Interview with: Bruce L. Hollander, Chairman, President and CEO - featuring: their products for the dental implant and tissue regeneration markets.

BioLok International Inc. (BLLI-OTC: BB)

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BoneGen-TR bone augmentation material along with patented Laser-LokŪ dental implants position BioLok International for significant growth and continued market share gains

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Healthcare
Dental Products and Materials
(BLLI-OTC: BB)

BioLok International Inc.

368 South Military Trail
Deerfield Beach, FL 33442
Phone: 954-698-9998


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Bruce L. Hollander
Chairman, President and CEO

Interview conducted by:
Walter Banks, Publisher
CEOCFOinterviews.com
April 26, 2006

BIO:
Bruce L. Hollander, Chairman of the Board, Chief Executive Officer and President
-- Mr. Hollander has been President and Chief Executive Officer of BioLok since 1996, and Chairman of the Board of Directors since 1998. Mr. Hollander was sole owner of Lion Wines and Spirits, a Florida beverage distributor from 1991 to 1995; and President of B.L. Hollander & Associates, a business consultant to a number of companies, including Kohlberg Kravis Roberts & Co., from 1982 to 1984. Prior to 1984 he was an executive with Incom International, Rockwell International and General Electric. Mr. Hollander received a BSIE from the Pratt Institute, a MSEM from Union College (GE - Co-op.) and is an APICS certified fellow.

Company Profile:
BioLok International Inc. (OTCBB: BLLI) is merging cell biology and technology to develop and market products for the dental implant and tissue regeneration markets. The Company is the worldwide manufacturer and distributor of the BioLok Precision Dental Implant System. BioLok offers a superior line of dental implants that incorporate many patented features and are synonymous with quality, fit of components, leading edge technology and design, and ease of use.  Approved for marketing by the FDA in early 2006, BoneGen-TR from BioLok is a clinically safe, nano-composite, time release calcium sulfate product used for bone regeneration, augmentation, and as a soft tissue barrier in Implantology, Periodontology, Endodontics and Oral Surgery.  The combined dental implant and bone augmentation markets are estimated at over $2 billion annually.

CEOCFO: Mr. Hollander, please tell us how long BioLok has been around, how long you’ve been with BioLok and any changes that we should be aware of?
Mr. Hollander: “BioLok started in the mid-70’s in Brooklyn, New York under a different name and became a company called Mini-Matic. In 1988 it went public through a reverse merger and I came to the company on January 1, 1996. The company marketed dental implants and was floundering financially as well as product wise, but then I came in and turned the company around. We took it through Chapter 11, did a small refinancing and renamed the company BioLok International. In fact, it was and still is an international company. We had 99% of all of our sales overseas.  In the first years of BioLok, we set our sights on becoming a company that provided unique products to the marketplace. To this end, we took all of the cash flow from our international sales and started building a very nice intellectual properties portfolio.

In 1999, we came across a company called Orthogen Corporation in Springfield, New Jersey, run by two Ph.D.s, in biomaterials, Dr. Harold Alexander and Dr. Harold Richie. Dr. Alexander is now the president of Orthogen Corporation and Dr. Richie is now an associate professor at NYU Dental School. They had two proprietary products; one was a laser micro-machine surface that they had already proven to stop epithelial down growth, get soft tissue attachment and get bone attachment. Therefore, we bought their company, so they are now our R&D division and we applied that technology to the collar of dental implants. We are now the only company in the world that has FDA approval to make those claims in our advertising. We received the FDA approval about a year ago (March 2005), and it is a fully patented surface technology.”

CEOCFO: What is the name of this product?
Mr. Hollander: “The name of the product that we obtained in the Orthogen Corporation acquisition is Laser-LokŪ and it is a surface applied to the collar of our silhouette implant. It is the premier surface in the dental implant industry today. It is growing very quickly in acceptance -- recognizing that BioLok is a small company with relatively limited marketing dollars, the technology is doubling each year. We are looking for continued significant growth from that product line.”

CEOCFO: Tell us about your competition.
Mr. Hollander: “The dental implant marketplace is over a billion dollars worldwide today and the major players are in the $300 to $500 million range overall. The largest is Noble Biocare out of Sweden; second I would say would be Straumann out of Switzerland, third and fourth would be 3i, which is a division of Biomet, and Zimmer Dental, a unit of the large orthopedic company Zimmer. There are also some smaller companies.”

CEOCFO: What would you say separates you from your competition?
Mr. Hollander: “Today, aesthetics and demographic trends are driving significant demand for dental implants. Aesthetic dentistry as well as an expanding population that is living longer requires implants that last a lifetime and have other important qualities. The first quality is initial stability, the second is long-term stability of the dental implant, and then you have to have the ability to stop epithelial down growth so that infection doesn’t set in. You also would need to give soft tissue time to attach to the implant, and, lastly, you have to maintain bone attachment to the implant. We are the only surface in the world that has FDA approval to say that we can do these things. Therefore, BioLok’s Laser-Lok implant is an increasingly sought after product with a superior surface.”

