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PetVivo Holdings, Inc. (OTCQB: PETV) |
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May 19, 2014 Issue |
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The Most Powerful Name In Corporate News and Information |
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Licensing and Commercialization of Innovative Pet Therapeutics |
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 About
PetVivo Holdings, Inc. (OTCQB: PETV)
PetVivo
Holdings, Inc. (OTCQB: PETV) is an emerging biomedical device company
focused on the licensing and commercialization of innovative medical devices
for pets, or pet therapeutics. PetVivo believes that it can leverage the
investments in the human biomaterials and medical device industries to
commercialize therapeutics to pets in a capital and time efficient way.
PetVivo's strategy is to in-license proprietary products from human medical
device companies specifically for use in pets. |
12100 Singletree Lane
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – May 19, 2014
CEOCFO: Mr. Lai, what is the idea behind PetVivo? Mr. Lai: We basically looked at the marketplace and realized that there was a need to bring human therapeutics and medical devices to the companion animal market. It is way underserved. We believe it is like ninety-some percent underserved. Therefore, we saw a tremendous opportunity. Many companies are advancing products for human use through the FDA review and clinical trial process and we recognize that advancing veterinary therapeutics and medical devices through the FDA would be much quicker and significantly less expensive. “There is a great opportunity to bring those products to market thereby enhancing the quality of life for companion animals.” Our first product is a medical device for the treatment of osteoarthritis, which is licensed from Gel-Del Technologies and already meets FDA guidelines as a medical device, and is ready for veterinary use. Medical devices for veterinary medical use have a much faster regulatory path than the veterinary pharmaceuticals. We have been working with Dr. David Masters, CEO, inventor and founder of Gel-Del Technologies in St. Paul Minnesota, to bring veterinary device products to market under a license agreement, including Gel-Del’s protein matrix particles as the next great thing.
CEOCFO: With all the attention paid to pets and the industry, why has it been so slow to realize there is a need for medical device products? Mr. Lai: I think it took a while to realize that the market is recession proof as well as having very strong growth numbers for the past several years. If you look at the last fifteen years, its average growth rate on an annual basis is six percent. It is believed that the companion animal market is about fifty-three billion, if you count Europe and the United States. The pharmaceutical companies and other companies have also realized this, “Wow! This is a big growth market that we have been missing!” Now there is a race to get pharmaceutical products through the Center for Veterinary Medicine at the FDA to fulfill the needs of this market.
CEOCFO: How stringent is the FDA when you would compare it to human drugs and human devices? Is it at the same level? Mr. Lai: Not the same level at all, it is considerably less. That is because in order to actually get to the human clinical trials they have to do quite a bit of testing on animals. Therefore, it is easier to take that same drug that is being evaluated for the human market and reapply them back to the animals, because you have a pretty good understanding and likelihood of getting through the process. The major concern for both human and animals is safety and then the efficacy. You have a pretty good idea of what both of those are for some animals, because you have to do such extensive animal research just to get to humans, however, animal species differences can make it difficult for some drugs, too. For devices, it is much easier since the FDA recognizes that medical devices mode of action do not have anywhere near the complexity of the chemical reactions possible from a drug, and therefore, do not require a formal FDA-approval process for veterinary medical devices.
CEOCFO: How do you decide where to start for your first product? Mr. Lai: We evaluate product candidates that are in or near human clinical trials after completing safety and animal studies. Our initial product has concluded extensive safety and efficacy studies for a variety of indications, including a human trial for tissue augmentation. Therefore, we said, “Let us start with an osteoarthritis product.” That is because lameness is a major problem, and current therapies often require the long-term use of NSAID anti-inflammatories where dogs and other animals have a tremendous negative reaction to their gastrointestinal tract as well as the liver. We are taking a different approach. Our licensed particle protein matrix is used as a treatment and repair for cartilage and tissue damage, without any possible drug side-effects. Therefore, our approach is quite disruptive to the industry and we believe it is going to create a different approach towards the treatment of osteoarthritis in the veterinary marketplace.
