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In the world of speculative biotech things can move pretty fast. Trying to keep it all straight can be very challenging to say the least. This is where I once again find myself when dealing with one of my speculative biotech investments. The name of the company is Advanced Cell Technology (OTCQB:ACTC). This company is a cutting edge biotechnology entity that is focused on the development and commercialization of human embryonic and adult stem cell technology in the field of regenerative medicine.

In the past several weeks there has been a flurry of activity. From the hiring of a new chief financial officer to the release of critical trials results, the news just keeps coming. Once again I reached out to Mr. Gary Rabin, Chairman and CEO, to answer some tough questions and help investors like me to understand the current trend. Below is the interview in its entirety that was completed on May 30, 2013.

Michael - We have all seen the recent news of the hiring of Edward Myles, CPA, as ACT's Chief Financial Officer and Executive Vice President of Corporate Development. Can you tell us what made Mr. Myles a good choice for the company and what are his first priorities for his new position?

Gary Rabin: Well, he's got a background in a whole variety of different types of financing skills. He started his career as an accountant. He worked as an investment banker. He worked for big pharma companies. He worked for small pharma companies. He worked for private biotech, public biotech. He has raised capital and done partnerships in all different kinds of arenas, so he really had a very broad background of financial expertise. Besides that, he's got broad operational experience, so in terms of managing to budgets, managing groups of people, you know he's got a lot of experience in that. He's got a good scientific background. He understands what the company does. He gets on very well with Dr. Lanza and the research team. So I think he's just a beautiful hand-in-glove fit. He's got all the right experience to fill in a lot of the needs of the company.

As for his priorities, one is getting this company funded from a permanent financing perspective rather than these after-market drawdown kinds of things such as what we did with Lincoln Park. Other priorities obviously are the uplisting to NASDAQ, managing the budget, and putting in place some policies/procedures. He will do the week-to-week management of meetings between the different company disciplines, making sure that all the pieces are working together in terms of an operating role. I think those are sort of the main things.

Michael - In our past interviews, you have stated that if you talk to any biotech/pharma company that has an interest in ophthalmology, there was not one of them that do not know every detail about your trials. Then in a more recent interview you stated that ACT is continuing to have regular one-on-one meetings with many of the biggest pharmaceutical companies in the world. After doing some research on my own, this would mean that such giants as Pfizer Inc. (PFE), Novartis AG (NVS), Merck & co. Inc. (MRK) and Roche (RHHBY.OB) should be in the mix. By looking at these statements it seems that the possibility of a joint venture/partnership agreement is developing at a pretty good rate. Can you give us any more insight as to what level ACT is at in any negations?

Gary Rabin - Well, you know I want to make it clear - I have never talked about us doing a Retinal Pigment Epithelial Cell (RPE) partnership. Never, ever have I talked about us doing an RPE partnership in Phase I. I have made it clear that doing a partnership with some big pharma is an important objective for us for this year, and there are a lot of different potential places that could happen. I mean it could it happen in the RPE, look, anything could happen, but we have a very specific strategy. For now we're advancing in these trials. Once we treat all of the cohort 2a and the cohort 3 patients, then we can take all that data and sit down with our Ophthalmic Advisory Board and really sketch out what we want in Phase II. At that point we can discuss what we want the efficacy to look like and what we want the label or labels to look like. Then I think we could have a coherent discussion about whether or not we should do some kind of regional or global or financial-only partnership on the RPE program.

In terms of other programs, we have talked about the photoreceptor progenitors, platelets, mesenchymal stem cells. We've got numerous ongoing potential places where those things could be partnered and at the right time we will announce them. I'm not going to give any more other than to say that all of the logical people who could be good partners for us in those fields have been contacted with varying levels of information and they are evaluating the value of a partnership with us in one of those programs. Obviously, the people who are focused on the ophthalmic indications recognize that a partnership for example in either glial cells or the photoreceptor progenitors might give them an inroad later into the RPE. That is really all I'm going to say about partnerships.

I get asked this so much, and my answer is always the same. I'm just never going to give any more other than to say everybody knows about the RPE program. Everybody who needs to know about these other programs knows about them, and at the right time we'll get a partnership done.

Michael - In our past interviews you have also stated that ACT does not want to partner programs too early as it would leave to much value on the table when you are going after these big markets. Would it be safe to assume that your potential partners are starting to see what you think the company is really worth on a financial basis?