CEOCFO: Are you still having great success internationally with your product?
Mr. Hollander: “In terms of our gross sales, international sales are approximately 65 to 70% of our total sales, but we are developing a U.S. presence. Last year we had three sales people in the United States and this year we have 12. By the end of calendar year 2006, we hope to have 20 sales people in the United States. We will then grow our sales force over the next 2 years of approximately 30 to 35 people.”

CEOCFO: Acceptance of new products in the dental market generally revolves around what the Universities are saying; how does your sales staff overcome that?
Mr. Hollander: “We have studies done at New York University (NYU) dental school on a continuing basis. We also have continuing studies being done at the Dental School in New Jersey (UMDNJ), and we have a study that was completed at the University in Korea, because the Koreans don’t accept studies done in the United States and our products are sold in that market. Therefore, we have studies from three universities in addition to a study that was done in Rome, Italy with 20 doctors. That was the study that was published and accepted by the FDA as a basis for the claims that differentiate Laser-Lok from every other implant in the market. Each one of the studies proved exactly the same thing: that Laser-Lok implants stop epithelial down growth, that we get soft tissue attachment and that we get bone attachment. The results were identical in all of the studies, which allows us to walk-in and provide the doctors with the clinical proof for attributes that they need for safe and effective treatment for their patients.”

CEOCFO: Just to be clear, these studies are not required by the FDA, you just do them because it makes sense in your industry.
Mr. Hollander: “Absolutely correct. They give validity to the claims and they give validity to the product. Therefore, when an oral surgeon or a periodontist wants to see and understand the results, he has them.”

CEOCFO: Please tell us about the second product that you got through the Orthogen Corporation acquisition?
Mr. Hollander: “The second product that we developed at Orthogen, which we just received FDA approval on two weeks ago (March 2006), is BoneGen-TR, which is a calcium sulfate time release bone augmentation material. Calcium sulfate has been used in dentistry for nearly 100 years and probably used in orthopedics probably starting in the 1800’s as a bone augmentation material or bone filler. It is very well accepted because it enables bone growth, it is osio-conductive and osio-inductive, it is very safe, and fully resorbed by the body. The problem with calcium sulfate is that it gets resorbed to quickly and in doing that you can only fill small voids with it. Therefore, the approach that we took was the same as the one that the pharmaceutical companies did with antihistamines. When I was a kid, I took six antihistamines a day, but today I take one. The reason is because all of the little pellets of medication are coated with different thicknesses of a substance that dissolves over-time, so every hour or every minute, when a coating around a pellet dissolves, new medication is released. This is what we did with the calcium sulfate. We developed a nano-composite of calcium sulfate and a polylactic acid (PLLA), which is the material that is used in sutures that dissolve. Therefore, it is a product that the FDA has already approved for use. Calcium sulfate was already approved for use. Combining the two, we developed a nano-composite that takes 18 weeks or more to dissolve and get resorbed by the body. This compares to calcium sulfate without the nano-composite which is fully resorbed in 8 weeks. Now we can take a product that is safe, already proven and put it into larger bone defects.

We couldn’t have entered the market at a better time. If you think about what bone augmentation is all about and which products are available for that purpose, the best is your own bone. If you could harvest enough bone to use as your own bone augmentation, there wouldn’t be a $1 billion market for bone augmentation. The second thing that most people use is freeze dried bone, which is bone harvested from cadavers and processed, and then sold through tissue and bone banks. Recently in the news was a funeral home in Brooklyn, New York, that processed 17,000 cadavers illegally and replaced all of the appendages from the waist down with PVC plumbing pipe and sold the bone and tissue material to a bone bank. Included in that were cadavers of people who died from cancer. So I’m not ready to have any freeze dried bone put into my body and I believe the United States government should either put major controls on the processing and the sourcing or, as Australia and New Zealand has done, make it illegal to use the product for bone augmentation. You also have a lot of product that is bovine, which means that it is derived from cow and processed. Again, another serious issue has arisen with the 3rd case of mad cow disease in the United States that was reported last February or early March (2006). You also know what is going on in England with regard to mad cow disease, so I’m not sure that I want to be exposed to the possibility of disease through bovine. They do use some pig and horse, but I’m not thrilled with that either. In addition, you have other alternatives, such as bio-active glass and there are people who say that it doesn’t assist bone growth and there are people who say that it does, but the fact is that the material remains in your body, never gets resorbed and I don’t like the idea for foreign bodies being in my body. I still like the idea of resorbsion and something that disappears and just leaves bone -- that is calcium sulfate time release. We call our product BoneGen-TR, and I believe that this entry into the bone augmentation market will be significant for BioLok.

