JE: So, you’ve been at InSite Vision since December 2010, and before that you were at Tekmira Pharmaceuticals and at INEX Pharmaceuticals.

TR: Correct.

JE: Tell me how those positions have prepared you for your position at InSite and why is that experience beneficial to the company, as it makes its way towards commercialization for the existing products?

TR: Well, I think for my entire career I have been climbing through the ranks of marketing positions where I had product and profit line and volume responsibilities. That morphed into business development activities, roles and responsibilities, where I was either in licensing or out licensing products, and creating partnerships beneficial to the company. And then, at a certain point in my career, I started getting involved in new clinical development models, regulatory strategy, commercialization and launching new drugs. And throughout all of those positions, are exactly the things that are needed here at InSite Vision.

InSite Vision has always been a company that has been very good at formulating drugs in our Durasite drug delivery platform. It’s always been very good at early regulatory strategy. But it’s really fallen down on clinical development and on partnering. And the future for InSite Vision is really to become a clinical development machine, and by that I mean taking a look at what the clinical development timelines and standards are in the industry and attempting to cut those in half, because the most costly part of drug development is not the money to develop the drugs. It’s the time it takes keeping the lights on in the organization. When I was working for ILEX Oncology down in San Antonio, Texas, (this was a company that was originally a contract research organization, or CRO) we learned very rapidly from that business that we could cut the costs and the timelines of clinical development virtually in half, if we did certain things. And we ended up transforming that company into a very successful bio-pharmaceutical company, and sold it for a billion-one to Genzyme in 2004. So you can take smaller companies, get them to focus all their resources into the key things that you need to do to advance the drug, or drugs in our case, and then create real value for shareholders.

JE: I’ve read that during the AzaSite process you had spent a lot of time negotiating and talking with the FDA to formulate a more direct strategy. Does that come from your experience as well, the ability to negotiate through the FDA’s pathways?

TR: Absolutely. I think a lot of people in the industry have a lot of strong opinions about the FDA. And I think when you look at the FDA, it really is a lot of individual divisions that operate as they believe in the best interest of the patient segments that are served. I have most of my experience working with the oncology and hematology division, which at a certain point and time I think everybody had labeled as extraordinarily friendly and extraordinarily helpful. There a lot of people that don’t view that division in that manner today. One thing that I like about the ophthalmology division is that it is very helpful, and to us, very friendly and responsive in terms of us charting our clinical development path forward. Now that certainly doesn’t mean that they have been easy on us. We’re dealing with challenging clinical trial designs and in challenging disease areas. But I can tell you this, whenever we have a question, whenever we have a concern, our chief medical officer and other people in our regulatory clinical team really have carved out a very important and strategic relationship with the FDA, that gets us a lot of feedback very quickly to let us know that we’re going in the right direction.

JE: And have you had experience in dealing with the regulatory agencies in Europe and/or Asia and fostering any of the company’s products through approval there?

TR: Well, let me break that down into two answers, and we’ll tackle Europe first. Europe, absolutely. I have not only been involved with the European regulatory agencies historically, we have been involved with the European regulatory agencies in February of this year.

So one of the things we spent a lot of time on, in the first 90 days of me being on board with the company, was taking advantage of hindsight and being able to say, okay, here we are today, what are all the things that we think this company has done correct in its 20 years of existence. You’ve got to remember this was a company started in the mid 80′s that took until 2007 to get its first product approved, and its second one in 2009. I think anybody has to look back on that and say that’s a clear disappointment– to spend 20 years on something as simple as ophthalmology in front of the eye. And one of the things that we recognized is that this company had not approached Europe correctly. It essentially ignored Europe and Asia at the end of formulation development. We recently met with the regulatory authorities in the UK and in Sweden, provided them a full background of information on all the clinical development that we had done in the United States on our AzaSite plus and DexaSite product, and then asked them would this data be sufficient to support filing in Europe? And we were quite pleased to hear that in terms of a regulatory body, and again we’re dealing with a centralized body as well as individual countries, we were very pleased to see that they probably even more so than the FDA were very open and very attentive to our questions.  In fact, they surprised us by saying that there is no de facto need for us to run clinical trials in Europeans patients. They view North American patients as identical to European patients. And while there are certain minor formulation differences between European standards and North American standards, these were not things that would require any clinical bridging studies, and in fact if the trials were positive, we could probably file centralized approval process there. So we have always found that, in order to move forward in Europe, we needed to really define what is the manufacturing strategy, what is the regulatory path, and is there a need to do clinical work there, or can we just use our US clinical experience and file in Europe.

Please see remaining installments soon of the interview discussing clinical trials, managing approved assets, and the CEO’s pragmatic approach towards medical fields and drug commercialization.

JE: So tell me, how would you distinguish or set apart the type of work that Northwest is doing from others in the industry?  What makes the road you’re going down better, or more significant?

LP: Well, I think there are several things that make us different and stronger.  For one thing, we have built into our business strategy multiple chances to win.  We are pursuing both of the two largest medical markets in the world, the US and Europe, in parallel; what we sometimes refer to as the two continent strategy.  Next, we have a product that’s based on a technology platform that we believe will be applicable to basically all solid tumor cancers unlike, for example, targeted therapies for one particular cancer or a couple of particular cancers.  This technology and the products based on it should be applicable to basically all solid tumor cancers because of the way that they function.  Thirdly, we have developed several complimentary product lines.  We have a product line designed to address medical and clinical situations where a patient is having their tumor removed, as well as another product line for situations where the patient is not having their tumor removed, or is not able to.  Additionally, we have multiple clinical trials already either completed or underway in multiple different cancers.  So the combination of multiple markets, a technology for all the different cancers and embodiment in multiple product lines that cover the different market and clinical situations as well as progress in terms of the development pathway on several of them at once, gives us a very deep pipeline and multiple, I think, differentiators.

JE: So given the known risks, the ups and downs of clinical trials and results, do you feel that the diversity that you have can overcome negative factors, the negative situations that come up doing clinical trials and setbacks?

LP: Yes.  We do and it’s not just the diversity although that’s a very important factor too.  It’s also the strength and consistency of the performance of this product, this technology.  It’s a well known concern – and a legitimate one of investors – that well maybe you have great results in early stage trials but maybe they don’t do as well in the later stage trials.  Well, a couple of points about that; firstly, the point that you’ve put your finger on is a very powerful one.  The product has performed. DCVax technology has performed consistently across multiple diverse cancers, including  primary brain cancer, late stage prostate cancer and metastatic ovarian cancer.  Again, these were in small, early stage trials, but there was consistent performance in more than doubling survival time in the patients that received it.  That kind of consistency across very diverse cancers is very encouraging. A lot of times you see great results in a few patients and that’s great for them.  It’s wonderful.  It’s like they won the lottery, but it doesn’t do anything for the rest of the patients.  Our product, DCVax has performed consistently across patients as well as across diverse cancers.  More than eighty percent, of the patients that have taken DCVax have substantially exceeded standard of care in terms of time to progression, and survival time. We’ve added literally years of extension of time to progression and time to survival. When we come to a later stage trial, (if the results are even a fraction as good), we don’t have to replicate fully the results of the early stage trials.  Even get a fraction of that in the later stage trial, that’s a clinical outcome improvement to be approvable.

To put that into concrete terms, as an example in the brain cancer trial, the standard of care, median survival is fourteen months with everything, standard of care, surgery, radiation and chemo.  Our patients, and again across all the patients, across all the age groups, genders, whether it was a full resection of the tumor or a partial, whatever their Karnofsky Performance Score (which means their physical condition at the time of surgery), across all of those different patient characteristics, our median survival was three years.  That’s such a huge improvement, given that products such as Temodar were approved based on two and a half months of added survival. So from our perspective, if you look across all those factors, we’re very mindful of the common risk of things not going as well in the late stage trials as the early.  When you add up all those factors, yes, we think we’re pretty unique in that regard.

JE: There are thirty clinical trial sites right now for DCVax?

LP: Actually thirty-seven.

JE: Tell me about the partnership with King’s Health Partners.  Why is it significant?

LP: It’s really significant in some of the ways that are similar to why the Fraunhofer Partnership in Germany (we already announced) is so significant. Number one, it’s a large-scale organization.  It’s a very highly respected organization by all parties, by physicians, by patients and importantly by regulators.  They have large-scale capacity.  They have existing physical facilities, GMP Clean Room facilities to make the cellular product in, and they had experience for ten years in working with other versions of immune therapies. Just like Fraunhofer, they have actually dedicated their existing GMP facility to our programs.  It’s a small one but they’re in the process of constructing a much larger one as well so it brings us all of those things. And partnering with them gives us access to the UK market, a major market.  One of the leaders in the European Unions, especially for these kinds of medical products.  The UK has been very much at the forefront of novel medicines and, from a regulatory standpoint, encouraging novel medicines

JE: So the clinical trials for DCVax are Phase 2, correct?

LP: Yes.

JE: So that’s in the United States, an FDA approval process.  The European, Germany and London regulators will have to approve by their respective regulators for use in those countries as well?

LP: That’s the objective. But how the system will work – and this is a really important part of our strategy is this; it’s the same trial.  We are simply adding the European sites into the same trial that’s already underway in the US, rather than doing a separate parallel set of trials in Europe.  That’s really important for several reasons.  First of all, it saves us a lot of time on the front end; more than a year but that’s not the key.  They key is that by being all the same trial, all the data is going to be pulled together.  All the data is going to be presented, when the time comes, in an application for product approval in each location.  In the US, we’re going to include both the US and European data, and in Europe we’re going to include both the US and European data, and it makes it a very strong package.

JE: The King’s Health Partners trial will be centered on treating GBM?

LP: Yes.  Dually diagnosed GBM.

JE: Tell me about DCVax prostate.  That’s a Phase 3 trial?

LP: Yes. It’s approved.  The FDA has approved a six hundred and twelve patient Phase 3, double blind, randomized, placebo controlled trial.  That was several years ago. We have that on standby as our second program while we proceed with the brain cancer as the lead program, and as we’ve always said, our strategy is to move the brain program forward as aggressively as possible ourselves, and then as we reach a certain point in that process, we turn our attention to partnering on the prostate program. Our business strategy is to partner the prostate program. The reason for that is because it’s a very large-scale trial with probably a hundred trial sites and forty to fifty million dollars of costs.

JE: Should we expect to see more significant agreements like the King’s College one from your company?

LP: Potentially.  We have had various stages of discussions in other countries in Europe.  However, I will say the potential of just the two markets that we’ve already developed is enormous.  Germany has a population of eighty-five million people and the UK has a quite substantial population as well and very importantly, they have hardly any trials going on in brain cancer.  There are a lot of clinical trials going on for brain cancer in the US.  Not just immune therapies but drugs of various kinds. It’s a bit crowded.  Not at all in Europe; I think first you’re going to see us really capitalizing on that value first, even as we have some footprints coming along elsewhere.

