the bacteria
must attach before it can set up an infection. And so what we're doing is we're
addressing ways to inhibit that first step of the infection.
Then the second basic technology that Antex has developing, we refer to as NST or
Nutrient Signal Transpection. And very simply stated, what we've been able to do in
the laboratory is to simulate the way the bacteria grow when it infects your body. So,
we're now able to be able to grow that organism and produce relevant vaccines so that
when you do see the infectious agent, we're prepared to respond to it immunologically.
That's very simply stated the two core technologies that this company has developed,
and Antex developed all of the technology internally. The applications of this
technology is not only for vaccine development, but also to be able to address blood
development.
You know, platelets you've been seeing in the news from time to time, you hear the
statements, are we losing the war against bacteria? Are the antibiotics no longer
effective? We believe that the basic technology in the company will enable Antex to
address the development of a new family of anti-bacterial agents.
BROWN: Now, this base that will allow you to develop that new family of antibiotic --
anti-bacterial fighters or vaccines, for lack of a better term, how much do you see
product -- these new products derived from this technology attributing to growth in
revenue in percentage -- or a percentage basis?
ESPOSITO: Well, I think it's going to be tremendous, because the thing that Antex has
been doing with this two core technologies is that we are addressing the development
of vaccines to meet unmet clinical needs. As an example, camplobacter(ph) which a lot
of people up until about two weeks ago weren't even sure that that organism had
existed, they really had a hard time even pronouncing the word until the article that was
in the New York Times.
We recognized three and a half years ago that camplobacter which is one of the
leading causes of food-borne illness was an emerging disease, not only a problem
domestically, but also a global problem. In addition to the approximately 2-8 million
that are infected in this country that are reported, it's estimated that 400-500 million
people suffer diarrhea from camplobacter worldwide. But I believe that in the United
States that this is an under-reported number, because a lot of people are probably
infected by camplobacter but are able to resist and address the infection so that it
never gets to the point that they have to go to the doctor.
BROWN: Now, it's initially, I think, past Phase I testing. Are there other phases of
testing that it has to embark upon, and how soon until this vaccine comes onto the
market?
ESPOSITO: Well, it's currently in the Phase II trial. Based upon the successful
completion of the Phase II trial which is to
address the effectiveness of the vaccine, we will then go into a Phase III trial where we
will address the efficacy of that. If we're successful in all three stages of it, we would
anticipate in approximately three years applying to the FDA for approval of this
vaccine.
BROWN: Now, you mentioned Phase II and Phase III -- which of those phases deals
with testing on people? Or is that something else?
ESPOSITO: All phases. Phase I is to test the safety. Phase II is to test the
effectiveness, that is, will it prevent infection? And then Phase II is when you go out
into a large number of people to prove your efficacy. And that is under everyday living
conditions that indeed the vaccine will be effective.
BROWN: Now, just to reiterate, what -- how do you see growth being affected by
products derived from this technology in terms of your revenue or growth, just on a
percentage kind of...?
ESPOSITO: I think at the present time, that you should not look at Antex and judge it
based upon a significant increase in its revenues, because we are a development state
emerging biotechnology company where our biggest thing today is investing our dollars
in the development of our technologies.
ESPOSITO: In the foreseeable future, we would anticipate accelerated growth in
revenues as we bring products to the market -- not only camplobacter for treating
diarrhea and infectious diseases that are food borne, but we also have in clinical trial
today a vaccine for helicobacter, which is the causative agent of peptic ulcers. We also
have in the clinical trial a vaccine for treating otitis media (ph), a common ear infection
in infants.
So, that we have taken the basic technology that Antex has developed; that we've
taken that technology to address unmet clinical needs -- that is places today -- or
diseases today of where there are no preventive measures. So, based on that, we're
very excited about the future for Antex.
