Interview with: Michael Fonstein, Ph.D., Co-Founder, President and CEO - featuring: their proprietary discoveries about programmed cell death to treat cancer and protect normal tissues from exposure to radiation and other stresses.

Cleveland BioLabs, Inc. (CBLI-NASDAQ)

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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

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Cleveland BioLabs, Inc.

73 High Street
Buffalo, NY 14203
Phone: 716-849-6810

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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 BioLabs’s 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.

Company Profile:
Cleveland BioLabs, 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.

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 Biolabs?
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 sides.

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 drug.

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 process.”

CEOCFO: This is on the defense side.
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 Company’s 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 prostate cancer?
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 blood’s 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 sepsis occurs.

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 can do.” 

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 trial.”

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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“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.” - Michael Fonstein, Ph.D. does not purchase or make
recommendation on stocks based on the interviews published.