JE: Explain to me how the company’s products, which are not as toxic as chemotherapy ones, are more effective.  How are they more cost effective? And if successful, will this change the nature of how doctors and patients think and act about treating cancers?

LP: We think totally yes and you’re already starting to see it especially driven by patients who are clamoring for this type of treatment because chemo is hell on the patients. Let me answer this question in two steps; first the biological effectiveness, clinical effectiveness and then the cost effectiveness, because the cost effectiveness flows from the clinical effectiveness.

So first the clinical effectiveness; the sophisticated “drugs” today typically target only one target or at most a couple of targets on a cancer cell and they take a sort of attempted silver bullet approach and drug discovery has been much of the search for the better silver bullet.  Our approach, and we think the strength of our product, is the polar opposite in two ways. First of all, our product mobilizes your whole immune system, everything, your T cells that you hear about all the time, your B cells that make antibodies and your natural killer cells, your macrophages, your neutrophils.  You’ve got an entire army of players.  To give you one comparison, just one type of player is your B cells.  You have many different B cells and they make many different kinds of antibodies.  Well, the big blockbuster drugs in the world of cancer today are single, individual antibodies.  Avastin is an antibody.  Herceptin is an antibody; each of them to one target on cancer.  You’ve got one type of weapon being used, just an antibody, and you have only one target being targeted and hit.

We mobilize the whole immune army so you have many types of weapons.  You’ve got antibodies being deployed but you also have killer cells being deployed. We use the biomarkers from the patient’s own tumor and we use the whole set of them, which is also a distinguishing factor of us versus other immune therapies:  we’re targeting the whole set of targets on the cancer cell.  That is why that’s so strong in the first place.  The more we learn about cancer, we understand that it’s a personalized disease and it needs a personalized treatment. There’s huge patient to patient variability, even within an individual patient, the cancer mutates and evolves over the course of the disease quite significantly. So if you target just one target on there, what happens is many patients don’t express it in the first place, which is why most cancer drugs only get a clinical response in twenty-five or thirty percent of the patients who take them, and some such as Erbitux made by ImClone, only eleven or twelve percent of the patients who take it get any clinical response.  To remind you as I said earlier, over eighty percent of our patients get a clinical response.

Secondly, what happens with every drug you know in cancer?  Sooner or later it stops working because if you’re hitting one particular receptor on a cancer cell, cancers are very sophisticated.  They’re not just a lump of tissue, and they will stop expressing that one receptor like a turtle pulling its head inside a shell.  We target the entire set of biomarkers on the cancer and it’s really hard for the tumor to get around that and escape it.  It can’t–not express all their receptors.  Do you see what I mean?

JE: Yes.
LP: So the combination of having multiple weapons attacking the whole set of targets is why we think we’re getting such consistent results. So that’s the answer to your question about why we’re so biologically effective. That’s a distinguishing factor as I mentioned for us, not only vis-à-vis targeted drugs, but also vis-à-vis targeted immune therapies such as ones that use synthetic biomarkers and only use a couple of them.

JE: And the cost effective factor?

LP: Well, with these therapies, the healthcare system would not be paying for a hundred percent of patients to take a drug when only twenty-five percent of them get any effect of it.  Secondly, the healthcare system would be getting a lot of bang for their buck with years of extended survival instead of two months of extended survival.

We plan to charge approximately in the range of thirty-seven thousand dollars a year per year of a three year treatment regimen, so about a hundred and ten thousand dollars for all three years combined, and with that we can still produce very nice EBITA (Earnings Before Interest, Taxes and Amortization) margins for our investors.  As you know, that’s way below the pricing matrix.  I mean Avastin is typically sixty to eighty thousand a year.  Even all standbys like Temodar are fifty, sixty thousand a year.

JE: So you see the healthcare companies falling behind this once you have successful clinical trials and the product has come to market?

LP: We really do because of huge cost effectiveness and because of one more thing I haven’t mentioned to you, which is simplicity, absolute simplicity.  The finished product is loaded in a standard syringe that every clinic on the planet has and it’s administered intradermal, under the skin, as a shot in the arm, like a flu shot or an insulin shot.  That’s it.  No three and four hour infusion of toxic chemo or even a three or four hour infusion of immune therapy.  It’s a shot in the arm under the skin, that can be administered anywhere.  Not just in these centers of excellence – which are great – but is not where ninety plus percent of the cancer patients get their treatment.  They get their treatment in regular doctors’ offices and community hospitals, and so we’re positioning this to become a new standard of care and it has, we believe, the profile to make that possible.  It has the clinical effectiveness.  It has the cost effectiveness and it has the simplicity.

JE: So this could significantly change how doctors treat patients in treating cancers.

LP: We think so.  We absolutely think so.

JE: So let’s talk a little about your recent financing for the company.

LP: Well, the ongoing financing of the company is what’s enabling the company to ramp up its programs and to continue to move forward aggressively on its late stage clinical trial program, so that financing is the latest step in enabling us to move these programs forward.

JE: So from an investor’s perspective, the fact that you have successfully lined up this financing to continue to carry out your programs should be a positive indication.  Correct?

LP: Correct.

JE: Now that we’re on the subject of investors, why should an investor be interested and excited about this company?  What would draw them in that says ‘I should be involved in this company as an investor or a stakeholder’?

LP: Well I think the combination of the strengths that we’ve talked about, the multiple chances to win and the strength in terms of the consistent performance of the technology and the upside potential that comes from all of those multiple chances to win compared to where we are today.  Our stock price is tiny today.  We’ve not had any run up.  It’s the contrary.  We’re at an extremely economical ground floor type of price and market cap for any investor who would be considering this at the present time and given the stage that our programs are at, and the milestones along the way, that will be happening in the programs that we’ve discussed over the next twelve and twenty-four months. I think it would be really hard for an investor to find that combination of upside potential and low price in the landscape.  Basically we’re an undiscovered gem from our perspective in terms of the value that’s been quietly building, but we’ve been working very intensively to get all these programs to an inflection point.  We have two programs at late stage, one of them well underway in the execution and the other one standing in the wings for partnering, plus a deep pipeline that is already cleared by FDA to go into clinical trials. To have two continents, two markets, the share price and market cap that we have, I think is an absolutely unique value opportunity.

JE: You’re active in the US market.  You’re very active, as we just discussed in the European markets and seem to be growing that area.  Are you addressing or have any planned activity in any of the Asian markets?

LP: That’s a very interesting question.  We think that’s a very interesting region and we think it’s very suitable for partnering.  So we’ve got a great footprint of our own in the US and Europe, and we think that if we compliment that with a potential partnering out of that region that that could be really strong.  So that’s something that we’re quite interested to pursue.

JE: OK, Thank You.

LP: Your welcome

John Eastman interviewed Alex Walsh, CEO of Lithium Exploration Group in New York City for this article.

JE: I’d like to talk to you about the status of the 43-101 technical report. Tell me about it. Why is this significant? Why, and when will this matter to stakeholders of the company?

AW: The 43-101 is held as the gold standard in proving a resource. It’s a Canadian regulated body; it’s for mining companies, exploration companies. We went through a twelve-week testing cycle last spring, Q2, two of 2012. Our initial resource estimate covers 227,000 acres from 47 well samples. What we did was measure the content of the water in deep OIL field brine in the Swan Hills region of West Central Alberta, these oil field brines are located on the property that we control the metallic and industrial mineral rights to. Those tests were then put into a hydro-geological study showing the historical data compiled about the aquifer, where these valuable minerals are located, as total dissolved solids in a suspended solution between 2300 and 2600 meters below the surface. Then that hydro-geological study was married with the sample testing by Apex Geoscience, which is 43-101 certified, and put into a technical report. Now that technical report, 43-101, measures the amount of lithium, potassium, magnesium and other minerals PRESENT IN this aquifer. Our next steps are to quantify how much of that resource can be economically extracted and produced on an annual basis.

JE: This was all from the brine?

AW: From the brine – pumped out at a rate of X number of tons per day, we have Y number of solution, so every year you get this much increase and your overall resource is X for each of the minerals. What 43-101 does to the investment community, and really for a company like ours – and we publish it here in the next days and weeks – is it provides legitimacy behind what you are trying to do, because it shows that an independent party who is regulated by a certain regulatory body says – this is a resource, this is not pie-in-the-sky, the guy’s not guessing that there’s a resource down there. That’s why it’s an important milestone for Lithium Exploration Group and where we’re at today.

JE: The regulatory body that’s approving it, they’ve approved other 43-101s in Canada?

AW: Correct. Since each province has its own security submission that’s got an overarching body, it actually goes through three channels of regulatory bodies. They each review it, and they say, we’d like to see this change or we want more information about that calculation, more disclosure about this test that we saw.

JE: So there are bodies like this who use 43-101s in the United States?

AW: In the United States, the SEC regulates the way that a resource is measured in the United States. The 43-101 is the Canadian version of the way that the SEC regulates how they interpret a mineral reserve to be calculated.

JE: So since Lithium Exploration is a US based firm and trading in the US Stock Exchange, the Canadian certification is still valid?

AW: What the Canadian 43-101 standards say is that what we are producing is an inferred resource, which is a ‘here’s what we measure the resource to be’, but we don’t know its profitability yet because a full feasibility study has not been done.

JE: That’s the next step?

AW: That is the next step in our process. The SEC’s regulation and guides set under the SEC standards only recognizes a resource when it has been deemed to be economically viable and there has been a full feasibility study done. Now that is not why we went down the 43-101 road. We want this to meet 43-101 standards in the inferred resource, and the indicated and measured resource – which would be with a full feasibility study on the production of the resource – because it’s truly the gold standard globally. Everyone from Chile, Argentina, Australia, United States, Mexico and Canada, everyone understands 43-101 terminology and standards, and that’s the main reason that we’ve gone down that road.

JE: So when do you expect this stage to be completed and then subsequently the feasibility study to start?

AW: We have received feedback and we’re making the final changes to our 43-101, which are published to our website, and it will be released to the public. Immediately upon releasing that and having a finalized inferred resource we will move to the next stage of our feasibility study, which will include an engineering and environmental impact study. Economic feasibility of marketing these products to different places in the globe, potential buyers of these products, as well as the mineral processing technique and the economics behind how you’re going to take this brine from the suspended solution to the cake to the lithium carbonate, potassium chloride and magnesium hydroxide – all those things have to be studied and married into one report. We will begin the process of interviewing and selecting all of the required consultants to help with this next step on April 2st of 2012, and as best I can tell right now it’s going to be a nine- to twelve-month process to bring this project to full feasibility standards. I will spend the week of April 2, 2012 in Edmonton and Calgary to begin this process.

