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Applied DNA Sciences,
Inc.
(APDN-OTC: BB)
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Applied DNA Sciences Has Achieved Its First Sales, Which Represents A Major
Step In Bringing Their Product To Market
Services
Business Services
(APDN-OTC: BB)
Applied DNA Sciences, Inc.
25 Health Sciences Drive, Suite 113
Stony Brook, NY 11790
Phone: 631-444-8090
Dr. James Hayward
Chief Executive Officer
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - November 9, 2007
BIO:
Dr. James A. Hayward has over 20 years of experience in the biotechnology,
pharmaceutical, life science and consumer product industries. He was one of
the founding principals and research director of Europe's first liposome
company, Biocompatibles Ltd. From 1984 to 1989, he was responsible for
product development at Esteé Lauder Companies, where he served as director
of research worldwide.
Between 1990 and July 2004, Dr. Hayward was the Chairman, President and CEO
of The Collaborative Group, Ltd., a provider of products and services to the
biotechnology, pharmaceutical and consumer-product industries based in Stony
Brook, New York.
Since 2000, Dr. Hayward has been a General Partner of Double D Venture Fund,
a venture capital firm based in New York, New York. Dr. Hayward received his
doctorate in molecular biology and biophysics from SUNY at Stony Brook.
Dr. Hayward received his bachelor's degree in Biology and Chemistry from the
State University of New York at Oneonta in 1976, his Ph.D. in Molecular
Biology from the State University of New York at Stony Brook in 1983, and an
honorary Doctor of Science from Stony Brook in 2000. He also serves on the
boards of the Stony Brook Foundation, the Research Foundation of the State
of New York, Long Island Life Sciences Initiative and the Ward Melville
Heritage Foundation.
Company Profile:
Applied DNA Sciences (APDN) provides customized DNA embedment and
authentication solutions that are designed to help prevent and identify
counterfeits. Utilizing our proprietary overt-DNA and covert-DNA embedded
technologies, APDN provides the definitive forensic proof of authentication
and validation to help protect revenues, brands and consumer confidence.
Secure and cost-effective, APDN’s SigNature™ Program provides ready–to-use
DNA encryption and authentication solutions that will complement barcodes,
watermarks, holograms, RFIDs and many other security applications. APDN also
provides customized safeguards to meet heightened security requirements for
government programs and anti-counterfeit measures worldwide. APDN has
successfully marked nearly 1 billion DVD’s, artwork, alcoholic beverages,
luxury and personal care goods, through our Asian licensee.
CEOCFO:
Dr. Hayward, when we spoke around the beginning of the year, you were
getting into the commercialization phase; please bring us up to date?
Dr. Hayward:
“We had achieved our first sales and we were just making that transition the
last time we spoke. We have now made sales to a large international chemical
company, we have a contract with the trade association representing a large
cotton trading group and we have signed agreements now with five selling
partners and OEMs bringing our product to the market.”
CEOCFO:
Please tell us about the cotton organization.
Dr. Hayward:
“We have an agreement with Supima, the promotional organization of the
American Pima cotton growers that calls for the development of an indigenous
DNA marker within mature cotton fibers that could be detected in the
finished textile. It is a way of tracking finished textiles back to the
cotton of origin and obviously that is quite valuable to an organization
like Supima whose cotton represents the top 1% of cotton grown in the United
States. Supima offers licenses to select textile mills, apparel and textile
manufacturers and retailers, who can then use the Supima trademark on their
products, indicating that the products are made of 100% American Pima
cotton. Because of this, there is value in being able to prove the presence
of Supima brand cotton in the finished textile. This project is more
important to us than it may appear. Number one, we look to achieving the
goal that has been sought for more than twenty years – that is being
able to track cotton as it moves from the field to the finished product. In
addition to that, this is important way beyond brand holders. It is
important to the government of the United States. The US trade deficit is
intertwined in part with sales of cotton globally and the sales of textiles
into the United States (some of which are supposed to have been made with US
cotton). To be able to keep our trading partners honest, it is quite
worthwhile to be able to track US cotton back to textiles being sold into
the United States by foreign entities who have negotiated trade limits with
the United States. It is one way of helping the US enforce trade agreements,
which are really not enforceable right now. We are looking forward to the
continued progression of this project and ultimately our successful
completion of it.”
CEOCFO:
Please tell us more about some of the applications that people might not
think of.
Dr. Hayward:
“That is why I personally find the value of Applied DNA such a compelling
opportunity. It is an opportunity for our company and investors to do well
by doing good. What I mean by this is we can be successful as a company
while using the technology to do some good, to help people throughout the
world. Recently there have been many articles in the news about counterfeit
and tainted products, many coming from the Orient including food products
and pharmaceuticals. One area that I personally feel strongly about is the
pharmaceutical market where a counterfeit or diverted product can lead to
physical injury, complications and possibly even death. A prime example of
personal impact of counterfeit drugs comes from our own backyard with a
young man named Timothy Fagan from Long Island. Timothy was taking a drug to
help eliminate the likelihood of organ rejection after he received a
transplant and unbeknownst to him and to his family he received tampered
products, which caused complications and landed him in the hospital. Stories
like this abound, and in using our SigNature™ DNA, we can help to prevent
more of these stories in the future.
In February of 2006, the World Health Organization estimated that
counterfeits account for more than 10% of the global pharmaceuticals market.
