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Genetronics Biomedical - using electroporation therapy to make cell walls of tumors more permeable to better deliver drugs and genes

Healthcare
Medical Equipment & Supplies
(AMEX: GEB)

Genetronics Biomedical Corporation

11199 Sorrento Valley Road
San Diego, CA 92121
Phone: 858-597-6006

Avtar Dhillon
Chief Executive Officer

Interview conducted by:
Walter Banks
Co-Publisher

CEOCFOinterviews.com
October 2002

Bio of CEO,
Dr. Avtar Dhillon
DR. AVTAR DHILLON recently joined us as our President and Chief Executive Officer in September 2001 and a director in October 2001. Prior to joining our company, Dr. Dhillon was engaged by MDS Capital Corp. as a consultant in July 1998 and subsequently became investment manager in August 1999 and Vice President in 2000. MDS Capital Corp. is one of North America's leading healthcare venture capital organizations. In July 1989, Dr. Dhillon started a medical clinic and subsequently practiced family medicine for over 12 years. From March 1997 to July 1998, Dr. Dhillon acted as consultant to Cardiome Pharma Corp., a biotechnology company listed on the Toronto Stock Exchange (the "TSE"). Dr. Dhillon has also acted as consultant to IGT Pharmaceuticals from May 1997 to November 1997, consultant to Inflazyme Pharmaceuticals Inc. from March 1996 to March 1997, and biotechnology investment analyst to various institutions from November 1996 to July 1998. Dr. Dhillon is a member of the following: B.C. Biotechnology Alliance, College of Physicians and Surgeons, B.C. Medical Association, Canadian Medical Association and College of Family Practitioners. Dr. Dhillon has a Bachelor of Science honours degree in physiology and M.D. degree from the University of British Columbia.

Company Profile:
Genetronics Biomedical Corporation is a drug delivery company. They specialize in developing technology and hardware, which potentially will allow physicians more efficiently and cost-effectively to deliver life-saving drugs or beneficial genes to patients with catastrophic illnesses, including cancer. Genetronics is the technology leader in electroporation, the application of very brief, carefully controlled, pulsed, rotating electric fields to human cells, a process that causes pores to open in the cell membrane and allows pharmaceuticals or genes to gain access to the cell’s interior. The therapy allows chemotherapeutic drugs (drugs that otherwise cannot enter the cell effectively) to accumulate inside the cell at relatively high concentrations and kill the cancerous cells. The amount of drug used per treatment is much lower than in conventional chemotherapy.

Its proprietary MedpulserŽ delivers "square wave" pulses which are more effective than "exponential decay" pulses for the electroporation of cells in the human body. In addition, the Medpulser^Ž is programmed to deliver pulses to multi-needle electrode applicators in certain patterns and with different polarities to maximize electroporation efficiency. The Medpulser^Ž allows physicians treating oncology patients with Electroporation Therapy to control the electric pulses with a foot pedal, thus freeing the physician’s hands to apply the electrode applicators to the tumor.

Electroporation is a broad-based technology, with many ways to achieve commercial success. Genetronics is developing applications for this technology in the primary areas of oncology and gene therapy. They have completed Phase I and Phase II clinical trials in the United States for the treatment of head and neck cancer. The Company has a strong patent portfolio of 216 patents approved or pending, a formidable barrier to competition.

In gene therapy, Genetronics has multiple collaborations with major biotechnology and pharmaceutical companies for the use of electroporation for gene delivery. Genetronics BTXŽ Division, a leader in molecular delivery, features electroporation and electrofusion technology for research laboratory markets worldwide. Electroporation equipment has one of the fastest growing markets of all laboratory products. It is used in experiments involving animal cloning and gene therapy.

Genetronics, BTX instrument division now offers seven electroporation and electrofusion instruments and more than 22 accessories that are sold in 40 countries where over 2,000 universities and research laboratories continue to use BTX products as an integral part of their research. Some of these BTX instruments are multi-purpose, capable of accommodating a wide range of parameters to help researchers conduct experiments in novel areas. Others are reliable laboratory "work-horses," which help researchers achieve consistent, reproducible results.

Other applications for Genetronics electroporation therapy includes intradermal and transdermal delivery of drugs, DNA or cosmetic substances. Programs include treatments to combat pain, erectile dysfunction, skin damage and osteoporosis.

CEOCFOinterviews: Mr. Dhillon, please give us a brief history of Genetronics Biomedical.

Mr. Dhillon: “Genetronics had its beginnings, with a company called BTX, which the founder, Gunter Hofmann, Ph.D. started in his back garage space in 1983. In 1985, he started selling his first research electroporation instruments and subsequently the instrument business continued to evolve. He decided, with some advice from his friends and close associates, to start developing therapeutic applications for electroporation, and that’s when the Genetronics entity was developed. Genetronics ended up going public in 1994, and since then, Genetronics became the bigger entity and BTXŽ became the instrument division.”