JE: So the 43-101 would be considered perhaps the first big milestone achieved?

AW: Exactly.

JE: And the feasibility study would be the second one?

AW: Exactly. It’s an extension of the technical report, and once brought to full economic feasibility study, it would then need guide setting standards of the SEC from our group declaring; we have this, and we have this resource and here’s our full study.

JE: If there are difficulties, delays, problematic issues with say the feasibility study, the company is prepared to just pursue it further, to continue? Is there a plan B?

AW: We have over 650,000 acres of metallic industrial mineral rights in Canada, and we have invested enough into the project and into the exploration of this asset to keep all of those lands meeting government standards for roughly five years. By bringing the study to a full feasibility report, the variables that we will be tackling are – how much is it going to cost to produce the lithium, the potassium and the magnesium? The risk that we have as a company is when we get to the end of that feasibility study – which is a very set and standard process. This is not groundbreaking stuff. This is just follow the guidelines, check the boxes, get your professionals to do their job. And we’ll have a study that says, at this price you can justify this much capital expenditure to build a facility that will produce this much lithium, potassium, magnesium hydroxides. The risks that we run as a company right now is saying that at 5,500 or 6,000 dollars, the production of lithium from this brine is not viable, but at a different price it is viable. At some point it becomes a viable project, and that’s the nice thing about where we sit today is that we feel strongly that we’re in a good position based on being able to piggy back on huge amounts of capital expenditure from the oil and gas industry and the fact that we don’t have to drill any of our own wells. We don’t have to build any of our roads or bring any power to our facility, because all of that stuff is already in place. The only capital expenditure that goes into this production facility and project will be literally the facility where the minerals are separated and produced into the final product. Most mining projects have huge amounts of up-front capital expenditure, which is then offset by profitable products. That’s the crux of what we’re trying to do with this project and why we feel very strongly that we’ll be in a good position. But as far as the near term, the actual viability, that’s something that we need to vet out.

JE: Okay. Tell me about the Valleyview Project please.

AW: Oil and gas in this region of Alberta is a seventy-year-old industry, and it was really the Mecca of oil and gas production for all of Canada and most of this part of North America for thirty years because of these deep oil and gas finds that were found back seventy or eighty years ago. What you’ve got now is a use of hydro-fracking and tar sands and other ways to produce oil and gas and other assets. In this section of Alberta, you’ve got a lot of old assets that are producing twenty times more water than oil today, and twenty times more than they were when they first came on production thirty and forty years ago. So the oil and gas companies are less focused on those assets. Our goal is to bring a new industry to the region, the production of the valuable minerals that lay with this oil and gas, in these deep well aquifers to the region. Because of the lack of interest, and because of a lot of the assets in this region are being foreclosed on by banks because they can’t afford the payments (similar to the housing industry in the United States bubble.) If an asset was bought in 2007 at eight dollar gas and leveraged to 270% cash flow, and gas drops by one-third or drops by two-thirds then gross profit, actually the gross revenue, can’t cover the debt load. Banks take it back, and give it out to someone else. So there’s really an opportunity for us to control our own destiny. In buying an asset, getting revenue on our bottom line, and having a footprint where we can then build our own production facility and not have to worry about calling on an oil and/or gas company and partnering with them on the production of our resources. Because if they control the land, and we’re just sub-leasing or having to build onto their property, it’s a risk to us, being able to access our own resources, because they own the wells, and infrastructure. The other component that I think is important, in part of that concept, is that we have very low overhead as a company, but we are exploration based. We don’t have any exploration revenue, and it will reasonably be another two years before we have revenue from the production of these brines. To keep the company going and expanding most exploration companies have to continually go back to the capital market, continue to dilute the existing shareholders. Our goal with the acquisition of an asset is to take capital once, have that capital serve two purposes: one purpose to provide revenue to the company so that we can make it go for an indefinite period of time; the other purpose is to own and control the asset where we want to build our production facility. This is a way of providing value to the existing shareholders that most exploration companies just don’t have, because they’re not located in areas where there’s the opportunity to partner with the oil and gas industry.

JE: But there’s a long history of development in this area of oil and gas?

AW: Sixty plus years and billions upon billions of dollars – roads, rail, power, skilled labor force – all things that any mining company is desperate for when they look at building an asset. And most mining projects are in such remote locations that they have to bring all of that as part of their up-front capital expenditure to bring a mine, and we’re just going to basically come in and participate in that for free.

JE: That represents significantly less expense and less risk for what you’re doing?

AW: It certainly is a risk mitigator, because we’re not as dependent upon a huge capital expenditure on the front end, which allows us a lot more flexibility on an internal rate of return basis on the back end of our project and its potential profitability.

JE: Let’s talk about revenue. So explain to me beyond 43-101s, and feasibility study. If I’m looking at this company as a buyer, where is this company going to get its revenue from, if all of these milestones are met and this is a go?

AW: Once we begin to move forward on the feasibility study – we’ve talked about the potential revenue of the oil and gas asset that we could potentially buy – that would be our path of least resistance to revenue from one of the company’s subsidiaries that will offset the expense of running the company and continue to develop the project.

From a mining perspective, once we get the 43-101 complete, it will take us about a year to build the facility and bring that to production. The revenue from the mining side will come from lithium carbonate, potassium chloride, magnesium hydroxide, calcium fluoride, and sodium chloride. Unlike most other mining projects – and this is an important long-term, part of our thought process on being as efficient as possible with the resources we have and the assets that we have and the infrastructure around us – is that all of our waste by-products (after the production of lithium, potassium and magnesium as core money makers), is a waste salt that could be thrown on any road in North America as a de-icing agent. There are no toxic agents or chemicals that could not be used as any de-icing cake that they throw on the roads in New York City or Toronto or West Central Alberta. So considering that’s your sodium chloride and all the other minerals in that, that not only are we not going to have to pay to dispose of those, we could actually get revenue from the sale of our wastes in an agreement with one of the major salt providers in the region for de-icing agents and let them do with it what they choose as part of their purposes.

Calcium chloride has an interesting dynamic, which is probably the second largest waste bi-product that we’ll have from production. Calcium chloride salt is re-mixed back into fresh water to produce what’s called work-over fluid or heavy water that’s manufactured specifically for the oil and gas service industry, because they have to use water that has a certain specific gravity to hold down the oil and gas while they work on the casings. That will be another source of revenue for company. So we’re not just going to produce the lithium and have a huge expense of waste bi-products. We’re going to take all of our waste and get it into downstream revenue generating opportunities, specifically the mining site. Now we haven’t talked at all about the technology.

JE: Of the waste from the process of mining the lithium, what percent do you think turns into revenue, of that bi-product which normally is an expense? We talked about salt for instance. Do you think fifty percent of your waste turns into revenue potential? Seventy-five percent?

AW: I wouldn’t like to put a number on it because I think that that is a critical component of the feasibility study. From the mineral processing technique which has already been designed and needs to be tested in a lab, they will be able to tell us the dynamic of the waste stream, and they’ll be able to tell us how easily it can be put into different products and what those products are worth. That’s one of the components of the feasibility study is answering, what are you going to do with your waste? but also how are you going to market the various products that you have? In concept we know where they are going to go, but until I can put a price tag on it and have a number from the study, I’m not necessarily comfortable yet throwing anything against the wall. It wouldn’t be as accurate as it should.

JE: That’s fair. So you’re working on developing some technology regarding the use of waste water?

AW: The technology is a patented process by which waste water is forced through a generator, and modifications made within the area that that water flows, which are patented, force a process called a cavitation. A cavitation is a naturally occurring ultrasonic occurrence, and simply defined, it’s the popping of micro-bubbles, bubbles that you probably could barely see with the naked eye, but when micro-bubbles pop there’s an energy release, and we’ve got a million bubbles popping per square unit. There are huge amounts of energy that are released, and what the technology is going to do is produce extreme heat, which is required to separate solids from water. Through flashing off the water in the form of dry steam, the solids that are in a suspended state within the water cannot travel in steam. It’s not physically possible. Solids can’t vaporize. It’s a solid for a reason and will essentially fall out of solution into a collection area where it will be then sent for processing. That’s how we intend to use the technology for the purposes of our project. By utilizing a naturally occurring heat source it will mean that we need far less natural gas or electricity to effectuate heat during separation.

Because of the dynamic of the way that the technology works, and what is generates, it’s on a much smaller footprint than other traditional technologies, which are natural gas fired evaporators and reverse osmosis membrane technologies. It will allow us to do all of the things that we need to do to get the lithium and other valuable minerals out of their water state and into a state where they can be further chemically separated into final products that are for sale. We entered into an agreement with the technology provider a year ago. We funded, in May, the development of this pilot unit, of the patented process. The technology is now finished and is ready to be tested. They’re going through all of the quality control and permitting and zoning issues to test this unit and tie it into a water source, and that’s going to be our first step of proof of the concept. Proof that cavitation is happening under pressure and is producing enough heat to effectuate.

JE: This is a patent that Lithium has rights to?

AW: We have rights to this patented process specific to the mining industry in Canada. Because we invested in the building of this pilot unit, which we are going to use for our project, our core asset lithium project. So any company that wants to use the technology for a mining project in Canada has to be a licensed from Lithium Exploration group or we have to be a joint venture partner for them to access this technology. It should work, as we all hope it will.

JE: When do you expect this technology project to move forward?

AW: I expect to have our first set of tests in the next week. That will tell us that the water is being heated and whether or not it’s being heated to a sufficient temperature, and it will tell us the ballpark of how much water they’re able to flow through this on a minute or hourly basis. We’re going to test it for about a week. We’re going to have data that, upon approval of our technology department, we will be releasing to our shareholders. Most importantly, we want to show them a video of the process taking place, because it is much easier to see something and know that it’s real and that we’re working on it. The steps beyond that are to test the unit with different types of brine at different percentages of dissolved solids for its efficiency, and being able to measure – specific to the percentage of content that we have at our project at Alberta – the volume that it can produce on an hourly, minute, and daily basis and the energy that it took to run the event. So that can be part of our strategy and our feasibility study going into the production of our plant. That testing process will last 90 to 120 days. At that point it’s mounted on a traditional tractor/trailer chassis, driven to Alberta to a site of our discretion at that point, where it will end up on our own property, and we’ll begin testing it for ourselves and utilizing the technology. Now you’ll notice that there’s a difference in when the technology will be on site and when we’re going to be ready to produce lithium and other valuable minerals.

JE: Right. My question is when you essentially apply this technology to an existing project how does this affect it? Does it result in less energy, more production, more efficiency?

