Healthcare
Biotech
Medical Equipment
OTC BB: EXTI
Exten Industries, Inc.
9620 Chesapeake Dr., Suite 201
San Diego, CA 92123
Phone: 858-496-0173
Gerald Newmin
Chairman and
Chief Executive Officer
Interview conducted by:
Walter Banks, Co-Publisher
CEOCFOinterviews.com
August 2001
BIO OF CEO
Jerry Newmin has managed NYSE and
American Exchange-listed Fortune 500 companies and start-ups, specializing in turning
around troubled companies and improving revenues, profits and shareholder value. He has
been President of HealthAmerica and International Silver Company, CEO of numerous
Whittaker Divisions, VP of American Medicorp, CEO of SYS and Chairman of International
Forum for Corporate Directors. Additionally, Jerry is Chairman, Treasurer and Director for
Xenogenics Corp.
About
Exten Industries, Inc.
Exten
Industries, Inc., through its Xenogenics Corporation subsidiary, is engaged in the
business of managing the research and development and commercialization of the SybiolŪ synthetic
bio-liver, an "artificial liver" or liver support system. The SybiolŪ liver
device is based on technology for continuously circulating liver cells (hepatocytes)
through a semi-permeable bio-membrane.
On April 2, 2001, Exten Industries, Inc. announced that they had signed a Letter of
Intent to acquire its research and development partner, privately held MultiCell
Associates, Inc. (MultiCell) of Warwick, RI in a cash plus stock transaction. Specific
details were not disclosed. This acquisition will solidify the working relationship
between the two firms in their joint liver assist device program.
MultiCell is a highly respected research company with unique expertise in developing
functional cells and cell lines with a special focus on liver derived cells. They have
several patents issued on their immortalized hepatocytes or engineered liver cells.
MultiCell’s mission, to develop and commercialize cells for diagnosis and treatment
of liver diseases, has resulted in an exclusive non-tumorigenic DNA-engineered porcine
hepatocyte cell line. Exten has redesigned their device to operate with the MultiCell
technology using DNA engineered liver cells.
The
SybiolŪ liver therapy device is intended to be used as an artificial liver
"bridge" for transplant patients when no donor organ is available, and, via
regular outpatient treatments, maintain essential liver functions for patients with
chronic liver disease or other liver trauma until the human liver heals and is able to
resume normal liver functions. It may also increase the quality of life in those patients
who are not curable. Lastly, the device may be an effective tool for laboratory testing,
veterinary applications, and/or drug testing applications.
CEOCFOinterviews - Mr. Newmin, can you give us a
brief history of Exten Industries?
Mr. Newmin: "Exten
has been around for a long time, but my involvement began in late 1995. The company
acquired the artificial liver device technology from a major medical center in Los Angeles
in l993. Exten then stopped all its other activities and concentrated solely on an
external biological device to artificially perform some of the basic functions of the
human liver. The device is trademarked SybiolŪ for synthetic bio-liver.
CEOCFOinterviews - Where
is your external liver device in its development?
Mr. Newmin:
"The original design of the device was used with liver cells that were extracted from
live pigs. We were conducting our research at Loyola Medical Center in Chicago. However,
it became apparent that, with both the FDA and the public, dealing with animal retro
viruses was going to be a problem. We found a company called MultiCell Associates in
Warwick, Rhode Island that developed and patented DNA engineered cells that were
manufactured in a laboratory. Therefore, we switched all of our research and development
over to MultiCell last year, using DNA engineered pig liver cells. That required
redesigning our device. This new device has now restarted testing, and our goal is to use
it on large animals, primarily pigs. Following these tests and developing enough hard
data, we will file an IND application with the FDA preparatory to initiating Phase 1
safety testing."
CEOCFOinterviews -
Do you have any projections as to when clinical trials may start?
Mr. Newmin: "We
plan to complete animal trials later this year, and then we plan to start clinical trials
in 2002. It is not entirely clear as to exactly how long it will take to get to Phase II
and Phase III of the FDA trials. We feel it may take 3 to 5 years. That depends on how
many patients the FDA will require to be tested."
CEOCFOinterviews – What will your relationship with MultiCell
Associates be going forward?
Mr. Newmin: "MultiCell
will be a wholly owned subsidiary of Exten. The owner of MultiCell Associates, an
internationally known scientist, unfortunately passed away and his estate decided to sell
the company. We have signed a Letter of Intent to acquire the company and are in final
stages of closing that transaction. Acquiring MultiCell will allow us to keep all of our
research in house. Moreover, the acquisition also gives us the exclusive right to the cell
lines. Multicell has developed a human liver cell that they can manufacture in
laboratories. Therefore, our hope is to test the device with the human liver cell, which
clearly will be a more approvable process than the use of pig liver cells. Since the human
liver cell has some significant opportunities for toxicity testing, we think that other
products may evolve from these cell lines. Sometime in the future we may consider the
merger of MultiCell with our subsidiary
Xenogenics Corporation, which owns the artificial liver technology."
CEOCFOinterviews – What changes have you
made in the SybiolŪ device technology since its acquisition?
Mr. Newmin: "There were certain problems
with the technology. Therefore Dr. Brems, the chairman of our advisory board and a member
of the staff of the transplant program at the Loyola University came up with some
innovative ideas, unique in terms of the way these cells were presented to the patient
plasma. That resulted in a patent that is now working it’s way through the patent
office. Our objective is to develop a device where the cells stay alive for long periods,
therefore extending their viability in terms of their interface with the patient blood.