CEOCFOinterviews: What are some of the applications for your electroporation therapy?

Mr. Dhillon: “We use electroporation in conjunction with Bleomycin to treat cancer; and use the same technology in order to deliver genes, therefore we have quite a broad platform that is being utilized to be able to deliver genes and drugs.”

CEOCFOinterviews: Could you explain electroporation?

Mr. Dhillon: “Electroporation is a use of brief electrical pulses to be able to induce pores or increase the permeability of a cell membrane. By increasing the permeability, you can get a drug or a gene into the cell, and this particular type of process is used in research settings as well as in therapeutic settings; that is where we have a strong proprietary position to be able to dissolve therapeutic or clinical applications for electroporation, primarily in the human setting. We also have techniques to be able to have potential therapeutic applications in veterinary areas as well.”

CEOCFOinterviews: What diseases do you target?

Mr. Dhillon: “Our main focus has been I the oncology area where we have just launched into a Phase III clinical trial in treatment of head and neck cancer. We have shown that the technology can affect other types of solid tumors, so we have treated a number of patients with melanoma and other forms of skin cancer. We have also done some small studies in Europe in treatment of liver and pancreatic cancer. Therefore, on the oncology side, we use this technology for is for treatment of all sorts of solid tumors.

On the gene delivery side, what we do is get a DNA, gene or molecule inside the cell thereby getting that gene to be expressed and then to produce therapeutic protein. We use this electroporation as a localized vector for transecting cells with genes, and thereby getting protein protection.”

CEOCFOinterviews: Are you using electroporation therapy with both gene therapy and drugs, in the Phase III study?

Mr. Dhillon: “The Phase III study is just in the oncology side. On the gene delivery side, we are in the pre-clinical stage of development. We have done multiple large animal studies on our own, as well as in collaboration with companies such as Chiron Corporation (NASD: CHIR) and Valentis, Inc. (NASD: VLTS).”

CEOCFOinterviews: Can you give us some more details on how your studies have been going?

Mr. Dhillon: “We have just finished analyzing our Phase II data in the head and neck area, and in that regard, we have done three studies, two of which are North American studies, and a small study in Europe, where we have treated a total of 69 tumors in 54 patients. This study included a group of late stage cancer patients that had received previous standard therapy, who were then put into the study because they had recurrences and were not good candidates for standard therapy. In this group, we had 26% complete response where there is no evidence of disease and 32% partial response for a total over-all objective response rate of 57%. These numbers are quite high compared to some of the results that we can see in the literature, including publications that are more recent.

In our early stage head and neck trial in Europe, in which we treated early stage cancers that had not been subjected to previous treatment; what we have press released recently was one study that involved treatment of 16 patients where we had 14 patients having a complete response. That resulted in an 89% complete response rate, which is a very nice number for this particular group of patients. Therefore, we have been getting results that have suggested that we should continue development of this technology into Phase III clinical trials, and that is what we have launched into. In addition, we will continue to treat early-stage head and neck cancers, and be able to demonstrate that it is a very good tissue-sparing technology. Our Phase III trial will involve 380 patients; it is a two arm study and we have been recruiting sites and investigators for expanding this study.”

CEOCFOinterviews: Are the head and neck areas treatable with chemotherapy, and what advantage does your technology offer?

Mr. Dhillon: “The main advantage with our technology is that it appears to be tissue-sparing. What we do is inject Bleomycin into the tumor. Bleomycin, which is an anti-cancer drug that is quite toxic drug so its sales have been limited; it is a generic compound and direct injection into a tumor does not produce any kind of significant affect on a tumor. However, once we follow the injection of the Bleomycin with the electroporation, we find that the tumor responds very well and that is what has been shown in our Phase II studies.”

CEOCFOinterviews: Where do you get the drug Bleomycin that you are working with?

Mr. Dhillon: “Bleomycin is generic, and can be bought off the shelf. It is manufactured by several different companies. What is proprietary to us at Gentronics is our ability to be able to apply the electroporation after injecting the Bleomycin, by sticking a six needle applicator into the tumor and pulse it with DC current. The electroporation allows cells to become permeable and pick up the Bleomycin. The Bleomycin then kills the tumor cells and it appears to have relative selectivity for dividing cells verses the surrounding normal cells. That allows us to be able to selectively kill the tumor cells, allowing the normal cells to remain behind and that is how we create a tissue-sparing affect. Compared to surgery, which would generally require resecting the entire tumor, and a certain amount of the surrounding tissue, because you have to take certain margins, with the electroporation technology, you do not have to do that. With electroporation you are selectively trying to kill the cancer cells.”

CEOCFOinterviews: Have you found any side effects related to the use of electroporation, and how does its application compare to the common cancer treatments now available?