BROWN: OK, now you mentioned now how you're investing pretty much for the
future right now. Lost money in the first, I guess, three quarters of this year. How do
you see -- when do you see that changing? What's being done specifically to turn that
around? Is it something that can be turned around immediately, or it this again,
something that will be realized long term once the true results -- or the true, I guess,
uses of the -- as products come to fruition in terms of their usage. I know there's a lot
of -- I guess, there hasn't really been -- there hasn't really been focus in terms of where
they're going to be used because they're designed to fight things that we haven't really
come across yet. But when they finally do come to fruition -- or when these products
are finally realized, when do you see profitability?
ESPOSITO: Each and every one of these vaccines will be multimillion dollar sellers;
multimillion dollar revenue generators. But, for the very near future, our revenues will
basically be based upon R&D funding that we're going to obtain from our strategic
partners.
BROWN: OK, you mentioned R&D funding. I think one of the relationships you have
is with SmithKline Beecham (SBH). Are you considering other arrangements with
other companies in the future in addition to that one? And how is that relationship
worked for you so far?
ESPOSITO: Well, currently in addition to SmithKline Beecham, we also have a
relationship with Pastor Ukenot (ph), which is the vaccine subsidiary of Rhone
Poulenc, the French chemical company. In addition to those, we do expect and are
actively discussing today, the engagement of other strategic alliances. Specifically,
though, your question with regard to SmithKline Beecham -- it's been a very good
relationship for Antex and we also believe for our partner, SmithKline.
It's been a very interactive and collaborative program and that -- our major emphasis
with them has been to address the things that camplobacter and the helicobacter -- the
current programs that we have in development.
BROWN: Now, I'm kind of -- I need some help in understanding this kind of
relationship. They're helping you with the funding. Once revenues are realized from
these properties -- from these products, are they in turn reimbursed, or how -- do they
get a percentage of the revenues that are derived from the products once they are in
the market?
ESPOSITO: No, this is basically a traditional relationship between a biotechnology
company and a major pharmaceutical company, in that there is an equity investment by
SmithKline into Antex. There is the development and R&D expenses that are paid for
by SmithKline for specific targets that they are interested in. In addition to that, there
are milestone things that are paid by SmithKline in that as Antex moves forward in
developing the product and hits milestones such as clinical development, various
phases of the clinical trials. In addition to that then, SmithKline Beecham will be the
marketing partner for that and there will be a royalty stream being paid through Antex.
BROWN: OK, now, obviously a bit of this -- kind of -- the fun of sort of being in the
business that you're in, tends to be very R&D intensive. In addition to the help you're
getting from SmithKline Beecham and other arrangements in the future, are costs still a
concern in terms of all the R&D at this stage to be in the business that you're in?
ESPOSITO: Cost is always a major concern. I believe that cost in -- my background
and experience has been not only with a start-up company, such as Antex, but I've
also worked with Fortune 50 companies, and I believe that cost containment and cost
control is always essential. We're strong believers at Antex, that we should invest our
money and not spend our money.
And what I mean by investment is to make sure that there's a good return. And to be
very straight forward, I would think that the productivity record of Antex in its brief
five-year history, and put it up against any biotechnology company in the industry today
-- because on relatively meager operating funds, we have developed two core platform
technologies, that you referred to earlier as the NST and the ART.
We have a very strong intellectual property portfolio that's developing both for the
United States patent and also foreign patents. We have three vaccines in their clinical
trials. We have four other vaccines that address other food borne illnesses -- for such
things as meningitis and clamydia, the number one sexually transmitted disease -- that
are in pre-clinical development.
And as I say, we've established three major alliances -- one with the United States
Department of Defense and specifically, the United States Navy. It's working with us
very closely on the development of the camplobacter vaccine.
And as I said earlier, we have the joint venture with SmithKline Beecham and then the
licensing arrangement with Pastor Mary Ukenot (ph). So, we believe that Antex has
been very productive; that Antex has been very efficient in developing not only the core
basic technologies that one would expect from a biotechnology company, but also to
take that technology and make it market driven and to develop specific vaccines that
address unmet clinical needs.
