Healthcare
Biotechnology & Drugs
OTC BB: ZKEM

Xechem International, Inc.

100 Jersey Avenue
Building B, Suite 310
New Brunswick, NJ  08901
Phone: (732) 247-3300
Fax: (732) 247-4090

Dr. Ramesh C. Pandey
Chairman, President, and
Chief Executive Officer

Interview conducted by:
Walter Banks, Co-Publisher

CEOCFOinterviews.com
April 2001

BIO OF CEO

Dr. Ramesh Pandey has a distinguished career in the biomedical sciences spanning over 35 years and has served with numerous universities, government agencies and pharmaceutical companies worldwide. He came to the United States from India in 1967 with a Ph.D. in medicinal chemistry and spent three post-doctorate years at the University of Illinois-Champaign Urbana, IL with Professor Kenneth L. Rinehart, Jr.

After additional studies on antibiotics at the University of Illinois, Dr. Pandey went on to the National Cancer Institute's (NCI) Frederick Cancer Research Center as a Senior Scientist, Head of the Chemistry Section and worked on the anticancer products daunomycin, maggiemycin and fredericamycin. Dr. Pandey has the first U.S. Patent (#"4,501,699) on the biologically active antracyclic aglycone-maggiemycin and anhydro-maggiemycin.

In 1983, he relocated to Abbott's Pharmaceutical Products Development (PPD) Laboratories in North Chicago, but this move was only for a short time because the President of LyphoMed requested Dr. Pandey's help to develop and produce a generic version of Eli Lilly's Vancomycin, whose patent had expired. Dr. Pandey agreed and in 1984, under a joint venture with LyphoMed, Dr. Pandey formed Xechem and was its President and Chief Scientist.

During this time Dr. Pandey was also a Visiting Professor at the Waksman Institute of Microbiology at Rutgers, the State University of New Jersey, where he carried out most of the Vancomycin development work. In 1987, Xechem became a subsidiary of LyphoMed, but in 1990 when LyphoMed was acquired by Fujisawa, Xechem split from Fujisawa-LyphoMed and moved to New Brunswick, New Jersey. In April 1994, it went public on NASDAQ as Xechem International, Inc. Since then Dr. Pandey has formed the wholly owned subsidiaries Xechem Laboratories, Inc., XetaPharm, Inc., Xechem (India) Pvt. Ltd. and a joint venture, Xechem Pharmaceutical China Ltd. He has made over 90 presentations at conferences and seminars and has authored (or co-authored) 80 original peer reviewed scientific papers and contributed to several books discussing chemistry and biochemistry topics of major importance.
 
Dr. Pandey holds patents for biotechnology analysis and rare drug production processes.  He also holds several US and international patents for paclitaxel and its new analogs. He is a member of the Editorial Board of the International Journal of Antibiotics and of several professional societies. He has been awarded several grants from NASA, NCI and NIH.  He is a member and past President of the New Brunswick, NJ Rotary Club and is also involved in local and international community services through Rotary International.

About
Xechem International, Inc.

Xechem International, Inc. ("Xechem" or the "Company") is a public holding Company. Xechem Inc., a subsidiary of Xechem International, Inc. is engaged primarily in applying its proprietary extraction, isolation and purification technology to the production and manufacture of paclitaxel (commonly referred to in the scientific literature as "TAXOL®," a registered trademark of Bristol-Myers Squibb Company ("Bristol Myers")). Paclitaxel is an anticancer compound used for the treatment of ovarian, breast, small cell lung cancers and AIDS related Kaposi sarcomas. The Company has successfully isolated pure paclitaxel and has received a process patent on this technology. The Company has submitted to the FDA a Drug Master File ("DMF") for the facility and the bulk paclitaxel product. The Company has been issued five U.S. patents on paclitaxel and its second-generation analogs from the U.S. Patent and Trademark Office and over thirty-four international patents are pending

The Company showed it’s expertise in drug development with their first project - the successful launch of Vancomycin in a remarkably short time - within 3 and 1/2 years, from culture in the test tube through final active drug substance to the finished dosage form marketed with FDA approval. This occurred when Xechem was affiliated with the LyphoMed Pharmaceutical Company.

