With consumers searching for and demanding non-traditional medicinal solutions, the timing is right for Herborium Group to bring the wealth of Traditional Chinese Medicine to drug discovery and to the discerning healthcare marketplace



Biotechnology
(HBRM-OB)

Herborium Group, Inc.

3 Oak Street
Teaneck, NJ 07666
Phone: 201-836-2424



Dr. Agnes P. Olszewski
Chief Executive Officer/Chairman

Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - April 12, 2007

BIO:
Agnes P. Olszewski, Ph.D. MBA; Founder, Chief Executive Officer /Chairman of Herborium Group, Inc.
Dr. Olszewski, co-founder of Herborium, has over 20 years experience in business strategy, strategic marketing, and international business. Prior  to founding Herborium Dr. Olszewski was a consultant and a team leader on strategic management and competitive marketing strategies for leading American corporations as well as foreign companies and institutions. In her capacity as an international consultant she has lead multicultural negotiations and managed diverse teams of professionals in the USA, Asia and Europe specifically focused on the pharmaceutical industry.

After the collapse of communism in Central Europe, Dr. Olszewski formed A&T Global Marketing Inc., one of the first consulting firms in the US focusing on the transfer of Western management and financial know-how into transitional economies. The company was also involved in advising American corporations on entry strategies into the emerging markets of Europe and Asia. Dr. Olszewski was also co-founder, President and CEO of G.O. International, Inc., a consulting firm specializing in business strategies for the pharmaceutical industry and global technology transfer. G.O. International, Inc. subsequently merged with Herborium, Inc. in June 2002.

 Company Profile: The Power of
Botanical Therapeutics^®

Herborium Group, Inc. (HBRM.OB) offers a robust business model designed to capitalize on emerging market opportunities in the healthcare sector spearheaded by novel regulatory, market, and technological trends. Providing a unique blend of management expertise, a proprietary portfolio of Botanical Therapeutics^®, and innovative market development strategies, Herborium is ideally positioned to take advantage of the rapidly growing market space located between high cost/high risk ethical pharmaceuticals and commoditized classic nutraceuticals. This $500 billion market sector is supported by recent changes in FDA’s regulatory approach (FDA 2004 Guidance For Industry Botanic Drugs Products) and the erosion of consumer trust related to recent problems with ethical pharmaceuticals such as Vioxx, HRT or Fen-Fen. Finally, the economics of botanical therapeutics and botanical drugs are attractive since they can be developed quicker and less expensively than traditional pharmaceuticals.

Herborium is one of very few players in this emerging niche. The firm has a portfolio of natural medicinal products that have been validated through clinical studies and focus on those specific market demands that result from the gap between consumer’s healthcare needs and currently available treatment options offered by traditional pharmaceuticals.

From a marketing perspective Herborium’s Botanical Therapeutics^® represent a value added approach to healthcare products based on product differentiation, higher profit margins, and intellectual property protection. In the future, some of Herborium’s treatment candidates may be developed into licensed pharmaceuticals.

CEOCFO: Dr. Olszewski, Herborium is an industry innovator; will you tell us about your company and your products?
Dr. Olszewski: "Herborium is indeed a healthcare sector innovator. We focus on the opportunity afforded by the convergence of new forces shaping the healthcare of tomorrow. Everybody, from the government to insurance companies, from doctors to patients, is looking for more economical and efficient ways to address disease treatment, management and prevention. The human genome project represents one such innovative avenue with an eye on future opportunities. Botanical based medicines represent another, perhaps quicker and certainly less expensive – and therefore a less risky - way to develop treatment options for selected diseases and health concerns. The new and enlightened approach taken by the FDA and summarized in the 2004 Industry Guidance for Botanical Drug Products is a big step forward in recognizing the opportunity afforded by non-Western approaches to drug discovery and botanically derived treatment options. We are excited to be a part of this emerging sector.”

CEOCFO: How is the general market climate for botanicals and non-Western drug discovery changing?
Dr. Olszewski: “Actually, the market is warming up. Just recently on March 2^nd the Wall Street Journal published a front page article (Dueling Therapies: Is a Shotgun Better Than a Silver Bullet? By NICHOLAS ZAMISKA) discussing opportunities afforded by the changing stand at the FDA which, by its 2004 Guidelines, makes it easier to develop herbal medicines into Western drugs. They have cited Shaw T. Chen, the botanical team leader at the FDA who said: "There were so many stories of potentially new treatments in alternative medicine ... we needed a different approach than dealing with a single small molecule."

