CardioVascular BioTherapeutics: The Wall Street Analyst Forum Presentation Transcript

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CardioVascular BioTherapeutics, Inc. (OTC:CVBT)
The Wall Street Analyst Forum
September 20, 2007 11:10 am ET

Executives

Dan Montano - Chairman & CEO
Jack Jacobs - Vice President, CSO & COO

Presentation

Moderator

Hey, good morning ladies and gentlemen in our ongoing attempt to adhere to the published schedule, I would like to introduce the next company in this morning's biotechnology, especially pharmaceutical conference.

CardioVascular BioTherapeutics is a biopharmaceutical company developing formulations of Fibroblast Growth Factor-1, FGF-1 to treat a number of diseases characterized by inadequate blood flow through tissue or organ. The company is developing injectable and topical formulations of FGF-1 to facilitate angiogenesis in the heart or other organs and tissues.

The company recently received FDA approval to begin a Phase II trial, for the treatment of severe coronary heart disease. CVBT is also currently conducting Phase I trials for wound healing and peripheral artery disease.

Now without any introductions, I would like to introduce Dan Montano, Chairman and Chief Executive Officer of the company, who will give some details. And our primary speaker will be Jack Jacobs, Vice President and Chief Scientific Officer and Chief Operating Officer of the company.

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Jack Jacobs

Okay. So as mentioned, we treat cardiovascular disease with a protein therapy. So we're not a not gene therapy or Stem Cell Company, we use protein therapy.

Our disclaimer for forward-looking statements in this talk. So, to give you a brief introduction into the company itself, our drug candidate which is human FGF-1 protein, and then talk about our Lead Clinical Development Program, which is in Phase II, in patients with severe coronary heart disease.

We have two Phase I trials, one in wound healing which is just finishing up; one that's just starting in peripheral arterial disease. And I will briefly mention our preclinical research programs at the end.

Okay, some information on the company. It’s headquartered in a suburb of Las Vegas, Summerlin where the executives live, to avoid whatever, California taxes. But our main research and development labs are in La Jolla, and we have a GMP-manufacturing plant in La Jolla, where we make the human FGF-1 for the clinical trials. We have approximately 30 employees in the company.

Okay. So, the physiology behind our product is the Angiogenesis, which is the growth of new blood vessels. And there might be 70 medical indications, diseases which result from the lack of blood flow to tissues.

At this past March, American College of Cardiology meeting there was a session on, Is Angiogenesis Dead? So there's been a real misperception in our minds that this therapy is -- angiogenesis is not a viable way to treat these diseases. But most of those failures have been with pain therapy trial. So I want to emphasize we are using a protein, and I would like to show you some clinical data that we feel angiogenesis therapy is still alive and kicking.

We are using a protein which is a potent stimulator of angiogenesis, FGF-1. It really doesn’t work on normal tissue, you've got to put it into ischemic tissue. We know it stays resident in the heart, for example for a week, to drive the angiogenic response. We've done four human trials that are safe and well tolerated in humans.

Importantly, we see no edema, so FGF is our main competition in this area. Some trials have been stopped due to vascular leakage and edema. We have a patent and have found this very important to put this growth factor right into the muscle, you can't put them into the coronary arteries, you've got to put it right into the exact location where there is ischemic damage.

And the last point Angiogenesis is typically defined as the growth of capillaries, FGF does that, but FGF-1 also grows small arteries which is important again to get better profusion into these damaged tissues.

I won't go into this slide much, just to say that FGF is part of a large family of FGF, there are 22 members, but we've chosen on the top there right here. This FGF-1 really is the most potent and diversely active of all the FGF's, and this has been very important in our wound healing studies where to get wound healing you need to stimulate a lot of different cell types.

Okay. Again, we've really launched an effort in the Company to distinguish ourselves from gene therapy and we've come out with a number of articles recently that we feel protein therapy is back and has high promise.

Okay, so going into the Company, the Company was founded by a cardiovascular surgeon, Thomas Stegmann, who performed the first Angiogenesis trial in humans, in the human heart at his medical center in Fulda, Germany, in the middle there. He since published quite a bit on his trials, he has written books, and we've taken his original discovery and added onto that with the U.S. trials which I'll talk about now.

Okay we have our lead indication as severe coronary heat disease. In addition, I'll discuss ongoing U.S. clinical trials in some of these other areas. But first, I'll talk about the heart indication where we've performed three clinical trials and we're starting our Phase II clinical trials right now.

In the first trial which was done by Dr. Stegmann in Germany, this is where he injected this growth factor into people's hearts as they were having a by-pass procedure. And what I'm going to show you right here, this is before injection; after injection you see the blushing, the angiogenesis, but importantly you see these arteries. So this is a very key difference with FGF-1 you get small arteries formed which leads on the right hand panel to an increase in vessel density in the heart and importantly, you can see it persist for three years. So we get capillaries, we get arteries that persists for three years.