This number is as high as 25% in some developing countries and as much as
50% in some countries. The pharmaceutical industry produces millions of
tablets each year. Even as little as 1% of the global production being
counterfeit would affect many people. How do we get there marking DNA? We
get there by continuing to do what we have been doing since I came to
Applied DNA and that is educating the market about our SigNature™ DNA,
speaking at conferences and other media opportunities throughout the US and
Europe. We continue to make inroads in many different market verticals. We
work with our outside agents, in specific countries and specific vertical
markets and we work with our OEM partners to offer the ability to
manufacture products directly using Applied DNA Sciences SigNature™ DNA.”
CEOCFO:
How does it work?
Dr. Hayward:
“The way our DNA markers work, we create a unique DNA marker for each
customer or it can be for each application or even for each product. The
origin of that marker is a plant genome that works with large sections of
DNA. The more complex, the larger, the better. We reassemble that DNA;
encrypt it in a form that only we can read. It is the equivalent of taking
the Sunday New York Times, cutting all the words out of the paper and
reassembling the words into our own order in such a way that they can be
read only by us. We call that product a chimer and that is what our
SigNature™ DNA marker represents. The next step in our process is to embed
that DNA into or onto a product and if it’s a pressed tablet we can simply
add it to the pressed powder of the tablet. If it is ink on a
packaging, we can apply it into the ink, or laminate it onto a hologram, an
RFID, or even the varnish on a guitar; we can provide DNA in all of those
vehicles and others as well. The final step in protecting brands or in
dissuading counterfeiters is having a very effective authentication system,
which we do, offering three levels of authentication. We offer an immediate
authentication, which takes on the order of one second, is done with remote
hand-held devices and is capable of identifying both the DNA and a marker
which is covalently attached to the DNA.
Our second level of detection, which can also be done remotely, provides
more detailed information, and can take as little as three or four minutes
(sometimes it takes longer depending on sample preparation). That is a
forensic method called Polymerase chain reaction and it is much more
specific, amplifying as little as one molecule of DNA marker strategically
placed on a product or a document. This level of detection can verify
simultaneously the presence of DNA and the sequence of that marker. Finally,
for a case that might be going to court, in a sample prep that takes on the
order of two hours, we do a full marker sequencing. That is equivalent to
the kind of analytical work, which the FBI does with this kind of system and
I can tell you that the reliability of that method is such that false
positives virtually don’t take place at all. The frequency of a false
positive is on the order of one in five hundred trillion, if you can believe
that number; which is to say it is a very reliable and robust platform.”
CEOCFO:
Please tell us about some of the reseller and joint agreements that you
have, who is going to be representing you?
Dr. Hayward:
“Our platform has been estimated by a number of firms to be relevant to a
very significant amount of global trade, in fact somewhere between 6 and 10%
of global trade is estimated by some of the larger firms to benefit from our
SigNature™ platform (as they are affected by counterfeiting, piracy and
product diversion). As a consequence, the challenge we face is penetrating a
large number of vertical industries effectively. The best and fastest way we
can do that is by leveraging relationships with original equipment
manufacturers (OEMs) and so far this year we have found five of them. Our
management team expects to find a total of about twelve; our expectation for
their performance in the early stage of the company’s growth is that our OEM
partners should be providing on the order of $2.5 million of revenues each
to Applied DNA Sciences and on the order of $10 million to some of the
better performers. For example, one of our OEMs is a thread manufacturer
with whom we have developed the techniques required to manufacture a tightly
controlled DNA thread in which DNA is detected along every millimeter of the
thread and where miles of the thread can literally be manufactured. If that
thread were used, even a single thread included in any luxury apparel would
make it very easy to authenticate its points of origin. We have other OEM
relationships in the food arena, in the arena of making thermal transfer
ribbons for printing labels and stadium tickets and we have relationships in
the ink and print areas.”
CEOCFO:
These are exciting times for Applied DNA!
Dr. Hayward: “We have achieved half the watershed in our development. We are
recognizing our very first revenue and we are deploying our technology. What
is most exciting is to see the phone ringing with inquiries coming from
people we have not yet even met. The word is getting out there and we have
an opportunity to very effectively leave our mark on the marketplace.”
CEOCFO:
Why should potential investors be interested?
Dr. Hayward:
“The most telling aspect of our platform is that we address such a broad
market and have such an opportunity to deploy in so many different markets
The cost of manufacturing DNA, many people expect to be expensive, but in
fact it is not. We have been able to participate through our Asian
affiliates in the marking of over one million DVDs. We were but one of a
dozen security marks placed in those one billion DVDs and remarkably nine
months after the launch of those DVDs, eleven of the twelve security
platforms were counterfeited and the only security platform still left
standing and absolutely uncounterfeitable was our SigNature™ DNA. Our DNA is
accurate, offers forensic proof; it is secure, impenetrable, versatile, and
can be integrated with other security measures in a seamless fashion. We can
provide overt and covert markers in a wide variety of marker hosts, codings,
packaging, labels, liquids, powders, ink. We are extraordinarily adaptive
and versatile as well as robust.”
CEOCFO:
What should investors remember about the Applied DNA Sciences story?
Dr. Hayward:
“Our challenges going forward are to customize our solutions with more
customers, to continue to build the infrastructure that facilitates sales.
Investors should recognize that we have evolved remarkably quickly since
totally restructuring the company two years ago; providing a new management
team, new board of directors and new incremental patents. In addition,
investors should recognize the dominant role that counterfeiting and
diversion plays in global trade. Just in the news headlines alone this year,
we’ve seen very impacting events such as melamine poisoning of dogs and
cats, diethylene glycol being sold as counterfeit glycerin poisoning 300
people in Panama and injuring people in Southern China, and lead paints used
in so many of the toys imported from Asia. Our authentication platforms are
platforms that not only protect companies, but also protect consumers and
can make for a more healthful and beneficial life overall.”
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