CytoGenix, Inc. (CYGX)
Interview with:
Dr. Malcolm Skolnick, Chairman and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
products and services based on proprietary DNA expression technology, in pre-clinical development including, anti-herpes, anti-psoriasis and anti-inflammatory topical creams.

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CytoGenix - going after diseases that they can approach with a topical delivery such as herpes and the human papaloma virus that causes cervical cancer



Healthcare
Biotechnology
(CYGX-OTC)

CytoGenix, Inc.

9881 S. Wilcrest
Houston, TX 77099
Phone: 281-988-6118


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Dr. Malcolm Skolnick
Chairman and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor

CEOCFOinterviews.com
October 2003

BIO:
Malcolm Skolnick, PhD, JD Chairman/President and CEO

Malcolm Skolnick received his Ph.D. in Physics from Cornell University and JD from the University of Houston Law Center. Prior to joining the CytoGenix, Dr. Skolnick held academic positions in the Graduate School of Biomedical Sciences and the School of Public Health of the University of Texas Health Science Center at Houston. He is currently an Adjunct Professor in the School of Public Health where he formerly served as Professor of Technology and Health Law. Prior to joining the School of Public Health, Dr. Skolnick managed the Health Science Center's Office of Technology Management and oversaw the University's activities in protecting and licensing its patent portfolio of technology. While at UTHSC-H, Dr. Skolnick several clinical trials in pain management, smoking cessation and reduction of withdrawal symptoms in drug addiction.

Dr. Skolnick is a registered patent attorney, patented inventor and licensed to practice in Texas. Dr. Skolnick has been active in patent prosecution and licensing for selected clients and has served as an expert witness in intellectual property, product liability, and accident reconstruction matters.

Company Profile:
CytoGenix Inc. (OTC: CYGX) is a biopharmaceutical company that develops and markets innovative products and services based on its proprietary DNA expression technology. CytoGenix has products in pre-clinical development including, anti-herpes, anti-psoriasis and anti-inflammatory topical creams. The company owns a U.S. patent for its core DNA expression technology and has 40 international or U.S. pending patent applications.

With headquarters in Houston, Texas, the Company dedicated to developing biopharmaceutical compounds and services based on its proprietary gene regulating technology. CytoGenix’s controls U.S. and foreign patents for their technology that is effective in targeting and reducing gene expression and indicates that they can stop cell growth in lung, breast and cervical cancer cells by applying the company's proprietary ssDNA expression system (single-stranded DNA expression system) against target proteins.

CEOCFOinterviews: Dr. Skolnick, what was the original vision for CytoGenix, and where are you today?

Dr. Skolnick: “The original vision when the company began around 1995, was to deal with the preservation of fetal tissue and cloning. That went on for around three years. When I got involved in the company, there was a transition from that emphasis to where we are now, which is the use of technology to produce single strands of DNA in cells for using them in various mechanisms to down-regulate genes. We have chosen a number of target genes associated with the diseases, and found that we can prohibit the genes from expressing their protein and thereby do something about the diseases. We have worked on a number of viral diseases, the principle one of which is herpes. We have been able to down-regulate some human genes, especially one that makes inflammatory protein, which is involved in such conditions as psoriasis, rosacea, acne, bedsores and burns. We have progressed with the technology from where we began, to the point where we now have a few products in the pipeline; one is now in animal trial and several additional are ready to go to animal trial. We are looking forward to getting through the animal trials and going to the FDA, and then get the investigational drug application at clinical trials and then go to market.”

CEOCFOinterviews: How do you decide what problems to target?

Dr. Skolnick: “There are a number of criteria; one is that we have to be able to have a clear idea and specific knowledge of the gene and its role in the cell, whether it is the viral or bacteria gene, or an animal gene. Secondly, we have to be able to design anti-sense or a DNA enzyme, or another mechanistic approach with the sequence, to down-regulate that gene. Most importantly, we have to be able to deliver our technology, which is comprised of a large plasma of created DNA, that has all the instructions to do what we need to do. We need to get that plasma to the cell, and into the cell. The delivery being an important consideration, we have chosen to go after diseases that we can approach with topical delivery; that is putting our formulations onto skin or into cells that are available. For example, herpes because it is a skin disease is a good target. The human papaloma virus, which causes cervical cancer, is also a good target because we can approach that with a topical application. The human RHINO virus, which causes colds, is also a good target because we can approach that topically as well, by using an aerosol spray into the mucosal passages. The anti-inflammatory that we are after is another topical target because it expresses itself in skin and various types of dermatitis, abrasions and burns. We have chosen targets that we know we can make our technology work, in conjunction with delivery that we know we can achieve. Right now it is much more difficult to go after cells inside the body; we are working on various approaches to do that. The products we are going to make first, are the ones that will use this topical approach.”