AW: Less infrastructure, expense, steel and all of the other factors that goes into an evaporation technology. You’re spending less money to build it, taking on less of a footprint, and less energy required to run the unit. So you’re going to have a certain fraction of the capital expenditure and then a certain fraction of the energy input required to produce that separation. Those numbers I can’t give you today as we are waiting for data and how it will affect our project.

JE: It will be your project that is first to use this technology?

AW: That’s correct. We will be the first ones to use the technology. Now, between the time that we are ready to have our separation facility in place and market the products that are coming out, we will essentially be sub-licensing the unit to an oil and gas company, or to ourselves in treating water and taking corrosive solids out of the water. They tell me from their production we’ll be charging them to do so. Again, from a revenue perspective, when we get the unit to Canada it is saving someone money, because in the oil and gas industry it can be enormously expensive to dispose of this waste water. If you don’t have your own injection well – which traditionally costs you a million to two million dollars – if you’re a small operator you don’t, so you pay a waste disposal company twenty dollars per ton to truck it away and ten dollars per ton to dispose of it. So if we can bring a unit on site and extract all the corrosive solids, give the oil company back fresh water or sell that fresh water to someone else, we can charge them to produce. And if the technology works the way we hope it’s going to work, there’s dozens of companies that I’ve already spoken with that would be interested to have this technology on site. In the meantime, we are proving our resource.

JE: In the press, in some of the market publications, there has been some negative information suggesting Lithium Exploration is a shell company, has missed milestones that have been promised and not made, etc. How do you answer that? What’s different now?

AW: I started doing research on the lithium industry in early 2010 and found it to be an industry that was lacking innovative thinking. Realizing that there were studied brines in Canada that had never been exploited I developed a strategy around how to enter the space and was able to complete our reverse merger and takeover as CEO of Mariposa resources in November of 2010. Mariposa was a company that made an attempt at doing some mining projects and essentially went nowhere. I brought in a director that had capital markets experience. I brought in a director who is a mining engineer at a major copper mine in Arizona – he works for Freeport McMoran – and started to develop the strategy in conjunction with my geological team at Edmonton around producing from these brines. I had found out about this technology around the same time that I started to research the lithium industry, and they all just had this really nice synergistic relationship, which is why I came up with the concept of bringing this to the fore.

We then changed our name to Lithium Exploration Group and optioning our initial property in Alberta in December of that year. There was a third party promotion done on our stock, having nothing to do with the management and/or directors of LEXG, but essentially taking advantage of this world that we live in – the internet and e-mail blasts –they essentially went out and paid someone to tell the world via the internet that we were the greatest thing since sliced bread, when we weren’t the greatest thing since sliced bread. We were a company trying to build a concept and trying to utilize the capital markets to do so, which is what the capital markets are here for, and doing it in an interesting way. What that led to, was people who looked at it and said, well, that’s wrong. That company is not the greatest thing ever, they’re just some startup, and why is this doing this, and why did this stock go from ten cents to a dollar? Why did it go from a dollar to two dollars, and why did it go from two dollars to three dollars? And then that led to a lot of other people on the internet – who had a very vested interest in seeing our stock go down because they had a very significant short position saying that we were nothing, which was also not true, because we were in an early stage of a company trying to develop a concept around producing lithium. There are two sides of the equation – one wants it to go up, and one wants it to go down – and what happened to our issuance was basically the atomic bomb of the bulletin boards, and there’s not a whole lot that we can do to control that. We try not to get wrapped up in the positive or negative sentiment. Our goal is to execute on the plans that we have laid out in our filings and provide long term value to our shareholders.

Some of our vendors have missed their set dates for progress but we continue to work hard every day to improve our communication with our shareholders and execute on our strategy. All of the delays that we have had in publishing our 43-101 and finishing our technology unit have been ones that are temporary in nature and stem from wanting to do it right and taking all precautionary steps to ensure our long term success.

My philosophy on it from back then and still to today is I have not changed what I’m trying to do with this company. My company fundamentally has not changed. We continue to try and develop the resource that we tested in the early part of 2011, spent the second half of 2011 building a technical report and all the geological settings – which will now be complete here in the first part of 2012 – and then taking it to a feasibility study. In conjunction with that we invested in our technology, got certain exclusivity and distribution provisions to help the company with revenue, should it be the home run that we all hope it is. We’re trying to protect the shareholders on both sides by getting the upside that you want to see in the capital markets in lithium and in the technology that could be game changing but also not making us a one-trick pony.

We are in a very exciting position to change the way valuable minerals are extracted from solution and monetized. It is our position as a potentially game changing company.

JE: So existing shareholders, interested parties, and stakeholders should pay attention to the milestones and act accordingly?

AW: The next six months are going to be very, very interesting for us, and we have a number of milestones that all run parallel to each other, rather than consecutively. If and when they all get done and we execute on the things that we need to do and, as you said, the milestones, people should pay attention and they should read our discussion about it. We’re going to provide a forum where they can ask questions about it, and we can have that dialogue, because sometimes it’s a little hard to understand. But that’s where we want to be.

John Eastman interviewed Dr. Frost for this article.

JE: Dr. Frost, OPKO was formed in 2007 by the merging of two companies, Acuity Pharmaceuticals and Froptix, the company you founded?

DRF: Right. What we did was we originally thought we were going to be an ophthalmology company because of a development that we had become aware of at the University of Florida and we formed the company which was going to be making a new drug to treat the dry form of AMD, for which there’s no treatment. But while we were at that point, we came across a little company that had an siRNA (small interfering RNA) product that had completed phase II clinical trials for the wet form of AMD, and that was a little company called Acuity that was owned by venture capitalists. So we decided to put the little company that we had formed together with Acuity into a shell to make it a public company and we put cash into the company to finance it. When I say “we,” it’s a group of my colleagues and myself. And as it turned out, after spending about $30 million on the phase three clinical trial, it was found it wasn’t going to meet our endpoint, so we stopped the study. By that time we had come across other technologies that were, in fact, more important to us. One of them was a new platform for discovering new diagnostic tests in humans. We developed the diagnostic test, based on the ability to identify disease-specific antibodies in the blood of patients. This technology was discovered by a scientist named Tom Kodadek while he was working at the University of Texas, and he was on his way to relocate to the Scripps Research Institute in Jupiter, Florida.

I’m on the Board of Scripps, and the then president of Scripts is on the Board of OPKO, and it was through his good officers that I discovered this work. After some negotiating we got a license of technology from the University of Texas. Now, Dr. Kodadek is at Scripps, and we’re continuing to work together. He is a consultant to OPKO and we have laboratories up in Jupiter, next to Scripps, but we also support Dr. Kodadek’s work in his laboratories in Scripps. So that work is coming along nicely and now we have antibodies that we think are useful for diagnostic tests for Alzheimer’s, for pancreatic cancer, for Parkinson’s disease, and for lung cancer. For the Alzheimer’s, we have a preliminary working agreement with Bristol Myers, and it’s a non-exclusive type of agreement, so we’re free to exploit it in other ways on our own.

JE: And before that you were instrumental with a company called IVAX? It, too, was a public corporation and was acquired by Teva in January of 2006?

DRF: Right.

JE: Can you tell me about this company and its products?

DRF: IVAX was a company that we started in 1987, shortly after we sold our first company, which was Key Pharmaceuticals, to Schering-Plough.

JE: You were one of the founders of IVAX then?

DRF: I was the founder yes, and I had two partners to begin with, but they were more passive.

JE: And what did IVAX work on?

DRF: The company started out to develop new products based on new delivery systems, much as we had done in Key Pharmaceuticals. But before long we discovered the advantages of the generic drug business, which was just beginning to blossom at that time. And so it wasn’t long before in addition in our efforts to develop new drugs, we became an important generic company, but we always specialized in generic products for which the brand product had special challenges. For example, we were the first company to have a generic product that had $100 million in sales, with Verapamil.

What has always been my strategy was to internationalize the business. IVAX became a branded generic company in Latin America, Central and Eastern Europe, and at one point we were the largest generic company in the UK. So internationally, we played a significant role and I think this was one of the attractions to Teva when we finally sold to them in 2006.

JE: So IVAX was founded in 1987 and sold in 2006. Is that correct?

DRF: Right.

JE: Would you consider that company a success?

DRF: A huge success and I think it’s played a very important role in Teva’s business activities, also. The company has been totally integrated into Teva, but the original IVAX products are still very important products for Teva. For example the heart respiratory line of products is a billion dollar business for them. Our companies in Latin America and Central and Eastern Europe are over a billion dollars sales-type businesses. So it was a wonderful acquisition for Teva, it was a very nice sale for IVAX.

JE: For analysis purposes, from a stock purchased in 1987 when the company was founded, to after the split when it was sold, represented something like a 6000 % gain. Does that sound correct?

DRF: It could be, I never calculated it myself, but it worked out well for everybody. The actual sale by the time of closing was a $10 billion price. Originally, the actual sales price was $7.4 billion, but it was half stock and by the time we closed the stock had gone up to make it much more interesting.

JE: So I wanted to go back to OPKO. Today OPKO is a five-year-old company, correct?

DRF: Right.

JE: Its current capitalization is about $1.44 billion? It seems to have about $9 million worth of debt.

DRF: That sounds about right.

JE: I noticed in the closing of 4Q of 2011 the company reported a loss of about $20 some million and it also had about $71 million in cash. Does that sound correct?

DRF: Yes. The losses were, in part, right down of good will but it sounds right.

JE: Do you believe OPKO now has the sufficient cash on hand to operate, to carry out its stated directives for the company?

DRF: Yes.

JE: So as OPKO is a research and development-based pharmaceutical company, they make R&D investments which are risky. However, on the benefit side, if one of your products that reaches commercialization captures a large market, it could be significant for shareholders, correct?

DRF: Without a doubt. For example, the tests that I mentioned, if they work out, the Alzheimer’s test, any one of these tests could be commercially important beyond anyone’s present expectation. But talking about diagnostics, we not only have the new test, but we recently acquired a company called Claros that had a unique technology, which I consider the hardware part of the game. The new test I would look at as software and this represents a platform to actually perform the test. These are point-of-care type tests. This looks like a credit card and utilizes a technology referred to as Microfluidics, and it was developed up in Boston by scientists at MIT and Harvard. You put a drop of blood at one end, put it in the little box that applies mild negative pressure which sucks the blood through the pipes which are aligned with chemicals, and within ten minutes you get a print out of the test results that are similar to what you get in a large laboratory.