Gary Rabin - If you're suggesting that when we go through the potential magnitude of this indication, not only in terms of the number of people affected, but the annual cost to the worldwide healthcare system, and what the cost of our therapy could be, obviously these companies understand. You know, they look at it with very significant curiosity. We've treated 22 patients, and with the exception of two of them, they've been extraordinarily late stage patients. So it's hard to really tantalize a company that is used to looking at 1000's of patients for a trial with 22 patients, even though there are some tantalizing results within the 22 patients. Of course, they all know about the 20/400 to 20/40 patient. Some of them have seen the charts that show the improved visual acuity in a lot of the patients for a month, two months, three months, six months and some for more than a year, coming up on two years.

They're all very well aware of that, but we still need to define what the label is going to look like. Is it improving visual acuity, or is it slowing the decline of the disease? What is the patient criteria and what is the clinical dosage going to be? I mean those are things that potential partners look to other people to define. That's why you've seen such a dearth of drugs coming out of big pharma in the last few years, because they're not good at this part of the business. They're good as you get closer to commercialization. That is how they know to deal with things. These early stage trials, even though they show promising results, are not something that they really have had success in.

Michael - The company ended the 2013 first quarter with cash and cash equivalents of $4.1 million. ACT plans to fund operations for the foreseeable future with the equity line with Lincoln Park that had approximately $27 million available as of March 31, 2013. This means there is about $31 million in total for the company. Your burn rate is around $18 million a year. This gives ACT funding into 2015. Do you feel you have enough cash to continue at your current rate of velocity? Also are you starting to work on new funding sources at the current time?

Gary Rabin - You know we filed a shelf registration last week. That was a $35 million shelf, and once that is declared effective it should allow us to evaluate a whole bunch of other alternatives without having to create a new registration statement and create new structures and so forth. For example, if some investor comes to us and says it would like to put $15 million to work, or if some investment banker says let us do three conference calls and spend a day in New York and Boston and raise $20 million, that could be attractive. People liked the terms of the Lincoln Park deal a lot. It is a very small discount to market, but we are in the market every few days raising capital with that deal. To be able to raise a chunk of cash so we can get out of having to finance the company every few days I think would be very powerful for the stock. We would be putting new stock in the hands of people who fundamentally want to hold the stock for the long term, as opposed to Lincoln Park that holds a little bit of the stock, but is fundamentally trading out of stock. We want to put the stock in the hands of people like our existing investor base that are patient long-term holders of the stock. When you think about it, that's where the Lincoln Park stock goes, but we raise it in such small quantities. You know, we raise it a couple hundred thousand dollars at a time, because that's how much we can draw down every day.

Michael - Now let's talk about the 600 pound gorilla that we have been avoiding in this interview. On May 15, 2013, Reuters reported in a news article that the vision of a patient enrolled in your clinical investigation improved from 20/400 to 20/40 following treatment. Now obviously that announcement was pretty powerful and it caused a spike in volume in your stock. First, can you give us any more insight into the development and how that got released and why did the company feel it needed to follow up with a confirmation the very next day on the article?

Gary Rabin - Let me take the questions in reverse order. We felt that this was a very important piece of news. Since we were the source, we needed to correct it as it could be deemed to be selective disclosure. So even though the information was in the Reuters article, that is not deemed as a public release of information. We have the obligation to publicly release information. So when I became aware that this article had been published, I basically had 24 hours to determine whether or not it was material, and if it was material, we then had to file this press release in an 8K. So that's what we did.

Now why did it happen? The reporter is one that Dr. Lanza and the company have known for over a decade. I think they had a rambling conversation, some things on the record, some things off, and some things not for publication. I think she probably missed that there was something that was not for publication. Unfortunately the way it arose was a throw away last sentence in an article not even really about that subject. So obviously, that was not the way that we wanted to have that information released. But, you know, you've got to play by the rules so we had to confirm it. I will tell you that this patient continues to test at these levels and it's an unbelievable story. I mean, the difference between 20/400 and 20/40 is not inconsequential. It is not a letter or two or five on an eye chart. So, you know it's very exciting. For me it provides a hint for what you could have happen when you can treat patients that still have rescuable photoreceptors.

Michael - With the 20/400 patients results, it should be very interesting to see how the testing with the patient with better vision (20/100s) turns out.

