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With critical mass built in sales and marketing ViaCell is poised
to take a category that is going to experience significant growth in the next five years
and become the market share leader
Healthcare
Biotechnology
(VIAC-NASDAQ)
ViaCell, Inc.
245 First Street
Cambridge, MA 02142
Phone: 617-914-3400
Marc D. Beer
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – July 20, 2007
BIO:
Marc D. Beer, President and Chief Executive Officer
Marc D. Beer joined ViaCell in April 2000 as the founding President
and Chief Executive Officer, bringing over 17 years of experience in biotechnology,
pharmaceuticals and diagnostics. Prior to ViaCell, he held marketing and business
development roles at Genzyme Corporation, most recently serving as Vice President of
Global Marketing. In this role, he was responsible for global marketing and business
development activities within Genzyme’s therapeutics division. Before Genzyme he was
Vice President, Sales at Biostar, Inc. and held a variety of sales and marketing roles in
the pharmaceutical and diagnostic devices divisions of Abbott Laboratories. Mr. Beer
serves as a member of the board of directors of the Massachusetts Life Sciences Center. He
also serves on the Biotechnology Industry Organization (BIO) Emerging Companies Section
Governing Body. Mr. Beer holds a B.S. from Miami University.
Company Profile:
ViaCell, Inc. is a biotechnology company dedicated to enabling the widespread
application of human cells as medicine. The Company markets ViaCord®, a product offering
through which families can preserve their baby's umbilical cord blood at the time of birth
for possible future medical use in treating over 40 diseases including certain blood
cancers and genetic diseases. ViaCell also conducts research and development primarily to
investigate other potential therapeutic uses of umbilical cord blood-derived stem cells
and on technology for expanding populations of these cells. ViaCell's pipeline is focused
in the areas of cancer, cardiac disease, diabetes and fertility.
CEOCFO: What was your vision when you founded the company
and where are you today?
Mr. Beer: “In April of 2000, when we founded
ViaCell, we had a vision of building a fully integrated cell therapy company that would
deliver great value to patients by manufacturing and commercializing cells for diseases
that cannot be treated with the current modalities in medicine including proteins, small
molecules and monoclonal antibodies. The vision was that we would build an operating
business around cryopreserving cells and tissue that had clinical value and invest in
research, development and innovation that would allow us to manufacture cells for diseases
like Type 1 diabetes and cardiac disorders that are severe and do not respond to other
forms of therapy. Our goal was to not only deliver value by cryopreserving these cells,
but to be able to manufacture the cells and direct them in a different manner, so that we
can deliver therapeutic value beyond the current use today.”
CEOCFO: Where are
you in the process?
Mr. Beer: “In the last seven years we have been
successful in tackling a new standard of care, which is educating the birthing population
on the value of the stem cells that reside inside the umbilical cord at the time of birth.
A family has the choice of discarding the reproductive tissue – the placenta and cord
blood - or cryopreserving and storing the cord blood, which has tremendous value in
treating over 40 life-threatening diseases. The focus of the company for the last seven
years has been on an education and awareness campaign of creating a new standard of care
where obstetricians educate the birthing population about this tremendous opportunity. Our
educational campaign is still in its infancy although we have made great progress. We have
gone from approximately 3,400 families calling the company back in the year 2000 to last
year over 300,000. Still 300,000 of the four million births in the U.S. quickly leads you
to believe that we are at the infancy of this category. Although we have made a big
impact, grown the revenue and had commercial success, we have a long way to go and a lot
of opportunity in front of us.”
CEOCFO: How do
you breakthrough?
Mr. Beer: “I think it is a function of a couple
of things. One is getting education of the value of these stem cells to the birthing
parent. The second is getting the obstetrician the right clinical and scientific
information so that they proactively, universally educate on the value of these cells like
they do on a number of other things during the nine months of pregnancy. The second aspect
of creating that tipping point, that rapid step function growth in standard of care
acceptance, would be making additional breakthroughs in the value of cord blood stem
cells. Today, they are used primarily for blood cancers and genetic diseases and they are
used everyday. To really break through on some other diseases that have a widespread
impact on humans today like Type 1 diabetes, cardiac or neurological disorders, would
increase the value proposition significantly. I think that would drive the desire for the
physician and consumer to be educated more. It is a combination of more effective
education of both birthing parents and obstetricians, and investing in the technology side
of umbilical cord blood stem cells to make them more valuable.”
CEOCFO: Why do
physicians still need to be educated about cord blood?
Mr. Beer: “It is an amazing fact in our
healthcare system that most people do not appreciate and that is that we are asking
physicians to do a Herculean task. What society asks them to do is to know a little bit
about a lot. If you think about the practice of medicine, a cardiac surgeon has to
understand the heart incredibly well, but when you ask them about a diabetic foot
ulceration, they do not claim to be an expert. As a matter of fact, to stay on the
cutting-edge of a specialists own field is very difficult. The stem cell has such broad
reaching potential. It has potential in blood cancers, genetic diseases, neurological
disorders, cardiac and diabetes to name a few. We cannot ask the obstetrician to be an
expert in all of those areas. It takes time to educate the obstetrician about the
potential of cord blood stem cells. The second thing is that the obstetrician is really
thinking about the health of mom and child. We are asking them to understand future
clinical challenges that they do not treat everyday and to understand a very broad range
of diseases at scientific and clinical levels so that they can counsel the birthing parent
on the right decision. Most obstetricians will share with me that they know a tremendous
amount about their field. When they talk about the birthing population, women’s
health issues and health of child, they know a lot about it. When you ask them to
understand a broad range of diseases they don’t treat routinely and why stem cells
could be used in the future to treat heart disease, Type I diabetes and neurological
diseases, it is a bit of a leap. The obstetrician will get there but it takes a
little time.”
