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CytoDyn is leading the way with the first targeted immune therapy
for HIV and is preparing for Phase II
Healthcare
Specialized Health Services
(CYDY-OTC: BB)
CytoDyn, Inc.
200 W. DeVargas Street – Suite 1
Santa Fe, NM 87501
Phone: 505-988-5520
Allen D. Allen
Chairman, President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
February 9, 2005
BIO:
Allen D. Allen, Chairman of the Board, began his career as a theoretical physicist and was
mentored by leaders in the field of neuroimmunology from its very inception. In 1953,
while still in high school, he won a prestigious student award from the American Rocket
Society (National Institute of Aeronautics and Astronautics), and was elected Attorney
General of California Boys State. Mr. Allen attended the University of California at Berkeley
from 1955 through 1956, and UCLA from 1956 through 1957 when he left campus to work on
defense-related research. Over the past thirty years, he has published scores of scholarly
papers in the peer reviewed science and medical journals.
During this time he also served as an investigator on clinical research sponsored by major
pharmaceutical companies, including Roche, and Ortho Biotech (Johnson & Johnson).
Beginning in 1968 he founded and managed Data Techniques Corporation, a privately held
software company, which became profitable under his stewardship and was then sold to a
large leasing corporation.
Mr. Allen invented and patented the portfolio of HIV/AIDS therapies licensed to CytoDyn.
He also co-invented one of the neuropsychiatric drugs being developed in collaboration
with Phoenix Biosciences. During our start-up phase of operations, he serves as President
and Chief Executive Officer of CytoDyn. He is a member of the American Physical Society
and the American Federation of Scientists, a life member of the Institute of Electrical
and Electronics Engineers, and a founding member of the Editorial Board of Physics
Essays.
CEOCFO: Mr. Allen, what was your vision for CytoDyn and where
are you in the process?
Mr. Allen: “We hope to be a part of the new golden age
of medicine because the original one brought on by antibiotics is now succumbing to
natural selection. We have flesh eating versions of staph and multi-drug resistant
tuberculosis. The approach to treating infectious diseases will be to modify and enhance
the human immune system rather than relying entirely on antimicrobial drugs. We hope to be
on the cutting-edge of that. We are getting ready to submit a Phase II protocol to the FDA
for our first targeted immune therapy for treating HIV AIDS. This is the first immune
therapy that has shown an ability to significantly reduce the virus in the blood in
preliminary clinical studies.”
CEOCFO:
Will you tell us about targeted immune therapy in layman’s terms?
Mr. Allen: “A targeted immune therapy is a protein as
opposed to synthetic drugs. There are risks associated with proteins, the most important
one being an allergic reaction, so people need to take that seriously. There was just an
incident, I believe in Canada, where a young teenage girl died when she kissed her
boyfriend who had eaten a peanut butter sandwich because she was allergic to peanuts.
Proteins do carry risks but they do not have the toxicity that are inherent in synthetic
drugs. The targeted immune therapy is a protein, which attaches itself specifically to one
part of the kind of cells you are interested in modifying. The way I demonstrate that to
lay people is by using two strips of Velcro. It is easy to show how one strip of Velcro
won’t stick to your skin or the table top or anything but the other piece of Velcro.
Targeted immune therapies work exactly like that, by sticking to one particular thing that
they are designed to stick to.”
CEOCFO:
Please tell us about the industry and about what you specifically have that is different?
Mr. Allen: “We have a family of targeted immune
therapies. This is the first time targeted immune therapies have been used to treat
infectious diseases. They have become mainstream in treating cancer and autoimmune
diseases. The problem with using them against infectious diseases is that you have to
distinguish between a classical infectious disease such as rabies or the flu and
immunologically mediated infectious diseases. An example of the latter being Lyme
arthritis where it is not so much the germ as the way the immune system reacts to it.
People, who are cognizant of the HIV pandemic when it first started, may remember the
puzzling question for scientists with how this fairly benign retrovirus could cause such a
devastating disease in humans and only in humans. That question needed to be answered
before an immune therapy would work in HIV. We are leading the way in that sense.”
CEOCFO:
Do you have patents?
Mr. Allen: “What we have in terms of intellectual
property is a portfolio of patents on this method of treating AIDS. For example, AZT,
which is very familiar as a drug for treating HIV/AIDS was developed by the National
Institutes as a cancer drug originally. The molecule itself is in the public domain. There
is no use for it except to treat AIDS. The patent on that use was owned by what was
originally Burroughs-Wellcome. We hold a portfolio of those kinds of patents for using
proteins that are generally available but have no other therapeutic use other than
treating HIV/AIDS.”
CEOCFO:
Are these easier to run through the FDA process than synthetic drugs?