Second trial, he then went in and did patients with sole therapy, so without a bypass. And there we did SPECT perfusion in working capacity, so clinical endpoints in the second trial. And this shows you some of the data from the second trial which was done in Germany. On the left, you see a SPECT perfusion. So more red is more perfusion into the heart muscle, you can see clearly after 90 days there we get increased perfusion both at rest and at stress. And on the right hand graph there, this was statistically significant.

Our primary clinical endpoint both in Europe and in U.S. is exercise performance. In Germany, it is bicycles, here we're using treadmill tests, but you can see on the left there, we had a statistically significant increase in bicycle performance in the German trials. And on the right hand side we also see a very nice improvement in their chest pain scores. Okay, so, after the two trials in Germany, we applied to the FDA to start our Phase I trial in patients. Now, this is not a typical Phase I trial or treating of separate patients. We’ve done a lot of dog toxicity studies leading up to this. We’ve completed this trial, in six sites in the US treated 30 patients, and remain -- our readouts were three months. So, we inject the growth factor into people’s hearts, and for three months we give them a battery of safety and efficacy testing, where we do follow them for a year for safety issues.

Again, we are confirming and extending what we saw on our two German trials. Significant improvement in their anginal scores, chest pains after six weeks and twelve weeks. This Phase I study was not powered to show efficacy on the treadmill test, but again I think on the right hand panel there, you can see significant improvement at all doses tested in this Phase I trial.

So, the summary of the Phase I is that it's safe, from a open-label trial, and the efficacy results appear promising. And we are now beginning our Phase II trial which is a randomized placebo control trial. This lists some of the characteristics of this Phase II trial, where it's international global trial at 30 sites, 120 patients will get three different doses of the FGF-1.

It's very important to have a placebo-controlled dose here. And also a very important change from our previous three studies is that now as a partner we're using an injection catheter manufactured by the Cordis Corporation which is J&J Company. They will be working with us closely in this trial. And catheter delivery of this, of the growth factor to the same area of heart is really is a lot less invasive, and we feel this trial will roll quite quickly.

Just a little more on the study design. Again it's very similar to what we did before we inject the patients, and then in three months we do a battery of these efficacy tests that’s shown here. The primary end point's been improved vessel density in the heart and better perfusion by SPECT imaging.

We will be doing exercise stress testing as well. And then importantly with the J&J people we'll be using their NOGA mapping system to look at valve motion in the heart, increased voltage in the heart which shows healthier heart tissue. So we will be road testing some of these newer and hopefully more quantitative end points in this trial.

I have mentioned this clearly that using an injection catheter is less invasive. You don’t need a cardiac surgeon, and it can be done in a catheterization lab and also (inaudible) to use a Placebo Group. Again with the catheter, we feel that this will significantly increased the market size.

We are working with J&J Company, which has a lot of experience with this injection catheter, it appears safe and we'll tolerate it. And the final point is we firmly believe an insurance reimbursement for this out-patient procedure will be far greater.

Okay, moving on to our two other US clinical trials in Dermal Wound Healing. We've just completed a Phase I trial. Like in the situation of our animal data in diabetic mice, you can see on the right hand side very significant increase in healing when you put FGF-1 on this wound. This is the topical application now on diabetic wounds.

The right hand, the total closure panels is the FDA recommended end point for our clinical trials, time to total closure. You can see in these diabetic mice, we get a significant increase in total closure, an increase in about 30 days in these pre-clinical experiments.

Our Phase I is just ending with just basically a safety study where we've dosed eight patients, and we will hopefully start our Phase II efficacy study later this year or the beginning of next year.

We have FDA authorization to begin Phase I study in peripheral artery disease which is basically the same disease in the legs of patients, as we see in the hearts. On the right hand side there you can see an angiogram that's some one with PAD. The Stenosis, clearly blockage there and again like in heart we'll inject the FGF-1 locally in to the leg muscles.

I won't go into this, we have -- like animal data is that this growth factor does work in animal models of PAD. And this is a trial design we'll be looking at six sites in the US, three doses of FGF-1 placebo control which is important and we'll be making about 10 injections scattered both at the sign of Stenosis as well as in the cap. And the end point here is mainly walking, a six minute walk test.

Now one indication in which we are very excited about, in which we are doing a proof-of-concept trial in humans at the University of California, Irvine is in chronic back pain, disc disease. And you see here that we are uncovering this proof-of-concept trial, that blockage of arteries to people backs leads to disc degeneration and may be very a important cause of chronic back pain which is a very large unmet medical need in United States and elsewhere.