Then a day later Sanofi/Aventis announced the launch of ASAQ, a new anti-malaria drug combining artemisinin based on sweet wormwood, a Traditional Chinese Medicine considered by many a miracle malaria treatment and amodiaguine, an older malaria drug that still works in many malarial areas. The new space we are working in is certainly gaining momentum.

With our business model, the expertise of our management team, and scientific and marketing partners in the US, China, Hong Kong, and Europe we expect more then just making a mark on this emerging market sector – we expect to own a part of it.”

CEOCFO: What health problems are you focusing on and why have you chosen those areas?
Dr. Olszewski: “We have given significant thought to how we can enter this emerging field and what proof-of-concept would illustrate that choosing this route is timely, achievable and profitable. The area that provided such an opportunity is skin disease, specifically Acne and Rosacea. In our search for botanical candidates, we came across a unique, plant-derived formulation with initial encouraging clinical efficacy and safety data. The analysis of present treatment options for acne such as Accutane, Retinoids and even antibiotics revealed a set of pharmaceuticals with a variety of more or less severe side effects. Finally, the market needs for an effective, safe treatment for acne is enormous in virtually every developed and most developing countries. After all, in westernized societies, acne vulgaris is a nearly universal skin disease afflicting 79% to 95% of the adolescent population. In men and women older than 25 years, 40% to 54% have some degree of facial acne, and clinical facial acne persists into middle age in 12% of women and 3% of men. In addition to acne vulgaris patients have to deal with hormonal and cystic acne on their faces, back and torso. So if we wanted to have a product that addresses an important health problem, differentiates itself from competitors, can provide visible results, and has a large market potential - acne treatment was a perfect choice. After all, nothing is more indisputable than clear skin after years of persistent manifestations of acne. Finally, we looked into an area that allowed us to introduce the product initially as a supplement, under the regulatory framework of DSHEA 94 and then our ability to move the product through the confirmatory clinical studies, actually planned for this year, without the risk of stepping into the territory of serious and perhaps terminal illnesses. After perfecting this model, we intend to repeat it for other products targeting more serious health issues and also move into direct botanical drug testing under an IND for selected therapeutic candidates.

Our near term pipeline includes a product for Benign Prostate Hyperplasia (BPH) that represents a huge market potential with 50% of the male population over 60 years old   suffering from the disease; a botanical therapeutic candidate in the area of a liver health targeting symptoms associated with hepatitis B and hepatitis C, a unique female sexual health product and ED product. Actually, our therapeutic candidate in the area of women’s health represents an untapped opportunity targeting perimenopausal women and those women who have undergone hysterectomy, chemotherapy or had been taking anti-depressant and other psychotropic drugs. Our longer-term pipeline includes anti-infective for pulmonary infections and a promising candidate for the treatment of symptoms of rheumatoid arthritis.”

CEOCFO: How do you find the botanicals and formulations that you use for your products?
Dr. Olszewski: “That is an interesting question. To date, we have looked for our therapeutic candidates in botanic formulas of Traditional Chinese Medicine (TCM). China offers 5,000 years of medical history and experience in using plants as the basis for treatment of diseases in several significant areas of unmet therapeutic needs. In addition, there are a number of botanical formulations that are presently used in China that have initial safety and efficacy data that allow for significant risk containment with respect to future testing and marketing.

Through a network of alliances and collaborative ventures, Herborium looks for herbal medicines with potential intellectual property positions and strong initial confirmatory data. We also look at novel herbal medicines based on the science of Traditional Chinese Medicine, but formulated with today’s use of contemporary life science and pharmaceutical expertise. Our partnership with DPTC (David Pharmaceutical) includes co-development, co-testing and co-manufacturing opportunities for this new breed of herbal medicinal products. We also leverage our marketing experience in the US and European markets to prepare the proper market entry and future market penetration for these products.

As Herborium prides itself on being an innovator in the field of botanical therapeutics we need to recognize that in some sense this route represents Western medicine’s return to its roots. Historically, Western medicine based its drug discovery on botanical and natural ingredients. Over time, we decided to abdicate the natural drug discovery process for chemically developed, single molecular entities, in the name of reproducibility, intellectual property, and tighter process controls. What is happening now is a cautious reversal of this trend resulting from safety concerns, economics and consumer trends (including changes perpetuated by information technology).

When Herborium looks at product candidates, we specifically focus on existing data concerning the efficacy and safety of the product, intellectual property potential and market opportunity. We do not consider commoditized products, such as  Echinacea or Ginseng but opt for unique, complex formulations which we initially protect through trade secrets and that represent products with future patent potential for the formulation or/and the extraction process. At close look- we clearly are closer to the pharmaceutical industry than the herbal industry.”