Currently, their generic paclitaxel for injection is being prepared for marketing, via strategic manufacturing, distribution and sales alliances in Domestic and International markets

In addition to the Company's focus on the development and production of paclitaxel, the Company has continued to apply its expertise of research to develop other niche generic drugs by microbial fermentation or semi-synthesis.  Emphasis has also been placed on the development of drugs from sources derived from Asian as well as other traditional medicinal plants in the anticancer, anti-fungal, antiviral (including anti-AIDS), anti-inflammatory, anti-aging, anti-infective and memory enhancing areas. Some of these efforts are performed in collaboration with the National Cancer Institute ("NCI") and the National Institutes of Mental Health (''NIMH'').

NUTRACEUTICALS products currently on the market are: GinkgoOnce®, GarlicOnce®, GinsengOnce®, Gugulon^TM, and CoEnzyme Q-10.  GinkgoOnce®, GinsengOnce® and GarlicOnce® are unique in that they are once-a-day products which make them convenient for the consumer.  All of our products have been quality tested and are standardized.  We will soon be starting a new line of Ayurvedic dietary supplements with the launch of our new product “VIDAPRAS”.  This is an Americanized version of the Ayurvedic preparation “Chyawanprash”.

CEOCFOinterviews - Dr. Pandey could you give us a brief history of Xechem International, Inc.?

Dr. Pandey: Xechem International was formed in 1994, which was just before we went public. The company holds all of the technology of Xechem Inc., which is the pharmaceutical part of Xechem International. We also have XetaPharm, Inc., which is the nutraceutical subsidiary of the company, and Xechem Laboratories, Inc. In April of 2000, we formed a joint venture with J&M Consultants to establish Xechem Pharmaceutical China Ltd., with offices in Hong Kong and Beijing, Peoples Republic of China. Xechem International holds 45% of Xechem Pharmaceutical China Ltd. Additionally, we have another company in New Delhi, India called Xechem (India) Pvt., Ltd., and we are major stockholders of that company.

CEOCFOinterviews – What is your most recent and exciting news?

Dr. Pandey: A few weeks back we announced that Xechem had discovered some new leads active against Helicobacter pylori, which has been shown to be a source of stomach ulcers.   The Company has also identified plant extracts active against Vancomycin resistant bacteria, Methycillin resistant bacteria, and Pseudomonas resistant bacteria. These are very exciting areas because people are becoming resistant to antibiotic drugs such as Vancomycin, and even major pharmaceutical companies are looking for leads which are active in these areas. What is exciting about our products is that these materials are all plant products and the preliminary results are very good. We are getting a lot of interest from major companies to look at our new and exciting leads. Therefore, that is very exciting and positive for us.

CEOCFOinterviews – What is the next step that you’ll be taking with your new leads?

Dr. Pandey: We can go in two ways with this. One is to use the plant extracts as such. We can take these total extracts first through the preliminary investigation for toxicity, followed by IND Phase I, Phase II and III clinical trials. Then take it as a PHYTOPHARMACEUTICALS into the market, which will have the curing activity.  It will not be a pharmaceutical, because people have concerns with pharmaceutical products. The trend for the past decade or so in the western society is that the market is moving towards the natural products, and continuing to grow. Many people cannot tolerate drugs such as Penicillin, Erythromycin or their derivatives.  People who have concerns about these kinds of drugs are turning to natural products.

Secondly, we are also doing bioassay guided fractionation of these extracts, which will lead to products like TAXOL®, or Camptothecin, which are big products in the cancer area. We will then do the IND Phase I, Phase II and III, with the pure compounds, and if the pure compounds are known, we will take the use patents, but if they are unknown we will determine their structures, and then take the patents on the structural molecule and also their biological activity. Therefore, that will lead to the PHARMACEUTICALS, and we think that we have a tremendous potential in that area.

CEOCFOinterviews – Where is Xechem, in its work with Paclitaxel?

Dr. Pandey: In the year 2000, a company from Florida called IVAX, won their court battle against Bristol-Meyer Squibb to be able to introduce a generic form of TAXOL®. Therefore, IVAX has exclusivity for six months, which expires in April of 2001. Now other companies such as Xechem can also introduce generic Paclitaxel in the market.  We are in the process of preparing the Abbreviated New Drug Application (ANDA), for generic Paclitaxel. We want to submit an application to the United States, FDA, for generic Paclitaxel, and we are also trying to prepare these applications for India, and some Middle Eastern Countries. After submitting the application for generic Paclitaxel, the FDA approval may take anywhere from 6 months to a year or more. We will start marketing Paclitaxel when we get the approval. Meanwhile, we are also working on the New Formulation of Paclitaxel. We have a formulation, which we think, based on our preliminary studies, will not need pre-medication of the patients. This formulation is patented, so we believe that we can take it from Phase I to Phase III, but this is going to take at least 2 years or more to bring to the market.