So a patient comes to have their finger pricked by the nurse and by the time they sit down to see the doctor, the doctor can have the results in front of them. The first test that they’re developing is the PSA. As you know, the PSA has some controversy about it, but what we’ve done is analyze its three new markers, which when used in conjunction with conditional PSA, gives you much more precise data, and which can then avoid 60 percent of the biopsies that are now performed. That’s the big controversy, which is that too many biopsies get done. So we have not only a great test, but we think we have a solution to the present controversy. Now, from an economic point of view, it could be very interesting. There are 30 million PSAs done a year in the United States, and the average reimbursement is $30, so it’s presently a high dollar market. But the reimbursement’s paid per test. So with our four tests you’d expect it to be four times as much, a $3.6 billion market. But if we’re lucky enough to get an increase reimbursement because we’re going to provide information that’s novel and important, maybe we can even get more. We also have a lot of other things going on, new drugs that we’ve developed that are interesting.

JE: In addition to the obvious benefit of a faster turnaround, do you believe the device represents a cost savings in order to produce those tests?

DRF: So overall we’re going to show that with our PSA for example, it will save the payers millions of dollars if used extensively. But more important it’s going to give more precision to the process of existing prostate cancer tests. In so far as the other products are concerned, like in Alzheimer’s tests, with the neurodegenerative diseases, the critical point is to start treatment early, because in Parkinson’s and Alzheimer’s by the time you make the diagnosis, a lot of the tissue of the brain is already gone and it’s too late to do much. So with the new drugs coming along, it’s absolutely critical to start treatment early. And our Alzheimer’s test, for example, fills every promise of turning positive before the full-blown Alzheimer’s is present. That’s an example of the types of things we’re going after. All of our projects represent break-through type of projects, so that any one of them is enough to make the company quite successful.

JE: These all seem to be rather compelling reasons for why someone in the industry would be interested in OPKO. According to the public SEC Insider trading reports, you have in the past and continue to invest heavily in the company?

DRF: Absolutely.

JE: That represents a commitment, but furthermore it’s an investment of stock in the open market. Do you believe this company has compelling reasons for why this is a good investment?

DRF: Well, there are compelling reasons for me to invest. A week ago Friday I bought 620,000 shares. I’m very pleased with my investment and of course I can’t speak for others, but let me just give you another aspect of my approach.

Basically we’re extremely opportunistic. You’ve heard what I’ve described already, but another example is a product that we brokered called Rolapitant, which came about because the CEO of Schering-Plough, whom I had known, had to divest himself of this product in order to complete their merger with Merck. Knowing that we move quickly he gave me a call and very quickly we had the product in our hands. We paid very little money for it; we got the ownership of the product, plus raw material to continue with it. It was worth more than we paid for it. We worked on it for a year, we invested very little money and turned around and out-licensed to another company. We got the money that we put in, plus we have the possibility of getting $120 million in payments in it, as well as up to 20 percent royalty with almost no investment. That product can be a million dollar product. We also got some ownership in their company, the licensee’s company. So if that works out, I know the people in the company think it’s going to be a billion dollar product, we can wind up with a serious income stream just from that one product, and we don’t have to do anything further – they’re paying for all the Phase III studies. They have finished Phase II studies, by the way. So that’s an example of the type of opportunism that we were able to exploit.

JE: Very good. Can you tell me about the involvement of the Bill and Melinda Gates Foundation with OPKO?

DRF: That consists of a $3 million grant to Tom Kodadek, the scientist that I mentioned earlier at Scripps, he in turn got to work on our project, and now Scripps subcontracts with OPKO for part of the work that gets done within OPKO.

JE: Thank you Doctor Frost.

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JE: How did you come to be involved first as chief scientific officer, then as director, and now as chairman at IMUC?

Dr. Yu: Well, the company that I founded with a colleague of mine — I was originally attracted toward commercializing our therapy because of some of the frustrations I felt as an academic investigator in terms of being able to develop therapies for our patients, and that was essentially a therapy did not have a strong commercial backing and a clear pathway toward commercialization.  It was something that was very difficult to take past the phase one clinical trial, meaning the small clinical trial testing a few patients.  If you wanted to develop a therapy that would be applicable to the population of patients out there, it had to be strategically developed with an eye toward commercialization from the start. Let me give you an example of this.

One of the therapies that we had developed was a vaccine that could not be patented because it used similar types of strategies that were developed elsewhere.  Well, you know, this might be fine for an academic trial that we’d do in a small number of patients, but because of the inability to patent it, it was something that no pharmaceutical company would take past a small phase one trial.  Even if we wanted to test whether that therapy had legs and whether it would be something that could make an impact in patients with brain cancer, it was something that we really could not take any further.  So understanding that type of frustration and what it would take to overcome that type of frustration, we were careful from the get go to patent our technology and then to develop a commercialization strategy in which we would have a significant intellectual input into the company, so that it could be developed right, so that the trials could be done correctly. For the development of the drug to be done correctly with an eye toward regulatory approval, for all of these sort of factors from the intellectual property to the regulatory approval to the generation of a therapy to be commercialized and be relevant for the treatment of our patients, it really had to be done right from the start.  And in order to be able to do it right we felt that starting a small start up in which we could control how the trial was done, and how the drug was developed would be the most favorable way to go.

JE: And that is how IMUC was founded?

Dr. Yu: Yes that’s how I ended up at IMUC, and that’s why we founded this company.

JE: I’d like to talk about ICT107, your cancer vaccine treatment for Glioblastoma multiforme (GBM). That is the most common, most aggressive brain tumor, the primary brain tumor at this point in humans.

Dr. Yu: Yes.  Glioblastoma is the most common.  It accounts for about half of all primary gliomas, and also the most malignant with the survival measured in months, and at this point in the history measured in 14.6 months is the median survival.  So clearly a novel way of treating this therapy is really needed for this disease.  So we developed ICT107, (as a vaccine 201) that from our experience really targeted some of those Achilles heel of the cancer . We used several peptides or antigens that we knew were relevant on glioblastoma that were highly expressed on the cancer cells.  And we used several of them together knowing that by targeting several at once we could really make an impact on the tumor before the tumor has a chance to make variants that have lost a single or two antigens, and so by virtue of targeting several antigens we got several shots at our goal and prevented an escape variant which would no longer make the antigen that was targeted.

JE: And these are dendronic cell-based.  The therapy is the dendronic cell-based?

Dr Yu: Yes, Dendritic cell-based therapies.  We chose the dendritic cells because these are the most potent antigen presenting cells in the immune system.  So what that means is that the antigen presenting cells are the first responders in an immune response.  They’re the cells that take up the abnormal proteins that have infected a cell through a virus, or a cell that is abnormal because it’s a cancer cell, and it takes up those proteins from dead tumor cells, processes it, and cuts them up into small pieces, namely nine amino-acid pieces, and places them on MHC molecules or major histocompatibility molecules on their cell surface.  Then they present these pieces of protein to T-cells which can then recognize these proteins and will target cancer cells that bear these proteins on their cell surface in association with their MHC molecules.

JE: And these are the most potent first responders for an immune system?

Dr Yu: Yes, the dendritic cells are the most potent first responders to an immune response so we put together dendritic cells with antigens that are known to target cancer cells.  We later found out that these antigens are highly expressed or highly made on cancer stem cells, and we were one of the first groups to identify cancer stem cells in glioblastoma, –the most virulent or most aggressive cells of the cancer.

You see, before cancer researchers thought that all cancer cells were similar to each other, but more recently we’ve found that cancers are very heterogeneous with very different types of cancer cells within them. And only a few of them, between one to five percent, have the sole ability to self-renew or to make perfect copies of themselves ad nauseum and to make more differentiated cells which are astrocytes, oligodendrocytes and neurons in the brain. This is very parallel to normal stem cells that make these cells even through adulthood in the brain.  But cancer stem cells no longer have the ability to regulate their growth, and so instead of stopping when they should, they continue to grow and they continue to make more cancer cells.So we and others have found that in order to kill the cancer you have to really get at its root.  You have to really target the cancer stem cells.  What we subsequently found were that the antigens that we’re targeting with ICT107, made a lot more of the cancer stem cells than our normal cells, and so this provided an avenue to target the cancer stem cells of the tumor preferentially.

JE: And GBM when treated conventionally with chemotherapy and radiation — it doesn’t seem to be affected with that type of brain cancer. It’s resistant?

Dr. Yu: Yes.  And that’s really because cancer stem cells have the ability to be resistant to radiation and chemotherapy, and this is very much parallel with normal stem cells.  Normal stem cells in order to be able to withstand all the toxins that we face in life, and still be able to regenerate the cells and neurons that we need to retain our memory, have the ability to withstand radiation like that from the atmosphere, and withstand toxins like chemotherapies with genes that allow them to be resistant to these drugs.  Well, the cancer stem cells are resistant to all of these types of therapies including radiation,  and chemotherapy, and so whereas the daughter cells can die off, the root of these cancers remained and then will cause a recurrence of the tumor.  So the idea is to really target the cancer stem cells so the tumor no longer has the ability to re-grow after treatment.

JE: So with other therapies, immunotherapies under development for cancer, how is ICT107, how is it distinguished or how does it differ from other?

Dr Yu: Okay.  So for one thing, we have the only drug that’s targeting the cancer stem cells immunologically and preferentially trying to kill the cancer stem cell which is the root of cancer.  Number two, by using several antigens we’re preventing antigen escape variants from growing out from the tumor so that we can really kill off the tumor before it has the potential of growing back again, and by using dendritic cells which are the most potent and professional antigen presenting cells in the body and using the body’s own dendritic cells at that, we hope to generate the most potent immune response possible.  So that combination, together with the strategies that we’ve learned historically from our previous trials using our previous generation of vaccines, we feel like we can make the biggest impact on patients with cancer.

JE: So the phase one data that’s available indicates there was significant progress in survival improvement by more than a 150 percent, and that seems to be very encouraging. Do you expect validation of that result as you move into further trials?

Dr. Yu: Well, so, our initial indications are that the survival that we’ve seen is not a fluke when we look at the patients that we’ve treated so far.  So we think it’s a real phenomenon, but really the only way to test it is within a randomized trial.  When we look at other patients on other vaccine trials that are not ICT107, that were done concurrently at the same time, we find that the survival of patients on ICT107, is significantly longer than those patients on the other trials, suggesting that it’s not the choice of the patients on the trial, but rather the therapy itself.  And so we feel confident that the improvement in survival that we’ve seen will be carried through in larger trials at different institutions.

JE: And the next trial is a phase two upcoming?

Dr Yu: Yes.  So the current trial is a multi-institutional randomized phase two trial which is blinded both to investigators as well as to patients; however, the patients have a two to one likelihood of getting the real vaccine rather than the placebo vaccine, and so we’ve seen enrollment numbers that are quite robust, and you know, patients seem to want to get on this trial with the hopes of getting a vaccine that will improve their outcome.