Mr. Dhillon: “The treatment has very limited side effects, unlike surgery where you tend to take wide margins, and then surgery becomes very structurally deforming; chemotherapy involves systemic delivery of a drug, so it ends up having an impact on all sorts of tissues. The other common treatment modality is radiation, and radiation also has a damaging affect on tissue, for example, if you were radiating the mouth, the patient would end up with a dry mouth because you would damage some of the salivary glands.

With electroporation, you are restricting the amount of damage that you can cause to the surround tissue, and it’s not a systemic therapy so you don’t tend to get side effects associated with the area that you are treating. Therefore, treating a patient with electroporation ends up being a relatively safe technique; it simply involves injection of the injection of Bleomycin, followed by sticking six needle arrays into the tumor and covering the entire tumor with it. You have done your treatment and you just allow the tumor to slowly regress because it undergoes abtotic death, and the body through its healing mechanisms can heal the wound.”

CEOCFOinterviews: Have you studied electropolation with any other drugs besides Bleomycin?

Mr. Dhillon: “We have tested a number of different drugs to see how effective they are and how much we can enhance their efficacy by electroporating them and enhancing their uptake by the cells. We found that Bleomycin works very well and that we can enhance its efficacy, thereby reducing the need for an increased amount of drug, and the least amount of drug that is used the fewer the side affects typically associated with Bleomycin. Moreover, out of the drugs that we have tested, we have found Bleomycin to be one of the most effective for killing cancer cells.”

CEOCFOinterviews: Do you have any other clinical studies in the works?

Mr. Dhillon: “We are planning to commence two, Phase II studies in other indications over the next twelve months or so. On the gene delivery side, we are hoping to take this technology into the clinic either on our own or with a partner.”

CEOCFOinterviews: Can you tell us more about your BTX instrument division and how sales are going?

Mr. Dhillon: “Our BTX division is the research instrument division where we sell these devices to scientists so that they can do experiments in a non-human setting. There we have continued to have increasing sales since 1985; last year we had just over 4 million dollars in sales. We collectively believe we have done over 35 million dollars worth of sales in instruments.

On the medical grade instruments for treatment of cancer or gene delivery, we have not commenced sales. However, on the medical oncology instruments, which we call the MedpulserŽ, we have a CE Mark that would allow potential sales tenure but we have not tried to market or sell it. We would like to collect some more data in the clinical trials before we seek an appropriate marketing partner or decide to sell it ourselves.”

CEOCFOinterviews: What will be your sales and marketing strategy, once you get beyond your studies?

Mr. Dhillon: “What we will likely do, somewhere throughout the Phase III clinical trial is seek an appropriate marketing partner for head and neck cancer patients. In that area, there is a certain defined target audience, which we could potentially go after our selves; however, that is not likely to be our strategy. Our most likely strategy is going to be through a marketing partner, to whom we will license the technology.”

CEOCFOinterviews: How big is the market for treating head and neck cancer?

Mr. Dhillon: “The total instance of new head and neck patients in North America, is around 50 thousand, it is a little bit higher in Europe; worldwide , primarily because of the Asian population where there is a very high incidence of new head and neck cancer patients, because of the life style of smoking , drinking, and chewing tobacco. The worldwide incidence is approximately 500 thousand; the patient population of Phase III clinical trials is geared towards late stage cancer patients. Initially we would be capturing a smaller population of that, but ultimately we would like to get approval to treat earlier stage cancer patients and thereby have potential access to the new higher head and neck cancer population.”

CEOCFOinterviews: Do you have the cash and credit to continue to build out your company?

Mr. Dhillon: “We have just announced that we have arranged approximately a 4.3 million dollar financing, which will allow us to carry on with the clinical trials. Certainly, we will need to raise more money through the usual routes like equity financing or we will seek a marketing partner, which could help or take over the cost associated with the Phase III process.”

CEOCFOinterviews: In closing, what would you like to say to current shareholders and potential investors?

Mr. Dhillon: “I think the company has enjoyed quite a bit of success in the past in going through the development process and has been able to raise quite a bit of money and total direct funding for the projects; just over 67 million dollars. Certainly there as been additional money, that has been contributed through collaborations for research. There has been a lot of money spent for the development of the technology and the company enjoyed a nice market cap associated with their progressive development.

The market cap during the days that the company was enjoying its development as well as the over- all biotech boom, had reached over 300 million dollars. Because of the significant delay in going from Phase II to Phase III, of over two years as well as the biotech markets coming out, we have seen the market cap come down significantly and now we are in the 20 million dollar range; making this is a good turn-around opportunity. The company has a new management team; we are getting new funding and have launched into Phase III clinical trials. All of these developments fit really well for the company to grow and we look forward to that being reflected in the market cap.”

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