Cardium Therapeutics: Wall Street Analyst Forum Presentation Transcript

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Cardium Therapeutics, Inc. (CDTP.OB)
Wall Street Analyst Forum
May 22, 2007 11:10 am ET

Executives

Christopher Reinhard - Chairman, CEO, President and Treasurer

Presentation

Christopher Reinhard

Thank you very much, and thank you very much for having me here. Nice small audience, so I am going to keep my remarks a little bit more casual than I normally would do. We are on the website, and I hope some of our viewer will be able to view the presentation.

I will be making forward-looking statements today so I would remind everyone to be cognizant of that and to look into our 10-K and our various disclosure documents with the Securities and Exchange Commission.

So Cardium Therapeutics is a company I founded just a little over two years ago. And it was really founded to acquire some companies that we thought were important, and to help us grow and develop in this space.

I have spent last 20 years, first 10 years in mergers and acquisitions, buying and selling companies very involved, which included the formation of Allied Signal, Fisher Scientific and others. I was an Executive Officer of those companies.

In addition, the last 10 years I have spent, very involved in biotechnology. And I am going to talk to you about one of the drugs that I have been very involved in last 10 years, it was a company called Collateral Therapeutics which I had co-founded and developed. One of our drugs on our portfolio was acquired by Cardium, so I have a great deal and deep information, deep knowledge about it.

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So Cardium Therapeutics was formed as a medical technology company, and we are initially focused on cardiovascular disease and Ischemic injury. And when we formed Cardium, we strongly felt that we wanted to build a little bit different kind of company, one that was not a classic binary tech bet, one that was not an exotic science play. But yet we were still very interested in acquiring forward looking drugs.

There is a clear issue in large pharma and large biotech looking for a new and exciting quite two drugs. So we do believe that there are companies very interested in acquiring forward looking drugs with big market opportunities. So we are not planning to develop Cardium as a fully integrated pharmaceutical or biotechnology company, but rather we are more like a holding company.

And the assets that we acquire, we acquire for them to be sold, to be distributed to our shareholders in different companies and so forth. So we've specifically looked at building a portfolio of these kinds of products that have different risks and different rewards, as we believe that you should have and built a more diversified platform in these companies.

We think one of the classic problems in biotech has been that people in biotech have not really thought of themselves as building businesses but rather, they've been [DC] backed and more than not focused on building technology. So, we are little bit different, our strongly has been to acquire undervalue product opportunities that have significant growth potential and we have been buying these technologies and product opportunities on highly favorable economic terms and as one of the keys.

We acquire things that we know we can bring value to and that we can change and transform in one way or the other, and to some how in one way or the other to change its risk profile, while they were holding the return profile relatively constant. So, it’s a part of our process.

If you look at our management team, we would look a little bit more like a classic private equity company or a classic venture capital fund, and that we have expertise in a broad range of areas. But what makes us a little more different is that we offer these companies. We actually run them, so I'll talk more about that in a minute.

So, we have organized the company with three companies now Cardium Therapeutics owns the Tissue Repair Company. We own Cardium Biologics and we own InnerCool Therapies. In the Tissue Repair Company and Cardium Biologics, they are little focused in regenerative medicine and InnerCool and Biologics share an endovascular platform. In that we deliver drugs and or therapies using and endovascular devices, medical devices. So we are a mix, we have biologics and we have medical devices.

The three companies and we talk about a company-developed pipeline whereas other company would talk about product pipeline. Each of these companies here, Cardium Biologics, InnerCool and Tissue Repair have their own companies, they have there own product platform, and we are developing them as businesses and or to prepare them for sale at an appropriate time.

We are not building an integrated sales force but, in our case of InnerCool, we do have a sales force that we're building because that is a product line that we require the direct sales force. But, it's not our intention on becoming a fully integrated company. So, we don’t look for call points and similarities between these products.

We have assembled these three companies, they have had invested technology, capital in forms of clinical research, product development totaling about $270 million and we’ve acquired these for about $11 million upfront in terms of equity and or cash payments, and with future royalties. Cardium Biologics has a lead product called Generx. It has just recently announced and we have just begun a Phase 3 clinical study.

I have spent 10 years with this drug, I am very familiar with it, I sold it, founded a company with it, took it public with Bear Stearns, sold it to Schering AG in Berlin, worked for Schering on drug. And when Schering decided to evacuate the cardiovascular space and ultimately prepare ourselves for its sale to Bear. We acquired this product. So, we know a lot about it, and we'll talk more about it in detail in a moment, but it's a Phase 3 product.