BROWN: I wonder if you would mind taking off your CEO cap and putting on your
physician's cap. Is there anything in the pipeline, or do you foresee in the future any
product that would address the (OFF MIKE) issues that and obviously that they're a
bit concerned, has there been some progress in terms of protease inhibitors, that's kind
of like the latest thing that's out there to fight the virus. Is there anything on your radar
screen that Antex is working on that would address the AIDS crisis?
ESPOSITO: Antex is not doing anything at the present time to address AIDS. We
have concentrated our efforts in the area of bacterial diseases. And that's where our
major emphasis has been, because there's a tremendous need today. Clamydia
triconus(ph) which is the number one sexually transmitted disease and is also the
number one preventable cause of blindness -- there's no vaccine today. That's the
areas that we've decided to concentrate on. It's not to address at the present time viral
diseases or diseases of AIDS, but really to concentrate on bacterial infections that have
been around for a number of years and have presented to the American public and the
population worldwide tremendous problems that have not been addressed.
BROWN: Would a viral disease ever be something you would consider getting into at
a later date in the future?
ESPOSITO: Yes. We have given some thought to it. We have ideas in that particular
area, but we've maintained our focus on bacterial infections.
BROWN: Turning back to the financial side now, how do you see earnings -- the
outlook for earnings in the future, say, for the year or next year. I know we talked
about profitability and how that may not happen right away, but more of a long term
goal. Do you feel earnings will turn around as well?
ESPOSITO: Well, we expect the remainder of 1997 to continue at roughly 10 to 15
percent increase in our revenues. We are in the process today of developing the 1998
operating plan. And based on the projections we have at this point, we do not
anticipate any change from the trends that we've had in the past in terms of earnings.
BROWN: So, I guess that would still be a negative number at this point.
ESPOSITO: It will be -- if you go back to 1996 -- 1996 was a positive year for
earnings. So, that I think one of the things you have to keep in mind when you look at
biotechnology companies in
various stages of development, you will see from quarter to quarter variations in the
bottom line, but then you find out what stage and what the expense levels are,
especially for clinical trials.
BROWN: So, it's a concern that those areas do you feel earnings going back in the pot
will be back into positive territory, say, for 1998?
ESPOSITO: That's our expectation.
BROWN: You wouldn't particularly -- you wouldn't want to quote a figure at this
point?
ESPOSITO: Not at this point, because, as I said earlier, we're in the process of
developing the 1998 operating plan, but I would also add one other thing. I don't
believe a company such as Antex at its stage of development should really be
necessarily gauged only on its revenues. I think what should be gauged to some degree
upon the ability to invest R&D dollars to advance the technology.
Our day will come, and we don't think it's that far away, when we will become a
revenue driven company, based upon the fruits that we're going to harvest from
Antex's investment in research and development.
BROWN: You just mentioned that a company such as yours shouldn't be gauged on
revenues alone. Do you feel that Wall Street has a clear understanding of that and the
unique nature of your company with respect to that, and do you think they understand
the industry that you're in and do you think investors or potential investors would have
the patience to see you guys through to the long -- for the long term?
ESPOSITO: Let me first, Clayton, address your question about does Wall Street
appreciate and recognize Antex? The answer to that without any hesitation is no. And I
think the basic reason that Antex is not appreciated by Wall Street today is that we are
a small cap emerging biopharmaceutical company, and because of the fact that we're
small cap and emerging, we do not have any analyst following today. And with the lack
of analyst following today, we believe that it's impossible for Wall Street to truly
appreciate us.
If, however, you would look just in the last 30 days, you'll see that there's been a
tremendous change in the amount of volume on your stock on a daily trading basis.
We've also had significant appreciation in our share price. So, we believe that the
market is becoming more and more aware of Antex. And we believe that the fruits of
Antex are starting to be recognized by the investment community. And we would like
to see that positive trend continue.
BROWN: So, (OFF MIKE) aware of your company's (OFF MIKE) investments
(OFF MIKE)?
ESPOSITO: We believe so, and we hope so.
BROWN: Well, we'll definitely be watching and we hope you have a bright future
ahead of you. Dr. Victor Esposito of Antex Biologics .
END
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