CEOCFO: Who manufactures your products?
Dr. Olszewski: “We use contract manufacturing in the United States. If necessary, we bring both ingredients and extracts from outside of the U.S., since there are some that are better sourced in China. The final products are always manufactured in the United States at FDA compliant facilities and according to the best manufacturing practices.”

CEOCFO: You launched AcnEase^® a few years back: who is using your product and how are you marketing it?
Dr. Olszewski: “An easy answer is that everybody can be our satisfied customer”. In addition to its efficacy and unique botanical based formula the uniqueness of AcnEase resides in the fact that it works for women and men of different ages, Caucasians, Asian and Afro Americans. There are teenagers, men and women in their 30’s and even 50’s that are using AcnEase^®. If I wanted to be dramatic, I would tell you that people who use our product are looking at it as a last resort. We get people who have tried traditional pharmaceuticals including Accutane, antibiotics, Retinol as well as over the counter and cosmetic type of products to no avail. They come to us skeptical and hopeful, so we end up with the most difficult customers - and the most rewarding ones as well. By far our best responders are women with cystic and hormonal acne. In this group, we have almost a 100% response rate. These women have had acne for many years, and the treatment addresses the internal imbalance that causes such persistent symptoms. It is important to note that our unique value proposition is that by eliminating or reducing the causes of acne, AcnEase actually prevents acne for reoccurring, allowing the skin to heal and recuperate. Most other products, including antibiotics, work like a band-aid you put on an existing cut; AcnEase prevents another cut.”

CEOCFO: How do your customers find you?
Dr. Olszewski: “People find us on the Internet, because our acne product is one of the top 3 cited in cyberspace. They also find us by word of mouth and on the acne message boards where many of our happy customers post the recommendations for other acne sufferers. We have been featured on MSN UK and in two medical Journals in the UK: “Dermatology” and “New Generalist”, a publication of the London Collage of Medicine; we work with selected distributors and health clinics in the United States and UK. We just signed contracts for distributing AcnEase in India and Hungary. In 2007, we are planning clinical studies in one of the most prestigious dermatological clinics in the United States and with this data; we are planning to focus on healthcare professionals to accept our product. Our Hungarian partner plans to conduct the first clinical testing of AcnEase in the EU, which constitutes an important step in meeting the upcoming EMEA regulations of 2012.

So if I look at the future of Herborium I see us taking part ownership of the new business space, new markets and new opportunities.”

CEOCFO: Why should investors be interested now?
Dr. Olszewski: “Let me use an analogy. Those who over the past 25 years chose to invest in biotechnology (wisely of course) most likely retired to their private islands by now. Those who search for a similar revolution in health care now need to look at botanical based drugs and into non-traditional medical solutions that provide a shorter timeline for returns, contained cost and risk, and synergy with consumer trends such as self-medication or natural living. The world market for alternative healthcare is assessed at $3 trillion; in 2004, in China the TCM industry generated $11.1 billion US dollars; in output value, accounting for 26 percent of China's entire pharmaceutical sector. The US Department of Health and Human Services, National Center for Health Statistics, estimates that the US public spends between $36-$47 billion on Complimentary and Alternative Therapies. In a report developed by the Institute for Alternative Futures noted that today, complementary and alternative approaches to health and medicine are among the fastest growing aspects of health care. In 1990, one-third of the U.S. population used some form of alternative approach to health care, by the year 2010 this will grow to at least two-thirds of the population.

Herborium offers a robust business model designed to capitalize on emerging market opportunities in the healthcare sector spearheaded by novel regulatory, market and technological trends. Due to the unique blend of management’s expertise, diversified proprietary Botanical Therapeutics^® portfolio and innovative market development strategies Herborium is ideally positioned to take advantage of these opportunities and to provide high value to its shareholders.”

CEOCFO: In closing, is there an opportunity for consolidation in the industry and are you interested in making acquisitions?
Dr. Olszewski: “At present this new business space is populated by a limited number of small companies that present consolidation opportunities. We hope to take advantage of acquisition opportunities both in the USA and abroad.  This is actually one of the main reasons we went public; to move from organic growth to exponential growth, which includes M&A. We hope that our diversified growth strategy allows us to realize our mission and to establish a leadership role in this part of the healthcare sector.”

disclaimers

Any reproduction or further distribution of this article without the express written consent of CEOCFOinterviews.com is prohibited.