InnerCool Therapies has about $50 million invested in this company by a group of very informed venture capitalist. We acquired this company. It has a small sales force, one person when we took the company over. I'd have now six, and its in a area of Therapeutic Hypothermia, what we'd like to call Temperature Modulation Therapies and I will talk more in detail about that and we have acquired Tissue Repair Company, which is a DNA based growth factor therapeutics, somewhat similar to Generx and then its the Biologics, but due to Topical Gel and we will talk a little bit more about that.

We are preparing to start a Phase 2b study in somewhere in the second half of the year, really the third quarter. So, we are very excited about that. A protocol has been cleared through the FDA review process and we are now making final material and preparing to initiate that study. We expect 25 medical centers.

When we talk about Generx, it’s focused on the idea of cardiovascular, micro-vascular angiogenesis. And it is positioned as a biologic, it is administered to a patient one time using a standard diagnostic catheters. We put a little clip in the femoral artery, and we snake it up into the heart and we administer this product down the three coronary arteries over about 90 seconds down each coronary artery. It is one time.

It's being developed for patient population who has ischemic disease. These are patients who are exhibited and have chest pains which we will talk about in a minute. And these patients that we are targeting to, have had traditional drug therapy, it had bypass surgery and/or [blue] angioplasty and stenting, but yet they have still chest pain called Angina.

There are about 2 to 3 million patients in this area and it's the growing population, because these patients that have heart disease were able to keep them more healthy and live longer life. So it fits in that dotted area that you will see, which is the fourth treatment which we are preparing and developing for a DNA-based angiogenic growth factor therapeutic.

This is how it looks as if you had a catheter and it was being administered into the heart. And you can see, the heart has a very large vascular bed. Some guess that’s about the area of a football field, and these small microvascular vessels play a very important role in keeping the heart so it's not ischemic to effectively deliver the appropriate level of oxygenated blood to the heart.

And the large coronary arteries bring this blood into this area, but it is distributed by the coronary and the up microvascular circulation. So what we do here with this drug, with a one-time treatment is to enhance and turn on the growth of these blood vessels. We have not been able to do this in healthy tissue.

So this only really works when we have patients who have coronary artery disease. They have to have ischemic injury for this drug to work. Because, as an ischemic we know that has developed, and what we do is try to tip the balance and trigger this angiogenic response once it has been administered.

And if you took it under a high resolution microscope, this is what they would look like. A large vascular bed that inside the heart, this is what we’ll look at. You can see angiogenesis, you can see larger blood vessels and you can see the smaller blood vessels that have been growing.

We use a very interesting adenovector cassette to deliver this. And you will see this buttony looking like object which is adenovector. It is a virus very similar to what a cold virus, and it is replication efficient and these little [pantons] you’ll see play a very important role. And when it is administered to the heart through this angiogenic or through this cardiac infusion, these [pantons] are taken up in the heart through these CAR receptors which are very unique.

And originally in 1995 when we started this project, we recognized that it stayed in the heart when we used it in the pre-clinic mammal studies. But we really didn't know why, and over the last 10 years we have begun to unravel the unique aspects of this treatment, and we find that one when we put this in the animal we have a 98% response that’s measured and in humans when we have done it, we see about an 87%.

So there are these very specific receptors that take this product up. And what we do as we put in this gene, and then we deliver it in to the heart tissue and you will see this is how it effectively looks. You have a delivery catheter which is a standard basically diagnostic catheter something that isn’t here. Just a little lag in the response here, excuse me.

And when we administer this down to the three coronary arteries, what we do is, a drug is taken up by these little cells. You can see little blue, purplish areas is areas where our product or our delivery factor has been taken up and is secretive proteins. And these proteins in the face of ischemia have the capacity to turn on the growth of microvascular circulation.

Here is a representative patient. This is a patient in our study the AGENT-2 study. And you will see that if you had a perfect heart and we did the SPECT imaging study it would be a perfectly red circle as you can see up there.

This patient has ischemia, and you can see the area. The red area is normal tissue, the green area is the area that does not genes blood flow, and the black area is where this patient had heart-attack, and there’s a not a lot we can do for that patient right now.

And what we did was when we treated this patient, what happened over an 8-week period. You can see that the area about the size that looks like Florida began to shrink. And at the end of that 8-week period, we had turned on a sufficient level of blood flow into that heart that basically is a little ischemic area its about the size of Tahiti.