CEOCFOinterviews: I understand that your business model is slightly different than other companies such as yours, what is your plan?

Dr. Skolnick: “Our idea to demonstrate the science for a particular approach is very sound. We will take that science through cell cultures, tissue cultures, animal trials and into clinical trials, and then work hard to find strategic partners who can take the product the rest of the way to market. We expect to be able to make our primary revenue through licensing our technology in specific fields. The other part of our model is to use our technology to do what is called “target validations”, that is we can identify genes and the proteins that they express. When down-regulating those genes, we can also identify the cell phenotypes that are different without the particular protein. We have developed a variant of the technology, which we call “screening library,” which allows us to screen for millions of different type sequences that can have an affect on cells. We have also done that in conjunction with a number of different approaches to see the affect on cells. We used that technique to discover the sequences that kill bacteria, and we are in the process of trying to formulate a new antibiotic that we think will be more effective and where the bugs can’t develop a resistant to the way the do now with the antibiotics that are on the market. Our business model is two-fold; we have a service element, which is the target validation, and secondly, the licensing of the technology.”

CEOCFOinterviews: I understand you had your first major licensing agreement recently.

Dr. Skolnick: “We gave an option to a company to seek regulatory approval in The People’s Republic of China. This is sort of a two-tier kind of arrangement. The first company option, and to fulfill that, they have to give us the proof that they have achieved the regulatory compliance. Then they will get a license to market the product, which in this case is a herpes preparation for both simplex one and two. The company has indicated that they want to take the same kind of option, license agreement for several other countries of which we are in negotiation with. The approach there is dictated by our intent in being careful in getting the product to market consistent with the regulatory compliance, because we don’t want to do anything to upset our future relationships with the FDA."

CEOCFOinterviews: In what way do you have to be careful?

Dr. Skolnick: “We want to make sure that if our products are made and sold, they are done so under the compliance of whatever country’s regulatory elements there are. Certainly, that is going to b true inside the United States, and certainly, we want that to be so in The People’s Republic of China or whatever other countries where we expect to continue business. It will not do for us to go to the FDA and then have a record to where we sold product without regulatory approval. The pressure to do that is enormous because we have seen enough positive results from the use of our preparation, that people are putting demands upon us. One of the worst things we could do is have our product sold internationally or via the internet, and have some of it enter the United States, and have the FDA knock on our door and say “you can’t do that anymore”. This has happened to a number of other companies and we are not going to let it happen to us.”

CEOCFOinterviews: Please tell us about Dr. Chen and his paper, because I understand that is another important event for CytoGenix.

Dr. Skolnick: “Dr. Yin Chen is our Vice President for Research and Development. He is an accomplish Ph.D in molecular biology, he has invented a good part of the technology that we are now developing and continues to work in the lab to do more. I think the paper you are referring to is the G-quartet paper; what he does with collaborators on the outside is find some sequences that are particularly effective in killing cancer cells. It is an interesting discovery because it broadens the ability for us to use our technology, in some ways that we had not anticipated. This started about twenty years ago, when they figured out what the mechanism of the cell was and how proteins were made. They came up with the anti-sensing, which is putting a sequence in that will bind to a particular messenger RNA and stop it from being read by the protein factory in the cell, which is called a Rybosome, so that the protein won’t get made. We have discovered four or five additional methods of stopping the gene from expressing its protein, from closing down the gene, which is called the triplex approach.  In that case, you put a string of DNA in the gene, and bind it to the gene that you don’t want to express, and it will not- all the way up to putting a string in the cell that will bind to a particular protein and render it inactive and everything in between. The only problem that has come about with anti-sense is that people have thought that they could make these sequences in a laboratory, put them in the cell and hope to get enough of them that it would work, but that hasn’t been a very fruitful approach. Our approach is rather different; we make a constrap that has in it the instructions to use the cells own apparatus to make the strings that are necessary and we put that apparatus into the cell. Dr. Chen with his paper has found some new applications on the use of our apparatus to make specific sequences that we have found effective against cancer cells.”

