|
|
|
|
|
CEOCFO CEOCFO Monthly Analyst |
PacificHealth Labs, Inc. - developing
and marketing innovative science based nutritional products for sports performance, Healthcare PacificHealth Labs, Inc.
Interview conducted
by CEOCFOinterviews,com BIO OF
CEO
Dr. Robert Portman received a Ph.D. in biochemistry from Virginia Tech. He then worked as a senior scientist for Schering-Plough Corporation and Hoechst-Roussel Pharmaceuticals Inc. In 1974 Dr. Robert Portman founded MED Communications, an advertising agency which specialized in healthcare for pharmaceutical and diagnostic companies. In 1988 Dr. Robert Portman founded a consumer-advertising agency. In 1995 Dr. Robert Portman founded PacificHealth Laboratories, Inc. (PHLI) a nutrition technology company focused on the research and development of proprietary products for sports performance, weight loss and the treatment of Type 2 diabetes. About PacificHealth Labs,
Inc. PacificHealth
Laboratories, Inc. (PHLI) is a science based nutrition company that focuses on the
development of proprietary products for sports performance
weight loss/management and control of Type 2 diabetes. But
unlike conventional sports drinks, ACCELERADE
contains the patented 4 to 1 ratio of carbohydrate to protein to speed the movement of
carbohydrate into the muscle and the ideal combination of simple and complex carbohydrates
for rapid and sustained energy. By increasing the energy efficiency of every gram of
carbohydrate consumed, ACCELERADE conserves
muscle glycogen and improves endurance. Studies show that, compared to a conventional
sports drink, ACCELERADE extends endurance by 24%..
ACCELERADE was based on the same science that
resulting in Endurox R4 the Company’s first
sports drink. Endurox R4 has been shown to speed recovery following exercise
and improve performance up to 55% in a subsequent exercise bout. In November 1998 the Company was granted a patent
(U.S. 6,051,235). Dr. Portman: PacificHealth Labs was founded in 1995.Our
mission was to develop and market innovative nutritional products that were science based
in three areas, sports nutrition, weight loss and Type 2 diabetes. Dr. Portman: We began a weight loss research program a number of years ago. The goal- to develop a proprietary formulation that would stimulate the body’s natural satiety peptide, which is called cholecystokinin (CCK). Researchers have known for 30 years that CCK is the primary controller of appetite in humans. If we would turn on this particular peptide. We could help overweight individuals eat less and lose weight safely. This research came to fruition last year when we introduced our first product, called Satietrol®. Satietrol® is the first product specifically designed to stimulate CCK. Satietrol is taken 10 to 15 minutes before a meal. We’ve done some extensive clinical trials, and are able to show that Satietrol, taken before a meal reduces hunger up to 43% up to 4 hours after eating. and reduces calorie intake in a subsequent meal up to 48%. This is a completely new class of diet products. It is not a stimulant.The study of satiety peptides represents one of the hottest areas of research in weight loss We were out there with the first one. We have a novel technology to help individuals lose weight. CEOCFOinterviews – What makes Satietrol® different from Slim Fast? Dr. Portman: What
differentiates us is that we have a product that reduces appetite. Slim Fast is simply a
220 calorie meal substitute.. It’s convenient, but it has no real effect on
controlling appetite. Dr. Portman: It validates our research program. CEOCFOinterviews - Can you give us some of the specifics on the deal? Dr. Portman: GlaxoSmithKline purchased a 9% equity interest in Pacific Health Laboratories, Inc. They will have worldwide licensing rights to the Satietrol technology. We have one patent on Satietrol with six additional ones pending. In return, they have made an upfront payment of one million dollars and there will be additional milestone payments based on GSK meeting certain development goals. Once GlaxoSmithKline launches the product, they will pay us royalties. We will receive royalties based on the worldwide sales of all products marketed by GSK based on the Satietrol technology. CEOCFOinterviews - How long will GlaxoSmithKline pay royalties to PacificHealth Labs? Dr. Portman: The royalty payments will continue until the patent expires, but we are also filing additional ones. It could run up to 17 years or longer. CEOCFOinterviews - What advantage does GlaxoSmithKline offer in bringing Satietrol to the market? Dr. Portman: This is a market that is highly competitive, and it requires large resources internationally as well as domestically. GSK will sell the product in mass channels of distribution, which include grocery, chain drug, and mass merchandisers such as Walmart. We will continue to sell the product in health food channels of distribution, which include health food chains such as GNC, Vitamin Shop, and Vitamin World. CEOCFOinterviews - How long does your agreement allow PacificHealth Labs to sell Satietrol? Dr. Portman: Until GlaxoSmithKline launches, which could be up to 2 years. After 2 years, we can continue to sell certain types of products based on the Satietrol technology, but it would have to be under a different brand name. It’s a great deal for us because we are able to still maintain a presence in this category and we’ve linked up with one of the strongest partners in the world to realize the full scientific and sales potential of the technology. CEOCFOinterviews – Please tell us about some of your other pending patents for Satietrol. Dr. Portman:. Our
patents cover the incorporation of the Satietrol® formula into food which . By adding the
Satietrol formula to food, we aree able to take product like low-fat yogurt and increase
its satiation quality. satiety. The advantage to individuals trying to lose weight is
really quite significant. Many people go off their diet because they just can’t stay
on a low-calorie diet. What this product will do is make lower calorie foods feel more