JE: IMUC has recently formed an agreement with Progenitor Cell Therapy (PCT) a cell therapy services company to qualify the cGMP manufacturing process for ICT-107

Dr. Yu: Yes.

JE: Why PCT?  What value do they bring to the table for IMUC?  How are they going to help IMUC in this situation?

Dr Yu: Well, they’re a company that’s well-versed at commercialization of cell therapies, and that’s wherein their expertise lies.  By working with PCT it’ll improve any potential bottle neck that may occur in terms of patient enrollment by having a site of manufacturing besides the U. Penn. site where it’s presently being manufactured.  Also, because they’re a facility that commercializes their cell products, we feel we can move quickly into commercialization if and when we achieve FDA approval for this treatment.

JE: They worked with Dendreon Corp. on multiple phases of their products, which actually brought a therapy to market.

Dr Yu: Yes, absolutely.  They’re quite professional and quite good at generating these products in a very efficient manner. We’ve searched high and low and clearly they were the front runner for this type of cell therapy.

JE: So with the next stage that you’re going into with the clinical trials, what would you say are the biggest milestones that you’re looking for there?

Dr. Yu: Well, we’d like to see a survival benefit with our randomized phase two trial.  Clearly we’ve shown that we can handle the complexity of the technical manufacturing of the cells, the complexity of randomization, and of managing clinical sites.  With our CRO (Clinical Research Organization)  we’ve been rolling this out to more than 20 academic medical centers throughout the United States.  We’ve been enrolling ahead of schedule, and so what we consider to be our greatest technical challenges, I believe we’ve overcome already.  I think our next challenge is to get our data and to analyze and report it well, and then based on the data to efficiently make our next steps in terms of how we’ll develop this technology.

JE: And enrollment for the phase two trial has already begun?

Dr Yu: We’ve already begun enrollment, and we’ve enrolled more than 65 patients already.

JE: Okay.  I want to go back to phase one for a moment.  The data and the results from the phase one trial, is that viewed in the scientific community and maybe in the investment community as valid data, a controlled setting?

Dr Yu: Well, it’s a one center, phase one clinical trial with limited numbers.  I think what we were surprised with and what I believe a lot of investors are surprised with is how well the patients are doing.  You know, for the highly educated investor, they were always critical of whether we tried to load the patients on the trial with, you know, patients that have potentially good outcomes, but we really enrolled all comers in which we could surgically resect the tumor, and so we’ve shown our pre- and post- operative MRI’s to some people that were wondering whether these were all patients with tiny tumors, and they were really surprised to see the dramatic nature of the size of some of these tumors. So clearly, you know, there’s no loading of the trial in one way or another.  So I think what we’re seeing is really some pretty amazing outcomes, and we’ve tried to compare the patients with other patients on historic trials, but the only way you’ll convince people is with a large randomized clinical trial – which essentially we’re starting to do now.

JE: So, this cancer vaccine, what value does this represent?  Let’s say if this is successful, these trials come out with positive data and you move into the next phase, when the best case situation happens, what value is this going to bring – in your mind – to the company, to the industry?  Does this, its success, does this have the potential to become a mainstream therapy?

Dr Yu: Well, absolutely.  So the idea is to bring this to mainstream therapy.  I think the idea of cancer vaccines being part of the armor for mainstream therapy is really grabbing hold recently with the approval of Provenge and recent large trials with melanoma and lymphoma, so that the clinical efficacy of vaccines is becoming more and more of a reality.  We think that for brain cancers this will represent the biggest impact in being able to affect the patient’s outcome, and so clearly there’s commercial aspects of an efficacious agent, but what I think we as investigators in this field would be most proud of is the ability to impact the patient’s outcome with a low degree of morbidity, unlike the poisons that we normally give patients right now with radiation, chemotherapy.  This is really a therapy that capitalizes on the patient’s own immune system and ability to mount their own immune response against a cancer, so by doing that I think we’ll make a paradigm shift in how brain cancer is treated and hopefully make a dramatic impact on patients’ lives and their families’ lives.

JE: And as this would become a mainstream therapy and subsequently this would represent a revenue streams, would this be done via licensing of this therapy by other firms?

Dr Yu: Well, I would defer to the future in how we develop this therapy so I wouldn’t hazard a guess on how we’ll strategically develop this, but certainly that’s one of several possibilities.

JE: Are you looking for any of the pharmaceutical companies to joint venture with this or invest in ICT107?

Dr Yu:  Not necessarily, but certainly from a business standpoint I’m sure we would entertain any offers, but we’re really focused right now in developing this therapy and really rolling out this clinical trial which appears to be successful so far.

JE: If these therapies are successful, and in particular this one, if we could move ahead, how will these therapies be prescribed?  How will they be delivered and administered to a patient?

Dr Yu: Well, essentially in a very similar way that a patient would receive a prescription to receive this therapy.  Clearly it’s more than receiving the prescription for antibiotics.  I mean, it’s an involved therapy that they’ll have to go to a large medical center in order to get their blood cells out, and then to generate a vaccine at one of our vaccine centers, but it’s something I believe that patients will be very willing to do if we show a significant improvement in their outcome.

JE: So if you are diagnosed with let’s say GBM, the process is or will be that you would go to a center; you would have your stem cells extracted.

Dr Yu: Your white blood cells would be removed.  Mainly monocytes removed.  They would be sent to a cell therapy center where we would generate the vaccine.  It would be mailed back within a week or two, and then the patients would start getting their vaccine doses.

JE: And how long right now, based on the first trial data, how long after you receive the vaccine can you tell that there’s progress?

Dr Yu: Well, I mean, no news is good news.  If we see the vaccine and the patient has no progression then that’s good news.  The bad news is if and when a patient has a recurrence of the tumor.  So we follow quite closely every two months with MRIs, and then we follow any evidence of toxicity with blood tests and other exams.

JE: So stopping the advancement of the cancer once it’s diagnosed is essentially the proving ground.

Dr Yu: Yes.  Exactly.

JE: So with IMUC’s therapies in development and there are several other companies that are working on various types of development, when is the day when this is common day treatment, when this is the standard of care?

Dr Yu: Well, you know, if and when we finish our phase three trial and we receive the BLA (Biologics License Application) or approval from the FDA is when we’ll be able to roll it out to all patients.

JE: On the business side, IMUC in terms of number of people is actually very small.  Correct?

Dr Yu: Yes.  In fact basically all of the officers (5) in addition to our CFO David Fractor.

JE: Is this one of the reasons why it’s so efficient to do this, that your investment and so, say, the burn rate is lower, and the efficiency that these trials are carried out in.

Dr Yu: Yes.  Manish Singh (CEO) has been able to run this company as a bare bones company very, very efficiently with only the talent that we need, but the talent that we have is really second to none in terms of meeting all the requirements to execute a very efficient trial.

JE: What kind of funding does it take to bring a therapy —to get through phase two, phase three, where you have a sustainable inflection point?

Dr Yu: Well, the funding that we would need to finish a phase two trial is somewhere on the order of ten million or so.

JE: Okay.  So we’re in phase two with ICT107, is there anything that you see that could be extremely problematic coming up with the development of this particular therapy?

Dr Yu: Well, I think we’ve overcome all the technical hurdles that we can imagine.  We’ve shown that we can do it efficiently.  We’ve shown that we’ve done it cost effectively, that we’ve overcome the technical barriers to generate a viable clinical product.  So, I don’t really see any barriers to developing this therapy.  I think the main hurdle that we have to overcome is to show its efficacy, which is exactly what we’re doing.

JE: In our pre discussion, we were speaking of the human side of the disease (GBM).

Dr Yu: Yes, to add one more point to humanize this disease.  The reason that I was really drawn towards a career in the treatment and research of brain cancer is that, unlike other cancers where the cancer can be separated from yourself, really the brain cancer has the ability to take over all of that which makes us human, and that’s from our intellect to our ability to have emotions, to speak and to move. So it’s a cancer that not only takes our ability to be conscious of our own cancer, but it also takes away our ability to be conscious of ourselves. Really it’s a very debilitating and devastating disorder that really hits at the heart of our humanness, and the patients that have this disease are beyond brave in being able to fight off this disease as it eats away at their humanity, and so whatever impact that we can make as an investigator, as a company, and as fellow human beings to really make an impact in this disease will all be a life well spent.

JE: That’s very clear.  When you read some of the impacts that the therapies developed so far have had, it’s very moving.  To even extend someone’s life by several months seems to be a heroic feat.

Dr Yu: Yes, and when you’re looking at 14 months of survival ahead of you, I tell you, even two or three months makes a big difference.  That can be a whole lifetime in somebody’s life, and so, I certainly don’t downgrade any improvement in survival by any type of medication, but certainly we’d like to make a more significant impact than what’s been made in the past.

JE: Well, it seems as though if this is successful, that because of the less amount of toxins being injected into the body – in this case the brain as well – the quality of life once you undergo treatment is going to be much more improved as well.

Dr Yu: Absolutely, and that’s really the beauty of this therapy is that it uses your own drug, your own cells.  You’re just helping yourself fight off your own cancer.  You’re not adding any poisons or any kinds of toxins to your body.  You’re just helping the body fight off the cancer, so that’s really a big paradigm shift in cancer therapy which I think will be attractive to more physicians and patients in the future.

On December 21, 2009, Athersys entered into a global agreement with Pfizer to develop and market its stem cell therapy MultiStem which is used to treat Inflammatory Bowl Disease. Athersys’ proprietary MultiStem therapy is currently undergoing clinical trials for several other conditions, including the treatment of cardiovascular disease in Phase I and neurological problems which are in Phase II trials. Athersys displays an open door policy with outside collaboration, stating that one of its business strategies is to partner with other groups, including leading research centers, clinical institutions, and commercial partners to accelerate and enhance our development efforts, and enable us to do things more cost effectively (as opposed to trying to do everything ourselves).

This strategy makes Pfizer a good fit for partnership. With Pfizer’s global resources and large cap. (153.39 billion) financial assets, Athersys gained access to a farther reaching platform for its MultiStem therapy. In this agreement, Pfizer offered $6 million in initial research funding with eligibility for up to $105 million for MultiStem reaching a commercial milestone. This announcement caused a notable surge of over 150% increase in ATHX’s shares. On the 18th of December 2009, ATHX closed at $1.00 with a volume of 67.15k, compared with the 24th of December after the announcement, closing at $5.52 with a volume of 113.83 million.