We also have what we call the “Next Generation Paclitaxel” that are analogs of Paclitaxel.  We have some co-operations going on with various groups, and we hope that at some stage down the road we’ll be able to bring one or two of those compounds, the new analogs, to the market which have certain superiority over TAXOL® or the other analog from Rhone Poulenc Rorer, that is Taxotere®.

CEOCFOinterviews – Can you give us a brief history of TAXOL®?

Dr. Pandey: The drug, TAXOLl®, was discovered by two (2) scientists, Dr. Monroe Wall and Dr. Mansukh Wani, while under a contract with the National Cancer Institute. TAXOL® has had good and bad times as it is not soluble in water. Dr. Susan Horowitz of the Albert Einstein Institute in New York, found that TAXOL® had a different mechinism of action, and Dr. McGuire from John Hopkins University found that TAXOL® works where no other drugs work for ovarian cancer, and that’s how TAXOL® gained it’s prominence. The National Cancer Institute then made it one of the most important drugs in the past three decades, but there was one problem. At that time it was being produced from the bark of the Yew tree, which predominantly grows in the Seattle, Washington area.  They found that the spotted owls live in those Yew trees. The environmentalist came in the picture, so they had to find alternative sources, and today there is no problem obtaining the raw material. TAXOL® was first approved for ovarian cancer, then they found that it had good activity against breast cancer, then small cell lung cancer, AIDS related Kaposi sarcomas.  They are now expanding the use of TAXOL® into some other cancers. Therefore, this is one of the most important drugs in the fight against cancer.

CEOCFOinterviews – What is it about TAXOL® that makes it useful in the fighting against cancer? 

Dr. Pandey: The precise mechanism of action is not fully understood; paclitaxel is classified as a mitotic inhibitor.  Unlike other anti-microtubule agents, such as vinca alkaloids, which induce depolymerization of microtubules, paclitaxel promotes microtubule assembly and stabilization.  This in turn inhibits mitosis and cell replication.

CEOCFOinterviews – What is the advantage of generic TAXOL®?

Dr. Pandey: As the drug is already used in the market, the FDA approval is expected to be very fast. Last year the sales for TAXOL® were about 1.8 billion dollars. To put a drug on the market it takes 10 to 12 years to go through the clinical trials and obtain FDA approval. In the U.S., once a drug is approved it becomes much easer to get the approval through the generic or ANDA route. Our new formulation of paclitaxel with our new delivery system should only take a short NDA for approval. This means that we won’t have to do extensive clinical trials and that should move the process along more quickly. In regards to the new analog, or next generation of paclitaxel it will be a complete NDA.  Therefore, once paclitaxel, which has $20 to $50 million-dollar revenue potential for Xechem comes to the market, we could use the new leads to continue to grow our company.

CEOCFOinterviews – What is your new delivery system?

Dr. Pandey: Paclitaxel bulk drug is a powder that has to be dissolved in liquid to be given in order to be administered i.v. to a patient. What makes our approach different is our patented method of dissolving the drug. We use dimethylacetamide (DMA), and our research shows that the solubility is much better.

CEOCFOinterviews – How will it be administered to the patient?

Dr. Pandey: The New Formulation as well as the generic version will be injectable.

CEOCFOinterviews – When might you be bringing the new generation of paclitaxel to the market?

Dr. Pandey: We are currently doing some clinical studies in China, and if everything goes well we may be able to bring it to the market in 2 to 3 years, but the generic form should be in the market sooner. We plan to submit the generic Paclitaxel to the FDA in 3 to 6 months, and then the FDA review process could take another 6 months to a year or more. However, we think that we will get approval in some of the foreign countries before the United States.

CEOCFOinterviews – What lead Xechem to get into nutraceutical products?

Dr. Pandey: Regarding our involvement in the “NUTRACEUTICALS”, a scientist who had been taking a herbal product to lower his cholesterol came to us and indicated that sometimes it worked and sometimes it didn’t.  When we analyzed that product we found that the active ingredient responsible for reducing cholesterol, which was supposed to be present in the tablet, was not there. We also learned from various news reports that sometimes-herbal products do not have the active ingredients they claim to have. For example, Ginseng has been used for thousands of years in China, giving people vitality, and so on, but after analyzing the tablets and capsules samples of different manufacturers’ on the market we found that there were a number of Ginseng products in the market with no Ginsenosides  (the active material) present in them. 