The sales of GoneGen-TR were never included in our forecast for this year. We really thought that we were going to introduce it next year, but it looks like we are on the path to introducing it in the June and July (2006) timeframe.”

CEOCFO: And there are no side effects associated in using the BoneGen-TR?
Mr. Hollander: “None; and that is the beautiful part of BoneGen-TR.”

CEOCFO: Do you see the growth of your business coming through building out the U.S. side of the market, future market or through R&D?
Mr. Hollander: “I’m going to say yes to all. The U.S. market is going to be a strong market; it is going to continue building as we get more and more acceptance in the market and we get above the radar screen. I believe that we are still well below the radar screen in the world of surgeons as well as on the restorative side and with general dentists. As we present in different societies and different shows, and we take our story into the marketplace, the U.S. market is going to build. Through R&D, we will continue to introduce new products into the marketplace, superior to that which exists now and possibly into other areas.

It should be recognized that when I talked about calcium sulfate time release, this is a product that belongs in the orthopedic world and in the maxo-facial world also. Therefore, we will bring on a product manager that will be expanding and introducing some products outside of the dental industry.

Lastly, with regard to growth in the international side, we will definitely expand in the short term and the long term. We intend to bring on new distributors and, perhaps, look to develop direct sales forces in countries that we are not presently in.

US sales, international sales, and the introduction of new products within the dental market as well as for other applicable markets will be sources of growth for BioLok. All three will contribute to a company that over a relatively short time has the ability to grow to a $50 million company. That is quite a substantial increase from $7 million that we did last year. However, last year we increased sales by 48%, when the market actually grew 18%. In the first quarter of this year, the market grew approximately 15% and we grew 28%. We intend to increase that 28% back-up to the area of 40 to 50%.

We are very excited about our opportunities. We do not see anything standing in our way except funding to do the additional marketing and sales.  However, we were successful in raising capital in early 2005 and we have delivered on everything we said we would do, so I think we are developing a good track record that should help us if we return to the market.”

CEOCFO: Do you have a razor, razor/blade revenue model?
Mr. Hollander: “Yes; the bone augmentation material will be sold right along with the dental implants, because all surgeons and GPs (General Practitioners) use bone augmentation material to fill sockets after extraction, to maintain the height of the ridge. We also sell membranes, which are a surgical add-on, in that a membrane goes over a bone augmentation material to hold it in place. Of course, when I say dental implant, we include the surgical tools to place the dental implants and the abutments that sit on top of the dental implants, which are restored by the laboratory and the restorative doctors with either crowns or bridgework. Therefore, there is a lot more to it than just dental implants; there is a full system with additional parts. Essentially, almost everything we sell is considered a consumable product. Once we have a customer buying our products, we expect them to continue to purchase from us or else their practice and their own livelihood will suffer. Moreover, with a growing number of customers, we are in a position to accelerate our growth each time we introduce a new product. To this end, we anticipate greater leverage from our distribution and an improving margin contribution.”

CEOCFO: Can you give us an idea of your current financial picture?
Mr. Hollander: “We reported a 28% increase in sales for the 1st quarter of last year and, considering that we are a public company, all that I can tell you is that we are having a good second quarter, which we report in the middle of May (2006).”

CEOCFO: In closing, what should investors remember about BioLok?
Mr. Hollander: “I think that BioLok offers a very simple situation that has many attractive investment characteristics. We are a small company and therefore easy to analyze. We have the technology and the products to allow us to become a very nice medium sized company. What that means is significant growth over the next 3 to 5 years.

We believe we have an infrastructure in place to support this growth. We have hired a VP of marketing, Chip Jones, who has a number of years in the dental implant industry, and we have hired a VP of U.S. sales, Johnny Postell, also out of the dental industry. We have brought on people and trained people for customer service and tech support. In addition, we have a manufacturing facility that is second to none and which has the capacity to double our output over the next nine months, if required. In summary, we are in a very positive position from the perspective of having the right products and technology, a strong financial position, and the infrastructure for significant growth.”


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“Today, aesthetics and demographic trends are driving significant demand for dental implants. Aesthetic dentistry as well as an expanding population that is living longer requires implants that last a lifetime and have other important qualities. The first quality is initial stability, the second is long-term stability of the dental implant, and then you have to have the ability to stop epithelial down growth so that infection doesn’t set in. You also would need to give soft tissue time to attach to the implant, and, lastly, you have to maintain bone attachment to the implant. We are the only surface in the world that has FDA approval to say that we can do these things. Therefore, BioLok’s Laser-Lok implant is an increasingly sought after product with a superior surface.” - Bruce L. Hollander

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