Gary Rabin - Well, I don't think you can read that much into it, because I think this guy was a very unusual 20/400 candidate. You know, what happens is after the RPE cells die, the photoreceptors die. They die a very slow death. This patient, I think it's safe to say, had his photoreceptors for some reason remain dormant rather than dead for much longer than a lot of the other patients. So it was really remarkable. We don't expect to see the average patient going from blind to driver's license test. We're replacing the RPE cells. We're not replacing the infrastructure of the eye. We're replacing an important piece of the infrastructure, but we're not replacing photoreceptors. That is a potential future therapy for us with our photoreceptor progenitor cells, and it's something that is very tantalizing for us. It tells us that if we can get the healthy RPE layer to hang in there, mixed with some healthy photoreceptors, then you've really got something for these late stage patients.

So looking at combination therapy is something that's definitely interesting to us, but you've got to look at this thing holistically. We don't expect the 20/100 people to start going down to the gym and firing 3 pointers from everywhere. If we can arrest the decline in their disease and give them a little bit more visual acuity with some areas where there are chunks of dormant but not dead photoreceptors, that will be miraculous and wonderful.

Michael - As good as things have been for ACT, let me ask you a tougher question. In late April of 2013 a Sec Form 4 was issued that basically stated that the company had misreported sales of the company's stock, as well as adjustments to current share counts. You have stated that independent members of the board are conducting a review regarding the circumstances surrounding this as well as the internal trading policies and procedures. I know you cannot say much, but can you tell us investors about your initial reaction to this news and have any changes made to address this issue.

Gary Rabin - We put in place a series of policies that didn't exist before in terms of notifying the controller who is now notified any time there is a sale. The securities law firm is dialed into those notifications. That should never happen again. There wasn't a process in a place before for it happened. So basically even though the lawyers and the brokers were supposed to be in contact, in some instances they were, in some instances they weren't. That's how it happened.

Michael - ACT's stem cells don't seem to follow the same pattern that let's say a drug would going through an FDA trial. Do you see at some point you're going to have to engage FDA and modify the regulatory pathway?

Gary Rabin - You know, there are already eight cell therapy products on the market. For example, there is Dendreon's (DNDN) Provence for late stage prostate cancer, so there are other cell therapies on the market. They do not have as big a market opportunity, but I see a regulatory pathway for us.

In the case of macular degeneration it's an unmet medical need, so you get some fast tracking there. In the case of Stargardt's, you know you've got the orphan indication. I see a regulatory pathway that is very workable for us, and giving us ample fast track opportunities once we can define specifically where we're going. Look, it's easy to get excited about the results, right? We know we have something here, but what is the first label? Who is the patient base? How early or late is that patient base? What does that patient base look like in terms of visual acuity changes after you endure the surgery? Is it a visual acuity improvement that you're looking for, or are you trying to benchmark it against the study that has looked at the decline of AMD patients over a long period of time, and try to beat that benchmark? What is it that you're really trying to look at? We need to get a look at these 20/100 patients and the cohort 3. Then we can define what the end points should be as we look to Phase II. Until we do that, you can't say the regulatory process isn't working for us. It is working for us. We went through the FDA with these cells. We said that we wanted the FDA to let us treat patients with way better visual acuity than was ever allowed to do before. They let us do that. So this is a regulatory process that is working for us.

Michael - When the report came out about the 20/400 to 20/40 vision improvement, what kind of excitement did it generate? It was such big news. Did it have any carry-over effects into interest in the company?

Gary Rabin- You know, we got a lot of phone calls. I mean I got a lot of e-mails. I think people are digesting all of this news you know. We announced Ted Myles joining the company. That was a great thing. You know we filed this shelf - the company is finally shelf-eligible. I think that's a great thing. We got the 20/400 to the 20/40 patient. I think that's a great thing. I think interest in the company will increase as we continue to hit these milestones, announce this data, and move forward like we said we are going to. This is our objective because once we can attract institutional investors to this company, it will bring us a new serious group of investors who can layer on top of the retail community that's been very supportive of the company. That is a very powerful pool of capital for the company to be able to draw from, and that is a very powerful investor base. So just like anything else that works in supply and demand, if there are more people that can buy it, it can have a much bigger impact on the price.

Final Thoughts

First, I would like to once again thank Mr. Rabin for taking the time to participate in this interview. He answered every question in a thoughtful manner and was very generous with his time. Finally, I would like to make it clear that I was not compensated by ACT or anyone else to compose this article. I am a simple shareholder in this company, a contributor to Seeking Alpha, and nothing more. My intent here is straightforward, and that is to gather as much information as I can for myself and those interested in this company.

Source: The Fast Paced World Of Advanced Cell Technology: An Interview With Chairman And CEO Gary Rabin