We routinely screen traditional medicinal plants from various parts of the world for new molecules.  Xechem’s approach has been to first talk to the “folk lore” people, the villagers in countries and areas where these plant products have been used for hundreds and thousands of years, and look at those products through botanists, followed by chemists and using modern technology.

About 12 to 15 years back, the National Institute of Health (NIH), formed an Office of Alternative Medicine, and in 1992, their budget was $2 million dollars. Congress and Senators asked ‘why are our people going to Mexico, Europe or Canada for alternative treatments, and why can’t we do something about it here in the United States?’ They then put together a budget for herbal products. Today the Office of Alternative Medicine has become “The National Center for Complimentary and Alternative Medicine”, and in year 2000, their budget was close to $100 million dollars.  Now you can see many herbal products in the market, with people who believe in these herbal products taking them frequently. 

CEOCFOinterviews – What is your product pipeline in the nutraceutical area?

Dr. Pandey: Today we make GinsengOnce®, which is our brand product currently on the market. It is a once a day Ginseng tablet, and we guarantee that it has the necessary Ginsenosides. We also make GinkoOnce®, another once a day tablet, and GarlicOnce®, and Co-enzyme Q10, and now we are coming up with a new product called VIDAPRAS™.  In India people have been using a product called Chyawanprash, and is used as a paste for thousands of years. People in the U.S., don’t like the product as a paste, so we did some market surveys and have developed the product as a granule. We are in the final stages and hoping to introduce that product by May of 2001. Tests have shown it to be an anti-oxidant, immune builder, and energy booster, and you only have to take one teaspoon full every day with water, coffee, tea or milk. We would like to increase our nutraceutical pipeline to about 20 or 25 products.

CEOCFOinterviews – How do you market your nutraceutical products?

Dr. Pandey: We were marketing them through radio and newspapers, but we have stopped our radio advertising and now marketing through many stores in New Jersey, Florida, Illinois, and over the Internet. Our website is www.xetapharm.com for our nutraceuticals, and for Xechem International it is www.xechem.com. Our products are marketed in the U.S. and China.

CEOCFOinterviews – What would you say is your biggest marketing challenge in marketing the nutraceuticals?

Dr. Pandey: Our biggest challenge has become educating people about the benefits of our products, and letting them know that we have standardized quality controlled products.

CEOCFOinterviews – What is your commercialization strategy for Paclitaxel?

Dr. Pandey: We are in touch with several companies who are interested in discussing a license or marketing rights with us as soon as we submit the ANDA. Therefore, we will use their marketing muscles for marketing our Paclitaxel and other products.

CEOCFOinterviews – What is your current cash and/or credit position?

Dr. Pandey: We are currently raising money and writing grant proposals for submission to the National Cancer Institute (NCI) and other government organizations. We do some contract work with various companies, and that is how we are currently generating cash. Our burn rate is about $50 thousand dollars per month.

New Jersey’s Ex-Governor Whitman did a good job in pursuing legislation to let small New Jersey companies such as ours to sell their State Net Operating Loses to other companies, and year before last we received more than half a million dollars through this process. In 2000, we received close to $300 thousand dollars, and this year we are expecting another half million dollars or more from that. This is with no strings attached. Through this program, we don’t have to go out and raise money or dilute our shares. This allows companies to survive and benefits the State in the end. The State has been very helpful in finding ways to help small companies such as Xechem to survive.

CEOCFOinterviews – Where do you see Xechem a year from now?

Dr. Pandey: A year from now, in April of 2002, we believe that our situation will be totally different. We should be self-supporting by then, based on the licensing and marketing agreement for the generic Paclitaxel and the selling of the nutraceuticals.

CEOCFOinterviews – What final thoughts would you like to leave with your current shareholders and potential investors?

Dr. Pandey: In the field that we are in, normally it takes 10 to 15 years to bring a pharmaceutical product to the market, and we have been already here for about 11 years. Many people thought that we wouldn’t survive, but we have. Hang in there with us, because we are going to make it.  Thank you to all the Xechem shareholders for your support and confidence.