On March 14, 2011 ATHX announced its enrollment of patients for Phase II of its MultiStem therapy collaboration with Pfizer with an estimated date of completion around May 2013. Pending results, which many seem optimistic about, successful completion of this Phase II trial could be the milestone that Pfizer and investors are waiting for. Currently, Athersys has a 52 week range of 1.00-3.14 with a market cap of 33.03 million and last traded at 1.39. Almost a year later, Cephalon (now Teva (NASDAQ: TEVA)) made a deal to acquire a 20 percent stake in the Australian company Mesoblast. Mesoblast is a leading developer of biological products used in regenerative medicine. Currently in phase II trials of its leading cardiovascular treatment product, Revascor has shown positive interim results. The alliance between Mesoblast and Cephalon focuses on commercializing the adult stem cell products used to treat degenerative central nervous system and cardiovascular conditions. Obtaining worldwide rights for specific Mesoblast products, Cephalon fronted $130 million, with another $220 million to follow. Mesoblast’s 52 week range is 2.69 to 10.04 with its market cap at 2.23 billion and a 1 year target estimate at 8.00. This deal sparked a nice boost in Mesoblast stock, which has continued an overall incline.

Advanced Cell Technology is a company which could greatly benefit with investments from big pharma. One of ACT’s leading stem cell based platforms is its Retinal Pigment Epithelial (RPE) therapy used to treat Stargardt’s Macular Dystrophy, a retinal disease that affects one out of every 10,000 children, and age-related macular degeneration (AMD), which affects 25 million people worldwide according to the American Optometric Association. With no currently approved treatments, dry AMD, the most common form of AMD, could represent a $10 billion market by some estimates.

Currently, this therapy is in phase I/II of clinical trials. With this large market potential and pending positive clinical trial results, investment from a deep pocked pharmaceutical company could not only impact ACT’s progress, but hopefully advance the slow moving trend of big pharma’s support. This would be a move that benefits patients, investors, and stem cell based therapies.

Although big pharma’s move towards investing in stem cell technologies has been a slow and conservative one, encouraging clinical trial results and the large market for these treatments are keeping big pharmaceutical companies interested. With the impact from these investments, hopefully these treatments and therapies will one day become the standard of care for many of these elusive diseases that our current drugs cannot remedy.

Increased capital spending directly affects job creation in many instances. But the job statistics have been disappointing of late. Unemployment is up to 9.1%, and Washington has been talking stimulus for more rapid job creation. The discussion of raising the debt ceiling is making everyone nervous and possibly reluctant to target a stimulus package anywhere, including towards faster job creation.  The voices of the survey members are important as, on average, their economic clout is valued at about $3 trillion in revenues annually. Essentially – their pulse matters.

Sickly Employment status

Unemployment is like the Intensive Care of economic indicators. It scares nearly everyone, it’s a grave situation and everything seems to be on hold until clear signs of recovery are established. In this case, everything is capital spending, and positive outlook by consumers which leads to consumer spending.  Inflation is not really on the minds of many, as its outweighed by efforts at survival and looking for jobs.  Payrolls (non-farm) increased only a third of what economists had predicted last month, to approximately 54,000. Government payrolls fell for a seventh straight month. Payrolls need to growth above 300,000 a month to make significant progress.

Not spoken aloud but whispered about is the infamous double dip – the economy being in a recession, temporarily coming out of recession for a few slow growth quarters, then contracting again into negative growth.  This possibility is not often spoken, but still on the minds of many.  Tentative, or perhaps skeptical, may be good terms to describe the state of the business CEO at this point.

Oil is a factor, Oil is factor and lastly, Oil is a factor.

High gasoline costs at the pump and the slow upward spiral in the first quarter set everyone back on their heels, mostly hurting consumer spending.  The affluent, non-affluent middle, and hourly worker struggling to get by, all pause in discretionary spending when it takes nearly $100.00 to fill up your gas tank just to get to work and go grocery shopping.  At the end of 2010, economic growth was charted at 3.1 percent and looking up. First quarter numbers figure in at 1.8. Thus the evidence of living from check to check to survive is apparent.

A game with Chinese debt holders

If employment numbers are the intensive care-like economic factor, than the nation’s massive and growing debt, and discussions of raising the debt ceiling, are outright Code Red. Ratings agency Moody’s said that it would consider cutting the nation’s credit rating if progress is not made by mid-July in talks to raise the $14.3 trillion debt ceiling. It seems that the Federal Reserve is frozen in its long shadow of analysis and decision making process. Its Fed Funds discount interest rates are still near 0. One wonders where that can go from here. Treasure debt prices and interest rate futures rose, generally a sign of economic weakness, furthering the pressure on the Fed to keep rates falsely low.

In the news are discussions of Republican lawmakers entertaining a technical default on interest loan payments in order to make a point:  cut spending or else.  The problem is that the “or else” involves someone else – Chinese Debt holders –who could have a very negative reaction. China’s bankers are reportedly glued to their terminals awaiting the situation. A reaction by the Chinese could cause a crisis, in which the U.S. cannot go to the Chinese for more debt to bail them out.  A destabilization of the markets (not just in the U.S.), the undermining of the U.S. Dollar, and extreme tense relations could incur. China is the largest foreign creditor to the United States, holding more than $1 trillion in Treasury debt as of March, so its concerns equal a large and significant weight in Washington.

Congress has balked at increasing a statutory limit on government spending as lawmakers argue over how to curb a deficit which is projected to reach $1.4 trillion this fiscal year. The U.S. Treasury Department has said it will run out of borrowing room by August 2 of this year. A possible global economic panic could ensue, but many in the economic world believe the default would never happen.

A backdrop of overvalued IPO’s generate press

Amidst the uncertainty, we hear of social media valuations of $100 Billion for Facebook in early 2012, $25 Billion for Groupon, and LinkedIn’s IPO skyrocket price a few weeks ago.  They seem to be in outright defiance of the economic climate surrounding them, driven by the likes of investment bankers.  (Unreal, overvalued, 100 times revenue, “not in touch with reality” has been said about these).  Many in the investment community are expecting a bubble like never before to happen. But investors are lining up to profit short term on the offerings, regardless of the basic underlying information regarding revenue, profits, diversity of the company, or management history.  At the core, these companies manufacture nothing, and sell advertising based on the billions in Internet traffic that they drive, albeit they do contribute to employment of the nations workers.

What to do?

So in these extreme uncertain economic times, what is the strategy of CEO’s, Institutional investors, and individual investors?

What does the U.S. Gov do?

Back to the CEO roundtable survey for a thought.  Perhaps you voice a slight public optimistic approach, you ready your capital obtained from prior belt-tightening for investment if the light turns green or at least flashes green in the remainder of the year.

You invest in your own company, perhaps buyback shares, perhaps increase capacity with equipment improvements, but you add employees slowly and grow conservatively.

Perhaps institutional investors support their careful CEO plans and invest conservatively at firms that have solid business plans, are engraved in their industry, have a past track record of revenue streams, and net profits, dividends, and decent share price growth. Biotechs seem to be on a roll with potential cures for cancer and extended life periods.

Individual investors can take note of long strategies if they are patient. Assuming a series of domino-like catastrophic events does not transpire, conservative is the word to follow.

And the U.S. Gov?   How are those IPO’s looking to you Mr. Bernanke?

The Obama administration is trying to develop policy to sort this issue out and have a rapid response to it that is not over reaching but is as effective as more traditional attack and war responses. Possible responses include economic sanctions, reduced trade and supply chain cutoff measures, U.N National Security sanctions, a counter retaliatory cyber attack or even perhaps a military strike.

Defining exactly what to attack, dependent on the involved parties, may also be a key policy consideration. For instance, if a foreign country defined as a terrorist state by the U.S. set off explosives in a public arena and injured U.S. citizens it which may be considered an act of war, (declared or not by the terrorist country), a U.S. military response would be likely. But if that act of war were staged against a U.S. company, a large power grid supplier for instance, in the form of a cyber attack, would the U.S. response be different? In another scenario, what would be the response if the attack were against the Pentagon’s computer systems?

The U.S. Pentagon is reportedly trying to create these formal strategies, and the Obama administration the appropriate policies, to address these form of adverse actions by parties opposing the U.S. At the heart of the issue is essentially: can a cyber attack from a foreign nation can be considered an act of war, and should that result in a U.S. military response? If traditional war situation and policies apply the Pentagon may declare that any computer attack that threatens the U.S. civilian population or major environmental disruption would be treated as an act of war. This would include those acts that attack power grids, emergency responder networks, medical facilities, water dams, or even oil supply. Yet another could be actions that disrupt communication systems themselves such as cell phone and data networks.

What is likely at the early stage of a Pentagon policy and response plan is that a first level of policies may be developed that establishes the definition of a Cyber attack in terms of determining whether it is an act of aggression against the country or a business-oriented attack for competitive purposes, as the attack performed by a government or by hackers from the population.

A logical policy that would follow could be assessing what types of measured responses are appropriate. For instance, it would be within a normal response to bomb a terrorist camp if that group had detonated explosives in a U.S. city. But would the U.S. bomb China if a cyber attack against a U.S. company originated from there?

In traditional war settings of the past, these issues were much more clearly defined. An act of war was declared by a country and the Pentagon could readily define where that act was coming from. But definition is now often a blur as acts from terrorist groups, non-state sponsored strikes, and the use of technology has made confirmation difficult at best. Corporate sophistication in technology has also heightened in terms of competitive measures taken against each other through the use of bloggers, social media sites that attempt to control the content of discussion about their company or issue off the record statements about others. Many companies work under the radar in numerous ways just to fend off rumors about them made available on the web by bloggers.

Attack on Google (GOOG)

One notable cyber attack against Google in 2010 was found to have originated in China but never confirmed to be state sponsored or the work of private hackers. Since disrupting Google would seriously affect U.S and world commerce, could the U.S. government have considered that to be an act of war? Note that recent cyber attacks have also targeted defense contractor Lockheed Martin (LMT) and another Sony Corp. (SNE).

Considering the Obama Administration’s careful diplomatic approach to foreign matters, it would seem far-fetched that a traditional military response would be the response to a cyber attack against the U.S government, citizens, or corporate entity. But a “heavy stick” of rigid and strong policies could surface nonetheless for cyber attacks.

Two weeks ago, the administration‘s approach called for international cooperation on halting potential attacks, improving computer security, in addition to possibly neutralizing cyber attacks.

White House Attack

In the past seven days, White House employees and senior administration officials were the target of “phishing” attacks on hundreds of users of their Gmail service. Apparently the attack originated in China by hackers looking for administration business data in the personal Gmail accounts of officials. The Obama administration reiterated Thursday that no official messages were compromised. An FBI and Homeland Security investigation is underway with Google participating. The Obama administration isn’t going to raise the matter with the Chinese government until the facts about the attack become more clear according to government officials. The Chinese government has denied any involvement in hacking of U.S. officials’ emails.