Mr. Allen: “No, not necessarily, in fact they can be
more difficult because of the manufacturing issues. When I started out with this project
almost ten years ago, the idea of using this kind of product as a treatment was unheard
of. One of the resistance points that we came up against is that it was a new idea for
experts, but now there are so many such products on the market that the FDA has reassigned
them from the biologics division, to the drug division, which is a very different culture
within the FDA. The difference between the drug and the biologic product is that the
biologic product is not made through chemistry, it involves living processes and it is
actually very analogous to making wine. If I showed you our laboratory, which includes a
fermentation tank, and then I took you to Napa Valley and showed you a Champagne
manufacturer, you would have trouble telling which one you are in because they are so
similar. The only difference is that the seed that we plant is a culture medium instead of
the ground, but other than that, it is very similar; we harvest the crop, which is cells,
and then you have to purify and test them for all kinds of potential contaminants and then
package them. It is a lot more complicated to make a biological product than to make a
drug because a drug is chemistry and every time you put sodium and chloride together, you
get table salt. It is harder in the sense that there are more manufacturing issues that
have to be addressed.”
CEOCFO: You have a new trial coming up that was just
announced; will you tell us more about that?
Mr. Allen: “Pending FDA approval, we plan to do a trial
in San Francisco that will be headed by Jacob P. Lalezari, MD, who is a well-respected,
experienced clinical investigator with a specialty in HIV/AIDS and other infectious
diseases. What I always look for, because I am hardnosed about staying scientific, is that
I am impressed by the papers he has published and the original research he has conducted.
This will be the second part of Phase II, which, is where we will answer final questions
about the best dose and the best dosing regimen. Once we have those questions answered,
then we should have all of the information that you would need to give a practicing
clinician in order to be able to use a product. The final step would be the double-blind
placebo control trial that confirm that things are what they appear to be.”
CEOCFO:
What is the timetable assuming you find what you expect?
Mr. Allen: “We anticipate something like four years to
market with our first product, which we hope to have fast tracked for those patients that
are running out of good options either because of toxicity problems or because natural
selection is starting to catch up with us and we are now seeing multi-drug resistance
strains of HIV. That is not a huge problem yet but it is going to be. There are a
substantial number of people who are running out of good options, so that would be our
first indication if things go as we hope.”
CEOCFO:
It is an expensive process; what is the financial picture for Cytodyn?
Mr. Allen: “We have a philosophy that is nerve racking
but that serves our goal of creating shareholder value, which we are determined to do
because capitalism does not work unless shareholders get value. What we have done is to
limit dilution to the extent possible because the less shares you have issued, the more
the value of each share increases as your market cap increases. It is very tempting to
bring in money by doing a hedge fund or a pipe that would bring in a lot of cash but would
also create a huge amount of stock out there. It is harder for shareholders who already
own stock; and we have a lot of shareholders, to get a really good gain. It is a matter of
pride if nothing else; we would like to have our shareholders make a ton of money to
reward what we consider their wisdom in investing in our company. We are always cash tight
by choice because the alternative to being cash tight is to dilute.”
CEOCFO:
What other product are in the pipeline?
Mr. Allen: “Since I started, there have been changes in
manufacturing techniques that would enable us to make a product that is better in certain
senses, both financially and medically. We were so far along with the first project that
we do not want to just toss it out. We want to use it to salvage patients that need
salvaging while we are developing a more advanced product. We hope to have at least two of
these targeted immune therapies available for HIV/AIDS because the preliminary laboratory
and animal studies have shown that two work more than twice as well as one, so we hope to
have at least two of those on the market. We have drugs that we hope to develop for other
diseases based on other fundamental scientific breakthroughs that I participated in ten
years ago.”
CEOCFO:
“Where science makes the difference”-what is the meaning of your motto?
Mr. Allen: “You may know that the major pharmaceutical
companies have huge amounts of cash reserves but the earning always go to the biotechs
like Genentech, Inc. (NYSE: DNA) and hopefully soon CytoDyn. Analysts who are on top of
that industry, including the ones I just heard on CNBC, are aware that this is because the
larger pharmaceutical companies aren't as good at developing a pipeline. They have a
tradition and that is to ignore science. There is a belief that has been ubiquitous that
the human body does not obey any laws of science, that physiology is capricious and the
only way to develop a drug is through trial and error. That just is not true, we know why
Viagra works, we knew before it was ever manufactured much less tested. You do not have
all the information without a clinical trial that you need to give a physician to use a
new drug. But you know what a biological drug or product will do to a human body if you
pay attention. The new trend is to look at the science first and not to find a drug that
works and then try to find out why later. That is what makes the difference in what we are
doing. What we do is always based on a large body of scientific literature. You want to
look for replication of results because if something can be replicated, then it is real
science, and you want to look for independent research done by different groups who have
no connection with each other because that is true replication.”
CEOCFO:
In closing, why should potential investors be interested and what should people know about
CytoDyn that does not jump off the page?
Mr. Allen: “CytoDyn is a concept company with a
breakthrough in a high-risk industry. Companies like CytoDyn have the potential for a
large gain commensurate with the significant risk."
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