So you can see this was about a 77% improvement and this was in a statistically significant Mechanism of Action Study that we had done with Schering. This is the basis upon which Schering AG acquired Collateral therapeutics and began development on this drug.

Since working on this drug over the last 10 years, we have done four important studies. We have done Phase 1/2 clinical study, we have done two Phase 2b/3 studies, and we have treated over 650 patients at a 100 medical centers both in United States and internationally.

We have established Contract Manufactured Standards that have been reviewed with the FDA, and we are preparing and we are now preparing and we are now starting the Phase 3 studies. I apologize this computer is jumping ahead a little bit. Okay.

We have studied the AWARE Phase 3 clinical study, last week we announced this. And this is very important study. And that when we went back and acquired this drug from Schering AG, we did a Meta-Analysis of the 650 patients that have been treated in this trial. We found something that was very unique in this patient population, that women had a very unique response to this biologics. And we began to take a very good hard look at why that was case.

What we found was that it was an easier way to measure for women that in fact many of these women have microvascular disease and that when we looked at this, we were able to discern a very clear and measurable response among women. As we dug down and looked at this, we decided and went to the FDA to say, we want to do a study to review to the effect of this drug on women.

And it was one of the first of its kind, a therapeutic machine would go. It is the first of its kind, very unique drug for this and we find that women have a very interesting problem with Coronary Artery Disease, number, and let me give you a couple of interesting facts.

While men's mortality has steadily improved over the last twenty years, women's mortality in heart disease has remained unchanged. That if you have -- a woman has a heart attack, she has a 2 to 4 x times greater chance of dieing. Their heart disease in women, currently onset of heart disease in women is usually ten years later that woman will present to physician not with classic signs of angina. Men will have chest pain, chin pain, pain down their arm and it will be profound and clear.

Women will present with nausea, pain in their back and it will be different kind of pain ,and many times its in misdiagnosed that the pain she has is not diagnosed is Coronary Artery Disease.

More often, we take a women up and look at the [inaudible] or we look at the angioplast and we look up at that angiogram, quite frankly we can't see blockages. That the blockage is the plac build up as it lays flat to the artery wall is more difficult to protect. The wide study at NIH has recently completed a study and that showed that microvascular circulation is a real issue for women, and it may be different than men. So, we are finding that there is a gendered difference between men and women. So when we went to the FDA to review this fact, we were able to talk to the agency about a disease modifier effect. We are able to talk about the agency and agree on a woman-only clinical study.

Based on this work we formed the aware study. It's the first and only DNA based cardiovascular therapeutic to advance to phase 3, it is one of the first woman-only cardiovascular study, very unique study and we are very excited about it, looking at the therapeutic comparison between a biologic and a small molecule, there is a difference. As you can see here, small molecules deal with symptomatic pain of angina and this is based on either those other drugs but nitrates or beta-blockers which are nasal dilators will be reduced oxygen demand. And they are done basically for people who have this continued chest pain.

The disease modifier biologic as we have now reviewed with the FDA is going to the more of the underlying problem and what we are doing is by stimulating growth of microvascular circulation, we are classically a disease modifier and therefore we are using myocardial ischemia as the end point. This is very different and is the first time that we have an anginal kind of like effect in patient being reviewed by end point of myocardial ischemia as opposed to the classic chest pain of angina. So, there is a very different between a small molecules and biologics.

These small molecules are chronic daily, taken once a day or as a ischemia exists -- persists and we are one-time treatment. So, I will just walk briefly through -- I apologize again. The Phase 3 clinical study on about 300 patients, it will be at 50 medical centers and it will take 18 to 24 months to complete and we think it's unique. We think we've got the end points right and we think it’s a very exciting forward-looking therapeutic for us.

We have changed the end points. We have established a very, very clear way to measure this, an objective end point. We now look classically all anti-anginal drugs have been approved based on walking on a treadmill till you get a chest pain and stop. And what is unique about what we have done here is to develop this using a more objective measure whether its time to ST-segment depression based on ECG.

Powered up by the secondary end point which will be SPECT imaging. So, we have really worked to build this to use an objective measure because we believe this is one of the challenges that you have with these kinds of drugs that we are developing and how do you objectively measure it in a consistent manner. So, we think that we have made a lot of progress is it the value add that Cardium brings to this technology. We have developed new end points. We have developed the complete online real-time analysis to evaluate these drugs and I think that we've got it right.