A cyber attack strategy and policy could be a boon for some U.S. firms as federal agencies such as the National Security Agency, the Central Intelligence Agency and the Department of Homeland Security are developing cyber-warfare plans and responses. Billions of dollars are expected to be allocated to the effort, and private concerns with specific expertise likely will be retained to contribute.

Who do the Cyber attacks benefit?

The majority of big names in military contractors are working on cyber-warfare products and services with the likes of Northrop Grumman (NOC), General Dynamics (GD), Lockheed Martin, and Raytheon (RTN). All are expected to have major cyber contracts with military and intelligence agencies, with a federal budget of an estimated $10 billion for cyber-warfare systems alone.

Limited experts

Considering the relatively young nature of the problem, a limited number of experts exist in the field. With a focus on preventative measures, blocking attacks initially, and subsequently designing countermeasures, experts are ramping up their skills sets and resources in order to deliver. In some instances, larger concerns have been on an acquisition trail in purchasing smaller firms with expertise.

Long term players in the Pentagon’s security units such as Northrop Grumman and General Dynamics, are in an envious position in developing offensive cyber-warfare products and systems. Efforts are often focused on finding vulnerabilities in other countries’ mainframe and network systems and subsequently developing software tools to exploit such vulnerabilities or to steal sensitive information or disable the networks. These firms may be companies to watch as the Cyberwar and frequent attacks in the news daily continue:

Companies to watch

General Dynamics Corporation Co.  Just recently they won a $876 million contract (if all options are executed) with the U.S. Department of Homeland Security to relocate its headquarters. They will be providing a new IT infrastructure and are seen as one of the few firms who have the expertise to execute a project of this scale.

Lockheed Martin Corporation Right now, Lockheed is viewed with some skepticism due to the recent attack on their systems, but daily attacks being reported in the news will help their situation memories fade fast.

Northrop Grumman Corporation. Northrop Grumman has been shy of controversy and has recently completed milestone – SRR systems requirement review, to design and build a new spacecraft bus to reduce space operations, but they may not be seen as real mover.

Raytheon Company  Its been reported that the firm is six months behind schedule delivering its advanced air-to-air missile to the Air Force and Navy prompting the U.S. House of Representatives defense appropriations subcommittee to reduce by $435 million from a combined $498 million Air Force and Navy procurement request.

Approximately 200,000 people have been evacuated from around the plant, some injured from radiation burns, others developing radiation sickness from poisoning quickly thereafter. Potentially a great number of people could be sickened or their death caused by Acute Radiation Syndrome (ARS). This is especially apparent in the event of a nuclear plant explosion.

In instances where individuals have moderate to high levels of radiation exposure there may not be hope for survival. Many victims will have received enough radiation to injure but not kill their bone marrow. They can possibly recover from their initial injuries but are impacted by the reality of a 30–60 day period during which they cannot fight infections. During this stage, they are prone to uncontrolled bleeding and anemia. Their immediate need is to receive supportive care until their hematopoietic system recovers. This is a challenge as environmental factors and the nature of the disaster itself poses treatment issues. Potassium Iodide may be used for the prevention of thyroid cancer from radioactive iodine, and antimicrobials may be used to prevent infection due to the degradation of the immune system. In past nuclear disaster situations, such as in Chernobyl, such care was not possible in the field.

The human hematopoietic (blood-forming) system is especially susceptible to radiation injury. As a result of radiation injury to the blood forming system, victims suffer from a lack of the cells that deliver oxygen (red blood cells), cells that detect and eliminate infectious agents (white blood cells), and cell components that promote blood clot formation (platelets). This set of symptoms is generally referred to as Acute Radiation Syndrome (ARS) which is both dose and time dependent in the sub-syndromes and complications that can occur.

Minimal treatments are available to help people with radiation poisoning but this landscape is changing due to biotech companies that are developing solutions. There are multiple approaches to therapy and treatments, and as research progresses, more possibilities are underway.

The U.S. government has been investing in treatment options to assist in the development of anti-radiation treatments. The Biomedical Advanced Research and Development Authority (BARDA), NIH (National Institute of Health, and Department of Defense (DoD) have all played key roles to the tune nearly $500 million (U.S.).

A possible treatment for the loss of white blood cell production is the use of the growth factor Neupogen to boost their numbers. A quite unique approach is stem cell transplantation.

If the transplant is performed within 7-10 days of exposure, cure rates can be high for this procedure. Stem cell transplantation has been used successfully in Japan following the Tokaimura nuclear reactor accident in 1999. Stem cell transplantation has improved since then with the advent of autologous engraftments. In the past, therapies required donation of stem cells from family or close relatives to assure a close match. In many instances, grafts were rejected. Autologous transplants take stem cells from the patient, ensuring a perfect match. This procedure only works if you have cells of your own to work with. In cases of severe ARS, patients may have much of their stem cells destroyed.

As there are multiple therapy tracts, some initiated before, during or after radiation poisoning, others more on the preemptive side. There are various biotech firms posing solutions:

NeoStem Inc. (NBS) has a unique approach in that they prepare for use in the future by individuals their stem cells until they are needed. Its core business is the collection and storage of stem cells for those who want such an insurance plan. NeoStem has facilities across the U.S. to collect the cells, and its recent acquisition of Progenitor Cell Therapy has further enlarged its business, giving it additional scale. The company is conducting additional research on what are termed Very Small Embryonic Like (VSEL) stem cells that may have the potential to be used in bone marrow rescue through an autologous stem cell transplant. With the spotlight on potential nuclear disasters, NeoStem’s multi-solution approach and business plan for stem cell transplantation – accompanied with housing of individuals cells – positions them in a very positive way.

Osiris Therapeutics (OSIR) has a product which is currently being developed, called Prochymal. It is currently in FDA Phase III clinical trials for two diseases with clinical manifestations similar to acute radiation syndrome (ARS). These indications have Fast Track status by the FDA. Prochymal therapy could be administered post exposure or at the onset of symptoms, eliminating the need for a predefined treatment. Osiris’ stem cells are derived from human bone marrow. The long-term storage capability of Prochymal makes stockpiling for a mass-health event feasible.

Cleveland BioLabs (CBLI) has based its focus on molecular mechanisms by which radiation induces cell death to develop pharmaceuticals that address this need. The firm’s Protectan compounds reportedly rescues mammals from lethal doses of radiation by suppressing apoptotic cell death in critical hematopoietic (HP) and/or gastrointestinal (GI) tract cells. The company is currently developing derivatives of microbial factors that are natural regulators of apoptosis as Protectans, molecules that prevent death of normal cells in the face of stresses such as radiation. The lead Protectan compounds CBLB502 and CBLB600 series have significant activity as both radioprotectants (injected prior to radiation exposure) and mitigators of radiation damage (injected after radiation exposure). The underlying principle of radioprotection by Protectans, and their structures and uses, represent the intellectual property of CBLI developed in collaboration with the Cleveland Clinic.

The future of applications built upon this technology is encouraging and could lead to a boon of revenue streams for early-in companies.  Think outdoor billboards and posters, mobile ticketing in movie theaters, airports, and of course, debit-credit payment card systems at retail environments.  No more magnetic card swipes, license ID’s etc. NFC can be used to configure and initiate other wireless network connections such as Bluetooth, Wi-Fi or Ultra-wideband. Your smart mobile phone can sync directly with the merchants system using NCF technology.

More than one method

As with the current multiple credit card systems, there will most likely be multiple payment method devices offered.  Big players include EBay Inc.’s PayPal, and the ISIS system, which is managed by AT&T and Verizon Wireless. ISIS will process payments via Discover Financial Services.

Enter Google. (Nasdaq GS: GOOG )  Their plan is to start testing a mobile-payment service at stores within the 2011 year using its Android mobile phone operating system as a basis.  Rumored target areas are NYC, and perhaps San Francisco. The testing will reportedly enable consumers to pay for their purchases with mobile phones equipped with NCF technology using specially-configured cash-register systems from VeriFone Systems Inc. (PAY) at merchant locations. A host of database information including financial account information, coupons, store discount cards etc. is also reportedly going to being offered.

So what technology firms may benefit the most from the adaptation of NCF technology?

Some companies (mentioned may develop a transaction-based business model in which they receive a percentage or fee from each transaction, such as that with a merchant credit card processing account.   Other potential beneficiaries are the equipment suppliers for the merchant’s cash registers, and phone manufacturers as each unit will have to incorporate the new technology into them. This is seen as a must-do in order to just stay competitive with other phone makers.

Samsung Electronics currently markets their Nexus S phone, that allows for NFC capabilities and transactions.   Nokia Oyj (NOK) and Research In Motion Ltd. reportedly have products in the pipeline with NFC-enabled technology.

On the patent side of things, Via Licensing Corporation, an independent subsidiary of Dolby Laboratories is developing a patent licensing program for NFC technology.

Google (NasdaqGS: GOOG ) is currently trading at 561.00 range with a 52wk Range of 433.63 – 642.96. Their revenue stream is so vast that their involvement in the NCF technology may not even register a blip on their revenues for some time, but a long position on them could benefit an investor.

AT&T(NYSE: T ) is a long shot.  Currently trading at nearly 28.00 it’s typically not a real mover. With a 52wk Range of 23.78 – 30.10, short term gains are not likely, even with a news disclosure of significant payment processing deal with RCF technology. Their loss of an exclusive arrangement with Apple for the iPhone was a blow, despite AT&T CEO Randall Stephenson’s comments  on the industry is better off with more than one supplier involved. Given that they have one of the lowest approval ratings of cellular service in the U.S., many think they are in denial.

Verizon Communications Inc. Com (NYSE: VZ ) could be a long term beneficiary of implementation of this technology. At 35.00 at current, and a 52wk Range of 25.99 – 37.70 an argument could be made that they are heading in the right direction on many fronts and long-term results could be positive.

Nokia Corporation (NYSE: NOK ) could be positioned in a very positive way to benefit if their product materializes. Currently at 8.00, on the low end of a 52wk Range of 7.73 – 15.89, ground can easily be made up and investors can profit accordingly.

Boston-based Strategy Analytics is reporting that Apple (Nasdaq: AAPL), Nokia (NYSE: NOK) and RIM (Nasdaq: RIMM) together generated 64 percent of the revenue in the popular and ever-growing smart phone market. The report by Strategy Analytics indicates that Apple Inc. (NasdaqGS: AAPL ) had 16 percent of smart phone market volume in 2010, but a 29 percent share of revenue. Nokia was second with 20 percent of market volume and RIM third with 15 percent value share.  With such a considerable market share in the cell phone market, a readily adaptable device, and an easy road to application development for programmers, one would expect that Apple would have a presence in the NCF world.

It may take 12 months or so before NCF technology greets the customer and merchants on a daily basis, but looking carefully at the early-in market players could net positive results for an investor.