filling and do it in a very safe way. CEOCFOinterviews – When will that study be finished? Dr. Portman: That
study should be finished by October of this year. Dr. Portman: We just introduced our new sports drink called ACCELERADE®. ACCELERADE came out of the same research program which led to our first sports drink, Endurox R4. Endurox R4 was developed by six of the country’s leading exercise physiologists and designed to speed recovery following exercise. Clinical studies have shown that Endurox R4 reduces muscle damage following exercise and can significantly improve performance in a subsequent exercise bout. Endurox R4, which is targeted toward the endurance athlete and those who play team sports, has now become the country’s #1 selling recovery drink. It is used by over 15 professional teams including the Colorado Avalanche, this year’s Stanley Cup champions. However, the recovery drink market is relatively small compared to sports drinks used during exercise such as Gatorade. We launched our sports drink ACCELERADE this June after completing an intensive research program which showed that ACCELERADE, compared to a conventional sports drink, improved endurance during exercise up to 24%. Initial sales and consumer response have been overwhelming. By this month, ACCELERADE will be in over 5,000 retail outlets. We are supporting the launch of ACCELERADE with a heavy advertising campaign directed toward runners, cyclists, triathletes, swimmers and hockey soccer teams. One of the country’s prominent exercise physiologists has said that “ACCELERADE is the most significant advance in sports drinks since the introduction of Gatorade. CEOCFOinterviews – What
will a consumer have to pay for ACCELERADE. Dr. Portman: The 28 servings size will be
about $23.95. Therefore, it will cost about 80 cents per serving. That makes it less
expensive than a bottle of Gatorade or Powerade. Initially, it will only be available as a
powder. Dr. Portman: Probably
a year away. Dr. Portman: We are selling our products in a number of countries through distributors, but not aggressively.. That is an area where we would seek out a larger partner that has full international marketing and distribution capabilities. CEOCFOinterviews – What will protect you and give you a competitive edge in this market? Dr. Portman: Our
philosophy is to develop a patent portfolio around our science. We have the patent on
Endurox R4, and we’ve just filed a patent on ACCELERADE. We feel our protection will
come from three strategies, patents, clinical studies and a strong brand identity.. Dr. Portman: One of the areas that we are looking at is how to improve glucose regulation and increase weight loss in Type 2 diabetics, which is the fastest growing chronic condition in the United States. Our research is focused on is the relationship between cholecystokinin (CCK), which is the satiety peptide that Satietrol is designed to stimulate, and insulin. We have preliminary indications that Satietrol® would be very effective in type 2 diabetes, not only to help individuals who have this condition lose weight, but also provide better control of their blood sugar after eating. We’re getting ready to start a clinical study. CEOCFOinterviews – When will you be finished with your studies on Satietrol and Type 2 diabetes? Dr. Portman: The
diabetes studies will probable not be finished until next year. We will be looking first
at the effect that CCK has on glucose
regulation in obese individuals. If that is positive we would then go to the next step,
which would be trying to evaluate the product with individuals who are Type 2 diabetics. Dr. Portman: No
it does not. CEOCFOinterviews – Was your product pipeline built through your own R&D efforts or partially through acquisitions? Dr. Portman: Everything
was developed internally. For a little company such as ours to be able to come up with
innovative technologies and translate them into successful products is quite a story.. we
suffer from lack of recognition by the investment community. If we keep building our product portfolio and sales
however, I believe that Wall Street and individual investors will begin to take notice.
PacificHealth Labs is a nutratech company. We are following the same path as a biotech company in terms of research but our product development pipeline is much shorter because we do not need FDA approval. Based on our science platforms we can develop a product and have it to market within 6 to 8 months. Therefore, the opportunity to generate revenues from research is much greater with a company such as PHLI We are confident of our ability to be successful in the future because we have proprietary technologies incategories that have enormous growth potential. I think best sums up PacificHealth Labs over the next five years. CEOCFOinterviews – Can you tell us about your scientific board and who does your research? Dr. Portman: We have a very prestigious scientific board who helps us in the design of our clinical research program. We contract our clinical studies with leading universities. Some of our scientific advisory board include, in weight loss , Dr. Steven Peikin, Head of Gastroenterology, at Robert Wood Johnson,. David Kritchevsky, Professor at the University of Pennsylvania and one of the leading experts on the use of fiber, and Dr David Jenkins, who is one of the world’s foremost experts in diabetes. In sports nutrition we work with John Ivy, who is the Head of Kinesiology at the University of Texas, and Dr. Edmond Burke, Professor of Exercise Physiology at the University Colorado, Colorado Springs.CEOCFOinterviews – With all of your recent activity how should shareholders and potential investors look at PacificHealth Labs? Dr. Portman: If an investor looked at us up to this quarter, they were betting on our research. Now, we are a very different story. If investors look at us today, they should evaluate us in terms of increasing revenue, and profits and significant increases in shareholder value. For example, this quarter our revenues will exceed last year’s annual sales and we are looking to triple our sales this year over last year. We intend to biuld on our momentum.
|