CEOCFOinterviews: How does the company fund these projects?

Dr. Skolnick: “Our Company is equity funded; we sell stock mostly in private placements and we have done that since the beginning. Right now, we are beginning to drive some revenue from some of the licensing projects that we are doing, and we trust that the revenue from that source will continue. “

CEOCFOinterviews: What sets you apart from the competition?

Dr. Skolnick: “I believe I made the distinction of the way that we approach making molecular nuclear strings in cells, whereas others do it in a laboratory and try to get them in cells. It is the difference in trying to put our plasma, which is like a little factory into the cell and having it go to work, as opposed to making all the things that the factory does, somewhere else, and then bringing them to cell; which doesn’t work very well. There is another important distinction; there has been a rapid growth in the last year or two, which is something called RNAI or RNA interference; that can be used in much the same way that we have used our technology to identify genes and the proteins they make, and down-regulate them. The big difference is that if you use our technology, the results that you get will allow you to go for a therapeutic compound that is based on the information that you derive. It is hard for me to see the same result coming out of RNAI; it is a useful laboratory tool but I don’t think it is going to lead to therapeutics. It is hard to explain that difference to people, but what we have done is say “if you want to identify an approach that allows us to identify a particular target gene, down-regulate it, show you what happens when the protein of that gene is responsive, and then use the string that made that happen as the therapeutic, then we should work together. If all you want to do is identify a gene, and you don’t think about going further, then use RNAI.”

CEOCFOinterviews: How do you stay focused with all the developments at CytoGenix?

Dr. Skolnick: “This technology is applicable to virtually anything where you know what the gene is. That encompasses thousands of diseases. My particular personality is one that likes to look at broad possibilities instead of being focused on one, but I have to force myself and fortunately I have colleagues that help me do it as well. We are owned by shareholders and we have a responsibility to them as well as to the science to make the business successful. We cannot indulge our every whim or curiosity. There are a few criteria; do we know the gene, what mechanism can we use to down-regulate it, how can we test it and is their a good animal model for it, and a market for a an eventual kind of therapeutic formulation. I go through those questions on a daily basis for just about everything that comes up, whether it is looking at a new viral disease or any other human disease. The long-term question is how are we going to get delivery to internal cells, we have had wonderful success in killing prostate cancer cells in the laboratory.”

CEOCFOinterviews: Why should investors be interested now and what should they know that perhaps they don’t realize when they first look at the company?

Dr. Skolnick: “I think the first thing the investors need to know is the depth and breadth of scientific achievement that this company has been able to produce. I would suggest looking at the papers that we publish, the collaborators that we have, which are a bunch of prestigious investigators who are well renown in the field. I would suggest investors take a look at our patents and our published patent applications, and look at the way in which we produce new patent applications. They also should look at our press releases; we have been focused in making sure that our press releases are factual based on events that have occurred. People watch that and they develop an understanding of the technology. It doesn’t take much to do and it is just a matter of getting the vocabulary understood, the concepts are not that complicated.

People should not invest in our company unless they have the intent to put some effort into understanding our technology, and then they should follow the way we are developing scientifically. I think if people do that, they will recognize that we have an enormously broad platform that is approachable. We have a business model that we think is beginning to work. We have been in business with this technology for about four years, which is a short time for most Biotechs. We think that in our next round of funding we will get enough money to get a couple of our formulations into clinical trials. If we do, we will see success in our licensing to larger corporations that will be able to take us the rest of the way through the FDA. I advise people to look at our track-record, and look at our future plans to see whether we keep our promises.”

CEOCFOinterviews: In closing, what other challenges do you face?

Dr. Skolnick: “We are going to face increasing competition from people who want to do things around our patent and safeguarding intellectual property is difficult at best. We have competition from other kinds of technology companies, such as the twenty-year-old anti-sense industry. There is competition from companies with parallel technology as well. If a large drug company will look at our company and say “those guys really have something, and you twenty guys go in the backroom and copy it” there is very little we can do about that.”

CEOCFOinterviews: This must be exciting for you, because of the potential to help so many people.

Dr. Skolnick: “It is exciting, and I have seen very good results. Watching this company grow from infancy to a place where we are going to do something to help the world is the kind of thing that we really enjoy.”

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