There is a statistically significant improvement in women. It is a dose response and it is concordant in that as we see that efficacy results at all of the measures using ETT duration, timed ECG ST-segment depression, time to end in an improvement in CCS class. It is very rare to get that kind of concordance in a study like this. So, we feel that we have the statistics to drive, how of the power is study right. We think we have the dose response to understand it, and we think we have the efficacy data together with a 650 patient database to go forward, to do a very intelligent study for this indication.

Takes a minute for this to [kick] apparently. So, I am going to next talk a product called Excellarate. This is a product that we acquired from a Tissue Repair Company. We acquired it for $2 million. And I really apologize for this. Okay, Tissue Repair Company is a Gene Activated Matrix, is a topical gel, it uses collagen which is mixed with a gene called PDGF-B that uses the same adenovector driver.

What’s unique about this is, we have a therapeutic predicator PDGF-B which is a Regranex product. Regranex, we will talk about it in a minute is a well known and the only biologic approved for Neuropathic Diabetic Ulcers. But it’s problem is it’s difficult use.

It is used during a 10-week period, there will be 140 administrations. You take it on for 12 hours, put it off for 12 hours. And what we have done here by integrating this product, this gene together with the MATRIX. We have a localized and cellular response producing PDGF-B at the localized injury site.

We have a confirmed mechanical action based on the work with Regranex. At one time it sold a 150 million or so under 20 million. It is now selling at about 80 million. Difficult to use, patient compliance is not good. We think we've got a way to use it in a much more meaningful and simple way over patients, and we think it’s a really interesting product.

A response was measured in a Phase 1/2 clinical study. We acquired this product as I mentioned for $2 million as a royalty. We have now completed our work and have cleared with FDA Phase 2b clinical study. It has five arms, 210 patients, and we think we have developed this in a meaningful and powered way.

80% of the patients who are in this study had closure and that is the end point of the study, and we think that this is very, very forward looking therapeutic.

Lots of ways we treat these, topical dressing, Debridement, vacuum pumps, offloading, topical dressings of Apligraf and Dermagraf. But, really there is only one biologic and it uses PDGF-B. We have analyzed those clinical studies in great detail and know exactly how they worked. And we think we understand how and what is the right way to power this clinical study.

As I indicated, this is a comparison, so we're very, very close in terms of how this product lines up with Regranex. But we do believe it’s just a new and improved way of using the healing power PDGF-B, and we think we got a real good kick at the can here at the clinical study.

This is pretty large area, 800,000 diabetic foot ulcers a year and really everything but the kitchen sink is thrown at these. But patients will be patients with chronic ulcers. They have been open for year or longer, so they will be very difficult heal, and we think this is a very interesting and important new product.

I will next talk about InnerCool Therapies. InnerCool Therapies is involved and focused on Temperature Modulation Therapy. We acquired this company from Kleiner Perkins and Technology Partner. It is an endovascular medical device business. It has a fully validated manufacturing facility. Its FDA clearances were surgical, generally neurosurgery and fever control.

We have products being sold to 25 medical centers here in the United States. When I acquired it had 1% sales force, we are building that up and moving it to a new manufacturing facility that has the capacity to generate 50 million and above in annual revenue. We acquired it for $5 million, and shortly after the acquisition Alsius entered into a transaction to be acquired by a SPAC [Ethical] Corporation.

It was acquired for almost $45 million in upfront equity together with performance milestone payments of about another 30 million or so, for about a $70 million transaction. We completed very nicely against Alsius and we are very excited to get into the war.

But we made a couple of changes to this product, and I will talk about them now. When we acquired it, it had only one set older generation product, we have now built a company that has both surface cooling and endovascular cooling. We have changed the platform with a CoolBlue platform in to RapidBlue.

We have in the lower right hand corner if you will see our new console which is being presented this week at the Neurologic Conference Presentation up at Columbia. It is the world’s most efficient temperature modulation product. It lowers body temperature faster and regulates it better than any other product in the world.

It can lower cooling rates 4 to 5 degree centigrade and it can warm 2 degree centigrade per hour. It has it’s own built-in temperature that no one else can compete with, no one else has, and with this new console it is a I think is a world class beater. It is a green silicon it can be used anywhere in the world, and it is a world class product.

The catheter itself as you can see is very unique, and the competitors that we have used plastic catheters. We use a metal catheter which is specially designed. The little tip has a temperature control but it is very flexible and it is excellent in terms transfer of temperature in taking up body temperature.