CEOCFO: Would the medication be the same for all animals? How much difference would there be between dogs and cats? Mr. Lai: There is actually quite a bit of difference. Cats basically react differently to drugs and are much harder to dose, actually making them a very attractive market to us for our non-drug therapies. However, for logistical reasons we started with horses and dogs as our first two animal species to help with our treatment. There are definitely other categories of animals to go after such as bovine; dairy cattle. That is quite a large market, even though they are not companion animals. However, for farmers or ranchers that have dairy cattle, if there are cows with some type of arthritic condition and cannot stand in the booth to give milk, they have to be basically used for food. The value of the cow greatly diminishes, because the value of the cow is based on the amount of milk it can produce over its lifetime. If it has to be put down to be used for food, the value diminishes. Therefore, we feel there is a large market for that. However, that is a very hard number to determine, because no one has ever done any studies on how many cows actually exist with osteoarthritis. However, if you look at companion animals, like the dog and so on; when a dog reaches age ten, probably over eighty percent of those dogs will develop some form of debilitating osteoarthritis.
CEOCFO: How does your product work? Mr. Lai: The protein matrix particles are injected into the joint’s synovial fluid to protect the joint by providing a cushion where the joint’s natural cushioning cartilage is missing. We believe these particles substantially reduce joint inflammation and allows joint repair. In our animal studies, we observed much greater mobility soon after delivering this treatment. We have seen dogs eagerly willing to run, verses before injection where you would see them unwilling to move around much.
CEOCFO: What is the science? What is actually happening in the animal’s body? Mr. Lai: Without going into real detail of the damaged cartilage biological healing processes and all the characteristics of the protein matrix; the simple explanation is that we provide soft, resilient, saline soaked particles to the joint to replenish the slippery cushioning characteristics of the missing or damaged cartilage. These particles are simply providing the joint the mechanical characteristics needed to absorb the forces of a normal joint. It is administered by the veterinary doctor. It is not a product that a consumer can go to a local pet shop and buy and then inject into the body.
CEOCFO: How do you garner the interest of vets? Mr. Lai: There are basically five distributors that handle over ninety percent of the veterinary products that are sold to vets. Therefore, we will market to the various trade shows and to the distributors, offering a product that is quite unique, than the current methodology for treatment, which is NSAIDs. We believe we can demonstrate a significant advantage for the vets to use our product with our current methodology. Of course, scientific papers are going to be helping in that process. We are in the process of working with key veterinary doctors that have a great reputation, and can help us to publish our therapeutic findings.
CEOCFO: When you are contracting with a distributor, are you able to contract in such a way that they will put your offering at the forefront or does the distributor decide? Mr. Lai: As most sales people they look at how easy it is to sell the product and what kind of margins they can get. We provide above average margins for the distributor. Since we have the ability to differentiate our product versus the rest of the products in the marketplace, I think it gives us a very nice marketing edge. We also plan to use a great deal of social media to drive our demand side marketing. It is a product that does increase the quality of life for your pets. We will be working with social media sites to make consumers aware of the product and hopefully they will talk to vets about trying our treatment as a better alternative to the current drug treatments with NSAIDs, or possibly surgery.
CEOCFO: Are you really going on all fronts? Mr. Lai: Yes. We believe this product is differentiated enough and has a value equation that makes sense for the consumer as well as the vet to use this treatment verses the current therapy. We will be making strides towards marketing our product to both the vet and the consumer.
CEOCFO: Would all dogs be candidates? Are there gradations in the need for it? What might, if any, be the potential side effects? Mr. Lai: We have not detected any side effects and our safety studies show no toxicity, which is very helpful for marketing our device versus current drug treatments. Our joint particle treatment works very well and would be prescribed for all dogs and horses for general osteoarthritis prevention and treatment. The best time to use our product is at the very first signs of lameness before the cartilage damage progresses to far, allowing for better and faster recovery. Since our product mimics the composition and characteristics of cartilage, it adds an additional slippery cushion component to the joint.
CEOCFO: Are dogs living longer the same way humans are? Mr. Lai: Yes, according to the 2013 Banfield State of Pet Health report, pets are living longer: From 2002 to 2012 the average lifespan of a dog increased by a half year to about 11 years old. Furthermore, diets have changed in dogs over the last ten to fifteen years because of a better understanding of nutrition. Therefore, from an intuitive standpoint, I would say that dogs will continue to live longer and longer. However, one thing we have identified as a major trend within this sector is the human behavior towards their pets. They are more and more accepted as part of the family. Therefore, families are willing to spend much more on their pet’s treatment and healthcare. In the last fifteen years that has been a noticeable societal shift and a major market trend. People are very willing to spend more on their pets to make sure they have a better quality of life.