This is the imaging study we are doing at the University of California. But let me just show you what we are looking at there. We are doing MR, Magnetic Resonance, Angiograms, scanning and we look at both the discs of these patients, you can see Grade 0 is a healthy disc full of water. Grade one is one that's beginning to disintegrate, grade three is one that's really candidate for disc replacement. So, all these patients have chronic back pain or probably need a disc replacement. So, in the same skin, now you look at their vessels that are supplying these discs, we're seeing some very interesting findings in this University of California study.

You can see some of these vessels, these are the lumbar vessels supplying the disc with blood and nutrients, some are wide open, their patent is shown around the L3 area. L4, we see a stenotic one, probably blocked by Atherosclerosis. And then, in the L5 region there is complete blockage of these lumbar vessels. This shows another patient where we've looked at, completely block occluded vessels at the L5 region. So, we think when we patent this whole concept that chronic back pain may be due to a vascular etiology, we're doing 50 patients, we're about half way through this brutal concept trial. We then hope to be able to treat these patients with our angiogenic growth factor.

We have pre-clinical research in osteoporosis in stroke. Again, this growth factor stimulates bone formation, and we have some promising results in osteoporosis with animal models, as well as stroke, I won't go into this but, again, using its angiogenic property, we can see nice results in both stroke and osteoporosis models. We have IP around the proteins, about manufacturing and using it to promote angiogenesis in the heart and in the back, and also in those areas where we don't have patent under use. We have market exclusivity in Europe, where there is a 10-year exclusivity period for new innovative drugs from multiple sources we hear that legislation, hopefully we pass next year in the United States. So, all the current indications we are developing for this drug would qualify for this exclusivity period.

So, in summary and conclusion, our lead candidate is in Phase II clinical trials. We are moving forward in Phase I trial, pass Phase I in the wound healing and PAD, and we have some promising preclinical research data in other areas as well. So, I am happy to answer to any technical and medical questions that our CEO here who can answer any business or financial questions. Thank you for your attention.

Question-and-Answer Session

Unidentified Audience Member

(Question Inaudible)

Jack Jacobs

You can't make a statistic correlation because, the way it worked is that not all the people who are tested -- you might want to repeat the question or --.

Dan Montano

Yeah, it wasn’t -- in the Phase I U.S. study, there didn’t seem to be a dose response coming from our efficacy. So, really would not power, if you look at that, at efficacy. So, we didn’t have enough patients in each group to give a statistical significance. Clearly in the Phase II trial it is powered to look for that type of difference. So, we saw trends which was promising, and we hope to extend and confirm that in our Phase II trial. Phase I really was a safety trial, where we were testing some of our efficacy end points.

Jack Jacobs

But I think it's important to note that in the Phase I trial, we gave two doses per patient, whether they had one-vessel disease, two-vessel disease, or three-vessel disease. So, by random chance, if we made two injections on somebody who had three-vessel disease, we got an improvement but they still had a deficient area. If we gave two to a person with one, so, I mean, it wasn’t statistically powered. So that was -- safety is what we are looking for, but we got efficacy in every category naturally, it was always worth noting. And it correlates to the prior efficacy we’ve seen in the trials of Dr. Stegmann in Germany. Yes, sir.

Unidentified Audience Member

(Question Inaudible)

Dan Montano

At this moment in time, we do not have a partnership. With Johnson & Johnson we have a collaboration, we are working on a device. No, no, we do not have a business deal.

Unidentified Audience Member

Okay. But basically you are using their catheter.

Dan Montano

We are utilizing their catheter in the Phase II trial and their mapping system in the Phase II trial. At our election, we have not started [this business deals]. It's important to note that there are other providers of catheters, and if you -- I assume all of you realize that yes we do have a wage to grow blood vessels in the heart. We have substantial marketplace. The catheters go for between $3,000 to $5,000 depending on which one you talk to. It is the potential applications in dozen patients a year. A million catheters at $3,000 is a respectable number. We do not believe that Boston Scientific can afford to be excluded from our Phase III trial, because if our drug becomes labeled with the J&J catheter, that’s not good for Boston Scientific. We believe they understand that. So, at our option we have decided not to make a business deal until we've concluded the Phase II data.

Everybody in this room recognizes that all the human results we have, and by the way for those who want, we have a package with all the end reports. We also have a CD, it's actually a DVD, which has a news clip from ABC Nightly News on our drug done two years ago with some of the patients where you can see the angina, basically the angiogram before the treatment and afterwards. You can see the blood vessels there.

We believe the Phase II will confirm what we already believe. If the data is similar, where we see no adverse events and an increase in perfusion of 300% on average, we believe that the Phase II will confirm it. I think everybody in the world knows that for those people who check boxes and do deals, Phase II is what matters.

So, at this point in time we are not anxious to make a deal, nine months before we have Phase II data confirming something. So we do not have any partnerships. I can tell you, obviously we are dancing with a lot of people, but as every woman in the room can tell you, just because you dance with somebody doesn’t mean you have to marry them.