In addition we have acquired, just recently a new product line that is a surface cooling that cools the human body with a disposable vest. Both of these products are [CapEx] with a disposable, and we think we are now the only company in the world that has both surface cooling and endovascular cooling. And we think that’s a really important idea. In the United States, there are four companies that are playing this role in this place and we will talk about that in a minute.

So we've positioned this company since we've acquired it, it has now a valuation predicate that has way passed 7x times that’s our initial acquisition price, and I think that we are bringing a lot of value and again this is what Cardium brings to this acquisition.

We have 25 hospitals currently using this product which our main center is at Columbia and at Stanford, heavy, heavy use for neuro-surgery. There are other uses. We have some research going with the NIH for stroke. There we have a study in one Sweden, Lund University for heart attack.

We have a big driver that's going to put this industry which is cardiac arrest, it is a great deal of interesting cardiac arrests. It was a very important article, two articles in New England Journal of Medicine. It demonstrated with a less, about a one degree reduction in body temperature, you can significantly improve neurologic outcomes for patients who arrive at hospital with such sinus rhythm and when they are cooled, they have a 37% improvement in their logic function.

And that is because what we are doing is, the brain has been oxygen starved during the time that the patient has been out and by improving and bringing in oxygen and cool air, we started to cool it by lowering the temperature, we can do cell damage and we think this is in ordinary area and this is what we find driving a lot of the -- hospitals are driving a lot of the interest in the best and I think that's going to be a big growth driver for us in the next couple of years.

In this space of four companies, we think we fit very nicely with these companies competitively as I mentioned earlier. We are the only company that has both a surface cooling and an endovascular cooling. The companies that play in this space are Alsius which is out in the market place. This is what the catheter looks like in more detail and you can see its flexibility, its unique and is only metal catheter in the world that can do what it does, there is no other metal catheter, all the other catheter are plastic.

Question-and-Answer Session

Unidentified Audience Member

[Question Inaudible]

Christopher Reinhard

It's a clear cut in femoral artery and just rests in the vena cava and sits there and as blood moves by it with the temperature of the body and what's really unique about it, with the temperature in the center of the body, we get a true core reading as opposed to using of external temperatures.

So here's where we are with our competitors, only three of them are commercial. One of them is still doing research for heart attack. Net events is the surface cooling only, the commercial, endovascular disease the company as recently being acquired by SPECT for $70 million its the only endovascular and we are here with and endovascular Inner surface solution.

A new part about these companies whenever we have a hospitals looking at bringing in one of these systems is complete bake off. So we are all invited, so we all have chance and I think we will be spending lot of our time here educating consumers and our customers about the performance. Here is based on documented studies and differences in the ability to reduce body temperature, centigrade per hour and as I think you can see that you've got the surface cooling that aren't coming at around 1.4 -- roughly 1 to 1.5 degrees per hour.

Alsius which is a smaller system is doing in about 1.2 per hour but it's an endovascular system and you can see the performance here of about 4.8 degrees per centigrade. So, there is a real difference in performance here and what we do is there has not been really this kind of data that's been gathered to really make a performance base comparison and evident based marketing and that's what we are doing here with InnerCool.

We think it's about $400 -- $500 million market in the U.S., it will estimate on a global basis of about $2 billion. It depends on as we go forward getting protocols for stroke. It is a very difficult study in one that a lot of people are taking on and or for heart attack. So, we think at least at a minimum here we are looking at building this to about a 25,000 patient base and revenues about $50 million in the next three or four years.

There is 25 hospitals that we are targeting, 2500 hospitals and we have very small percentage and no one really has a big percentage in this space. So, I think it’s a really wide open market and very interesting, exciting area.

So, why is cardio therapeutics compelling or is compelling because we've got a team that is making very unique acquisitions. We are buying these at very, very favorable prices. We have for $11 million and are working value added, brought on a Phase 3 product, a Phase 2b product and a product that has a FDA 510(k) approvals.

If I came to you when I originally went to our initial investors and said, we are a relatively small amount of money, I am going to get large late stage clinical products. I think most people have said, you are out of your mind. And I think what we've done here, is shown that you are in spaces we operate and you have the knowledge that we have, we've been able to make very, very interesting acquisitions and to advance these and bring these into bear relate clinical study.

We continue to maintain a relatively small corporate infrastructure. And we are going to continue to use Cardium platform to acquire other companies that we can diversify risk and accelerate growth and enhance our shareholder value.

With that I think, we will take some questions. I think that concludes the web-based presentation. Okay.

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