CEOCFO: I was thinking that as dogs are living longer there would be a larger market for you; just as the aging human population provides opportunities? Mr. Lai: It is a proper assumption. Based on our understanding of better nutrition and healthcare to increase longevity, I believe the dog market will continue to grow even faster because senior dogs have a greater incidence of osteoarthritis.
CEOCFO: What about producing the product? What do you have in place in that arena? Mr. Lai: We currently have a contract to obtain finished product from our licensing partner. They are equipped with clean room manufacturing and storage ready facility as well as a demonstrated capacity to manufacture the product. Since this product for joint treatment has been FDA categorized as a medical device for human application, it is clear that this device will not require FDA approval for the animal market.
CEOCFO: Development and commercialization are always expensive. Are you funded for the next steps? Mr. Lai: Yes, we are to a certain degree. Obviously, we need more for the initial commercialization of the product, which we anticipate to be ready to sell to the veterinary doctors by the end of 2014. Obviously, as the company grows, we will need additional financing to support the accelerated growth once we hit the marketplace.
CEOCFO: You bring a great amount of experience in many different areas to the table. What have you learned in past ventures that have been most helpful at PetVivo? Mr. Lai: Most of the ventures that I have been involved with were in the conceptual stage of development. It usually requires years of proof-of-concept and there were always questions concerning the manufacturing process. I have seen too many times that the theoretical process doesn’t work exactly as planned. PetVivo is actually quite advanced in that it has already secured the ability to obtain the manufactured product from its licensing partner. In other words, the manufacturing component will not delay launching this product. Our marketing approach for this innovative product, along with the driving demand and supply equations for this market, will easily allow us to successfully penetrate this market while also differentiating ourselves from our competitors. We anticipate that the majority of capital used going forward will be for manufacturing and marketing.
CEOCFO: Do you have an idea where you will go next or is it way to early? Mr. Lai: We actually have a pretty good idea of our product pipeline in that we are planning to focus on devices rather than pharmaceuticals so that we can bring products to market faster without FDA approval timelines and provide veterinarians better products to treat their patients. However, I do not really want to comment on the specific products until we get further along. However, I do want to say that the portfolio will be quite extensive.
CEOCFO: Do you see much competition in general? You mentioned that people are starting to pay attention to animal health. Will you continue to look for products that have a very unique approach, that are not in the main stream today? Mr. Lai: Yes but we have a different approach. Our focus is to acquire disruptive technologies, such as medical devices, that are being developed for human use and have extensive animal efficacy and safety data. We are concentrating on device products that are utilized by the vet in a clinical procedure, where the vet will increase their business operation. This is a different model than the pharmaceutical business model where the veterinary clinic gets little business reward for providing a prescription that is filled by a third party.
CEOCFO: What are you on the lookout for? What challenges do you keep on your radar screen? Mr. Lai: It has been my experience that any time you are launching a disruptive technology to the industry that is a different approach; and so there is an educational cycle to the veterinary professionals. That is because most of our products are unique from the standpoint where you have to sell to the veterinary clinics instead of being a mass consumer product. However, the margins are generally much higher, easily supporting this educational cycle. It is important for us to identify key opinion leaders in the veterinary field to use our innovative products first to help us lead the way in the marketplace.
CEOCFO: Why should people be paying attention to PetVivo today?
Mr. Lai:
Basically, if
you look at where our company is positioned to our competitors, from a
valuation standpoint and a projected revenue standpoint, we feel the
comparisons are greatly in our favor. I will not mention the competitors
names, but they are public companies, so it easy to do comparisons. Most of
them are in very early stages with regards to the FDA process. They are all
valued in the hundreds of million to billion dollar market cap while we are
sitting here with product that is ready for commercial sale by the end of
the year with revenues and most likely profitability within twelve months of
product launch. The second advantage is our cost structure with what we have
as overhead relative to the competitors. Therefore, we fill the position
quite well when you look at head-to-head comparisons. I feel that there are
going to be quite a few acquisitions within the industry by the major
pharmaceutical companies. The major pharmaceutical companies are just
getting into this field within the last couple of years, so they are much
slower to react to market demands than the smaller companies. Therefore,
companies that are able to get commercialization and start reaching certain
revenue targets, will be acquisition targets within this sector over the
next three to five years. |
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