Jack Jacobs

Yeah J&J is providing more than just the catheters, they are providing training on the catheters. They are really working with us to identify sites,

Dan Montano

And new protocols and new designs.

Jack Jacobs

Kind of yeah. So, it's more of than just buying a catheter from them.

Dan Montano

But their motivation is, they have no other use for it but us. Since all the gene therapy trials have failed, since every alternative use of the catheter has gone except stent cells, and those don't appear to be a highly commerciable in the next three to five years, our drugs could be commercial to 2-11 -- to 2011 or 2012. The thing I really want to argue is, I lost that argument last night with the J&J people.

They have a real instinct to go slow. I haven't figured out what this is. But I think the bottom line is that with both of the providers of injection catheters, they have huge investments in these systems. For those of you who may know that Boston Scientific invested $40 million in Corautus to use their injection catheter to deliver gene therapy which failed. I think Boston Scientific has a choice, write-off their investment or come dance with us too. So, it's good time to be the only lady at the dance. Yes sir.

Unidentified Audience Member

You showed whole bunch of applications and having efficacy in each one of them. Having the approval from FGF to focus on some, we don’t have the money to do all these simultaneously. What would be your focus?

Dan Montano

We have three primary focuses. You don’t mind repeating the questions you have said?

Unidentified Audience Member

Yeah. So what is your primary focus? You have many applications of this growth factor. What is the primary focus of the company?

Dan Montano

Our primary focus is number one, the heart, as that's the biggest identifiable market. We believe the drug will sell for $10,000 per patient. So whatever you decide the marketplace is for United States, you can do your own calculations. The second, we believe is the wound healing, because we believe since it's topical the trials were both quicker. Third is the PAD, because the market is well defined, very substantial, i.e. basically similar to the heart. Those are our primary focus.

In a backup mode, we are spending about $1 million to look at lumbar ischemia because chronic back pain is one of the largest medical costs that we're trying to grade; nobody knows what the cause of chronic back pain is. If our suspicion is correct, we've uncovered a multi-billion dollar market or $1 million as both of us consider that as a good volume.

In the other pre-clinical stuff that Jack mentioned, the osteoporosis, the stroke, and we actually have others. We've spent 300,000, 400,000, 500,000 to advance animal trials to get a better definition as long as we have the extra money. But our focus is the big tree, and chronic back pain, you just have to find the answer because it's such a huge opportunity. It is my speculation at the World Spine Conference in January or whatever in Tokyo, that there will be a very impressive answer. And for a million bucks, it's worth throwing at it. I live in Las Vegas, so, yes, I'd probably be doing that.

Unidentified Audience Member

Thank you.

Dan Montano

We still have 10 minutes to check out, if anybody has any more questions, we never start late, we never run over. Okay. So, let me just make a closing comment if I might.

Unidentified Audience Member

(Question Inaudible)

Dan Montano

Let me make a closing comment, if I might. Dr. Stegmann in 1992, working in the cardiovascular hospital that he was in charge of. Where across, work done by Judah Folkman, who was trying to do anti-angiogenesis. Dr. Stegmann concluded that what you did not want vessel growth in a tumor he could use in the heart, since more people die from heart disease than any other indication. He started the work with his own money. In 1995, he got clearance at his hospital, to do the first human trial, was reported in 1998 by the American Heart Association in their publication circulation. He started a frenzy of activity.

To our knowledge between 15 and 20 other companies said they are going to angiogenesis. Also according to angiogenesis foundation, they reported $3 billion to $4 billion went into angiogenesis research.

At this point in time, to our knowledge, all other attempts have failed. Gene therapy has not demonstrated success. Injecting into the blood stream has not demonstrated success, and DGF has not demonstrated success. The reason I mention this, I would like to make a closing statement, we believe this is the single largest unmet medical need in the world, whether it's applicable to the heart or the brain or the back, there is no other unmet medical need that comes close, point one.

Point two, we believe we are alone, not because of our genius, but because other people that tried to use gene therapies to accomplish what we did. We believe we are alone and we believe we have a seven to ten year advantage over any competitor. The reason I make this comment folks is, you don’t have to believe us, but I think you should watch us. And I believe as one person told me recently, this is either the biggest opportunity he's ever seen or the biggest con, either way he's got to follow it to find out which.

I welcome you to follow us, we also have DBDs, we have annual reports, at our website are all the scientific reports. We can support everything we stated with evidence, and I believe that our Phase II clinical trial, we should be completed within the next 12 months. And I think all of you concur, if we open the magic envelope and we prove statistical significance that we were able to increase the perfusion in the heart. I would not want to long a stent company. Thank you very much.

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Copyright policy: All transcripts on this site are copyright Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

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