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Cleveland BioLabs Has Several Value Driving Events In The Next
Few Months: A Department of Defense Contract And Phase 2 Cancer Trial Results
Cleveland BioLabs, Inc.
73 High Street
Buffalo, NY 14203
Michael Fonstein, Ph.D.
Co-Founder, President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
Published October 12, 2007
Michael Fonstein, Ph.D.
Chief Executive Officer and President
Dr. Fonstein has served as Clevleand BioLabss Chief Executive Officer and President
since its inception in June 2003. He served as Director of the DNA Sequencing Center at
the University of Chicago from its creation in 1994 to 1998, when he left to found
Integrated Genomics, Inc. located in Chicago, Illinois. He served as CEO and President of
Integrated Genomics from 1997 to 2003. Dr. Fonstein has won several business awards,
including the Incubator of the Year Award from the Association of University Related
Research Parks. He was also the winner of a coveted KPMG Illinois High Tech Award.
Inc. is a drug discovery and development company leveraging its proprietary discoveries
about programmed cell death to treat cancer and protect normal tissues from exposure to
radiation and other stresses. The Company has strategic partnerships with the Cleveland
Clinic Foundation, Roswell Park Cancer Institute, ChemBridge Corporation and the Armed
Forces Research Radiobiology Institute.
CEOCFO: Dr. Fonstein, it has been about nine months since
we have spoken with you, will you bring us up to date on what is happening at Cleveland
Dr. Fonstein: As they say, so far so good. The
Company is about four years old and went public about a year ago on Nasdaq. Cleveland
BioLabs (CBLI) is focused on the development on two types of drugs, one type is protecting
from acute stress, such as radiation (Protectans), and another type that is an anti-cancer
(Curaxins). I am pleased to say that we have experienced substantial progress on both
On the protection side, our most advanced compound is CBLB502,
which is being developed first, as an anti-radiation drug for biodefense purposes and then
for medical use.
We have already established animal efficacy in two species and
completed our manufacturing process. We are about to file an IND to start human safety
trials, which may start as early as this year and will continue through much of 2008. This
would be our last technical step before submitting for FDA approval.
You probably understand that this type of drug does not fall
under traditional methods of FDA approval, since it would be unethical to test for
efficacy in humans. We follow the two-animal rule, which requires efficacy in
two animal species, and only safety in humans.
CEOCFO: How do you get people
to volunteer for those trials?
Dr. Fonstein: I think people do it for
compassion and economical reasons. In northern Europe, it is more common to recruit
people. In the United States, we have to show that there is overwhelming evidence of
animal safety, which we can. We are well on track with the formal development of this
In fact, the Department of Defense (DoD) has a request for
proposal outstanding, calling for late stage development of drugs such as ours for use as
radiation counter-measures. We are heavily involved in the process with the Department of
Defense and we expect a decision probably by the end of October (2007). According to the
specifications in their request, we believe we are the only legitimate player.
CEOCFO: Will you be producing
the drug yourself?
Dr. Fonstein: We developed the process together
with a manufacturing partner. With we have a GMP process in place and are about to embark
on human trials in October. It took us about a year and a half to complete the
CEOCFO: This is on the defense
Dr. Fonstein: Yes, this is on the defense side.
The reason we are excited about this drug is because while protecting normal cells against
radiation, it does not protect cancer cells. Therefore, there is a clear medical use for
this drug and we expect to expand this drug into radiation treatment of cancer to
improve side effects for patients.
CEOCFO: Tell us about your anticancer drug.
Dr. Fonstein: The Companys second line of
development is creating drugs with which we can control cell death in cancer cells. We
developed a drug based on this concept, which is currently in Phase II for hormone
refractory prostate cancer. In this trial, which has not yet finished, we are around half
way through. We can say that we achieved a number of technical milestones within the
trial, so we see signs of efficacy. We cannot say more than that today, because the trial
is not over.
CEOCFO: Why did you start with
Dr. Fonstein: Prostate cancer is one of the
biggest and most common cancers without any effective drug treatment. Compared with lung
and breast cancer, where there have been some promising developments, prostate cancer has
no cure. Our drug works on basic cellular mechanisms, which are applicable to many
cancers. In fact, we are expanding trials into a variety of other cancers, including Renal
Cell carcinoma and Multiple Myeloma.
CEOCFO: Going back to the
Department of Defense and the radiation protection compound - what is it that you are
offering that sets it apart from the others?
Dr. Fonstein: Our drug provides survival
benefits, so you have animals that not only survive, but that do not have significant
ongoing damage. If we inject our drug, we can save 60 to 80% of animals from a lethal dose
of radiation that kills about 80% of the control group. Most of the drugs, which are
involved in radiation treatment support survival and/or recovery from sub-lethal doses.
If you look at radiation exposure in mammals, there are two
primary ways that they are affected: hematopoietic (bloodproduction/bone marrow)
syndrome is the first syndrome experienced at lower doses, which destroys neutrophils and
platelets and ultimately leads to compromised immune systems, hemorrhage, and the
bloods inability to restore itself. At higher doses, gastro-intestinal (GI) syndrome
is the faster cause of mortality, as the integrity of the gut wall is compromised and
There are ways to heal hematopoietic syndrome by simply providing
blood transfusion for bone marrow transplantation. These methods are not practical,
however, in situations with large populations, or on the battlefield. There are no drugs
currently available to recover from GI syndrome, except ours.
The fact that our drug addresses both syndromes quite
effectively, and that the Department of Defense request specifically outlined GI
protection, have us quite encouraged. Also, remember that any compound the Department of
Defense acquires, needs to be something easy to deploy in the battlefield which we
CEOCFO: Development is
expensive; what is the financial picture of the company?
Dr. Fonstein: We have raised about $50 million
over the past four years. Today we have around $25 million in cash and more with grants,
so we believe we can go for many months and see at least our radiation protector through
full development and approval, as well as publish Phase II results on the cancer
CEOCFO: Is the investment
community paying attention?
Dr. Fonstein: I believe they do. Our stock
appreciated from $6.00 per share at our IPO to about $12.00 now. There is always a
challenge when you have a company, which plays at two tables. The Department of Defense
type of development attracts some investors and not others; while pure-play biotech
investors are more focused on the cancer drug and medical applications. So basically you
have two stories you are telling to investors, which is always a challenge. All in all, I
am very happy with the response we have received.
CEOCFO: In closing, why
should potential investors be interested now?
Dr. Fonstein: I see several potential
value driving events: First, the Department of Defense contract with development money and
a commitment to buy many doses, upon approval. This will be a significant revenue stream,
not to mention potential to sell to other governments and recurring purchases, as shelf
life expires over a few years. Second, the release of our Phase II cancer results in the
next few months, which will validate the second avenue of our development program. I have
not even discussed several other applications for our Protection compounds, nor our
discoveries in stem cell induction and mobilization. We have a platform approach, unique
compound sources, and a plethora of advanced applications. Investors have both long-term
value, and short term catalysts to grab their attention.
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