That makes the treatment more efficacious and at the same time drives down the cost per
treatment. As an example, the SybiolŪ is a
device designed to be a "bridge" for transplant patients, when no donor organ is
available and, via regular outpatient treatments, maintain essential liver functions for
patients with chronic liver disease and other liver trauma until the human liver heals.
Our goal is to be able to slow down the rate at which the liver is going to fail or, if we
are fortunate, prevent the liver from failing altogether.
The liver is the only organ that will rejuvenate itself, if you allow it. A family
member or close relative can literally donate a part of their liver to another family
member with a liver failure and the donor's liver will grow back quite quickly. The idea
here is to provide “off-line” help to the liver so that it can rejuvenate itself
throughout these diseases and allow the patient to lead a normal life.”
CEOCFOinterviews - Can
you give us a little more detail on how that would work?
Mr. Newmin: "With
kidney dialysis you go for periodic treatments into an outpatient center, where they
purify your blood. With our Sybiol device, the patient would go to a similar kind of
facility. We do not know exactly how often or how frequently or how long the treatments
would be; that would depend on their individual condition. However, you would essentially
run a patient’s blood through our device exposing its plasma to the cells contained
within our device. There would then be an interaction between the cells in our device and
the patient blood plasma where the cells actually perform some of the functions of the
liver, including de-toxification. It will probably happen at an outpatient dialysis
center, because everything you need for this type of dialysis is already there. We
probably would have liver dialysis departments, just as there are kidney dialysis
departments."
CEOCFOinterviews – How
will you approach the market place?
Mr. Newmin: "We
believe the market is very large. The market is not just transplants - there are only
about four thousand transplants a year done in the United States. However, because
Hepatitis, particularly Hepatitis C, is on the rise all over the world, the business
opportunity for a liver assist device is probably as large as or larger than kidney
dialysis, which is in the hundreds of millions. We will talk to some of the key players in
the major pharmaceutical companies as soon as we have good hard data and are in FDA
trials. We will attempt to partner with someone who has much better resources to put our
device out to the market than we do."
CEOCFOinterviews – Can
you give us an idea of the current cost in treating liver disease?
Mr. Newmin: "It is a very expensive process.
For example, it costs over $300,000 for a liver transplant. Our goal is to get the
outpatient treatment with dialysis down to close to what kidney dialysis runs. That could
be in the thousands of dollars per treatment, yet it is certainly is not in the hundreds
of thousands, which is what a transplant would cost. There are a number of treatments that
can help the diseased liver, yet they are all very expensive."
CEOCFOinterviews - What other revenue generating possibilities are
there for the MultiCell Company?
Mr.
Newmin: "MultiCell has a potential to be in the business of
selling cells to the pharmaceutical industry. We have already held discussions with
several companies and they were very excited about this product. That business opportunity
is probably as great as the liver technology’s potential. We think we will be selling
some of these cells within months after we close the acquisition. That should happen this
year and will be generating revenues and hopefully profits. This is a very exciting
business opportunity for us, selling to pharmaceutical firms and research companies.
MultiCell is the only company that has engineered human liver cells. Other people
are growing cells using tumorigenic cells, because they proliferate rapidly. MultiCell
developed a line of cells that can be replicated and produced in a laboratory that are
non-tumorigenic, DNA engineered in origin."
CEOCFOinterviews – Will you be looking to make any more
acquisitions?
Mr.
Newmin: "We were looking at
acquiring some other companies, for example we would like to acquire a medical device
manufacturing company, because we would want to be able to manufacture the device, the
Sybiol synthetic bio liver, and the disposable products ourselves. In all, we intend to be
selling three products. The device itself, the disposable kit issued to each patient at
the time of treatment and the cells that would then be applied to the patient as needed.
Therefore, we would like at some point to vertically integrate all those activities."
CEOCFOinterviews - Are there any other companies
working on a device for liver dialysis?
Mr.
Newmin: "There are companies
experimenting with liver dialysis, however, none of them is doing it in the fashion we
are. We are truly unique in that we suspend our cells in a solution as opposed to growing
or packing them in the device itself. There is also another company, which kills pigs to
extract liver cells, freezes them and then puts them into the device. We try to create a
friendly environment for the cells. The fact that we manufacture the cells eliminates
major concerns of the FDA."
CEOCFOinterviews - Do you have the cash or credit to continue
going forward?
Mr.
Newmin: "We are always
raising money. We raised over a million dollars in the last 12 months from a group in
Dallas, and now we are in the process of raising more, both to close the acquisition of
MultiCell and to cover operating expenses. Beyond that we will be trying to form an
alliance with a major financial partner, a strategic partnership for the major money
required for the FDA trials."
CEOCFOinterviews – In closing, what would you like to say to
your current shareholders and potential investors?
Mr.
Newmin: "I think we are at a
very exciting point where the company is clearly about to make a major breakthrough in
terms of the new cell line and the way the cells work in our device. We also have a patent
for our technology that, we hope, will be issued shortly. We have additional patentable
processes that are evolving in our new design concept. We believe that we are in a good
position looking forward.
This company has been around for a long time. Since I have been
involved, I have never questioned or doubted any of our doctors or scientists, and have
always believed that we could develop a device that would work. I think that the addition
of MultiCell is the most exciting thing that could happen to us. Where we are today was
once only a dream, and we have done it quite rapidly. I think that the MultiCell
acquisition is an incredible opportunity, and if we can do even a part of what we think we
can, our shareholders will be very happy."