CEOCFO: You have
well over 115,000 units; how do we know it is safe and how big a factor is the cost for
the people that are storing?
Mr. Beer: “The use of umbilical cord stem cells
is quite robust. There have been over eight thousand transplants conducted worldwide. It
is widely accepted as a very safe and efficacious therapy for forty diseases. It has also
been found to be safer than other therapies used for blood cancers and genetic diseases
like a bone marrow transplant. In fact, cord blood stem cells have a significantly smaller
incidence of graft-versus-host-disease, an unfortunate side effect in transplant medicine.
The clinical proof of concept and use of umbilical cord stem cells is quite robust. The
next question we are often asked is how good will these cells be ten years from now.
Studies go out fifteen years and show there has been very little drop-off in the viability
of these cells after being stored for fifteen years. That is because when you freeze the
cell at negative -196 Celsius, you stop the maturation of that cell and it truly is a cell
similar to when you froze it fifteen years earlier. Most experts in cryobiology say these
cells are going to be good for decades. When you come down to the cost and the value, we
find that most parents and obstetricians, when properly educated, will say that if you can
afford this service it is priceless when you think about the potential negative outcome
that could happen in the family. I often have families tell me that they understand the
prevalence of the 40 diseases and understand that there may be significant breakthroughs
in the future, but no matter what the prevalence is, if their family is affected by it, it
is 100%. When they think about the one-time cost being approximately two thousand dollars
to store these stem cells and then $125 a year, or the cost of a dinner a year; that is a
relatively small price to pay when compared to the potential negative outcome that can
happen in their family. That is how we look at the value of a family’s decision to
bank their umbilical cord stem cells versus the cost.”
CEOCFO: What is
ViaCyte?
Mr. Beer: “Our product pipeline is something that
we are very passionate about. Our most advanced program is ViaCyte, which is in a pivotal
trial now. ViaCyte is designed to give women the ability to freeze their eggs in order to
potentially protect or extend their fertility. There is a tremendous unmet medical need
now in women’s health and that is the need to be able to cryopreserve the oocyte or
the egg. The first unmet need is women that are affected by cancer. These women need to be
treated with chemotherapy or some sort of therapy to kill the cancer. Often when an
oncologist puts them through an effective cancer treatment, it damages the oocyte and
makes them infertile. If you are a male and have cancer prior to attempting to have kids,
the first thing the oncologist will do is store your sperm. The reason why we can store
sperm is it is a small diameter cell and it cryopreserves very well. Unfortunately, female
cancer victims do not have that choice and the reason is that the oocyte is the largest
cell in the body and the largest component is water. Historically, when attempts were made
to freeze it, it crystallized the inside of the cell and damaged it, so that when thawed,
the oocyte would not be viable and not suitable to birth a child.
The other clinical utility for ViaCyte is the biologic clock. Unfortunately, infertility
in this country is increasing every year. Infertility is primarily caused by the age of
the egg, not the anatomical challenge of a woman. It is the age of the egg that affects
the infertility of a woman. By cryopreserving their eggs, women have the possibility of
having a biologic child later in life. In fact, couples are having children later and
later and at the age of 30, fertility starts to drop and at 35 it starts to drop
aggressively. Many women would like to have the choice of having a child at 30 or older
and the odds start to work against them in those years.
About four years ago we in-licensed a first
generation technology that gave a good return on the number of eggs that were frozen and
found the eggs to be about 65% viable after thawing, meaning the percentage of living
cells after we thaw them out. However, we found a superior technology coming out of
academia about three years ago which we in-licensed and this is the technology we have
advanced to a pivotal clinical trial. This second-generation technology demonstrated a
post thaw viability of 85% or greater. We believe it has the potential to address this
unmet medical need both on the cancer side as well as the fertility side. We expect to
conclude our pivotal trial in 2009. If the data supports it, our goal is to introduce the
first FDA approved product offering in this area. We are excited about this program.”
CEOCFO: Will you
touch on the other things that you are doing now?
Mr. Beer: “Our next pipeline product behind
ViaCyte, is our cardiac product candidate that we are co-developing with Centocor, a
division of J&J (Johnson & Johnson). This is a preclinical product candidate that
we derive from a subpopulation of stem cells found in the cord blood and manufacture using
our manufacturing technologies. It is a proprietary cell that is multi potent. In
other words, it can create different tissues in the body, one of which is a cell that
improves cardiac function in a patient who has been through a heart attack or has
congestive heart failure. In our preclinical program, we have demonstrated functional
improvement in several different animal models. We have one more preclinical study that we
are performing with Centocor. The focus of this study is to deliver the cells through a
catheter so that an interventional cardiologist could deliver them and avoid surgery or
opening the chest. We expect this preclinical study will be completed by the end of 2007
and will provide the data to enable us to make the decision whether or not to move our
program into the clinic. If the data is consistent with previous preclinical trials, we
expect to move this program into the clinic in 2008 for cardiac disorders, specifically
acute myocardial infarction, or a heart attack.”
CEOCFO: What is
the financial picture at ViaCell?
Mr. Beer: “We are proud of what we have
accomplished in the past seven years both on the commercial side and the pipeline side of
our business. We have a healthy financial position with greater than $47 million in cash
on the balance sheet as of March 31, 2007, no debt, and potential to achieve near-term
positive cash flow. We expect to become cash flow positive in the first half of 2008. To
be building a biotech company and have rapidly growing revenue, increasing cash flow,
potential cash flow positivity by mid-2008, and no debt, it is a very healthy position to
be in.”
CEOCFO: Address potential investors; why should they
be interested in ViaCell at this time?
Mr. Beer: “Although not without risk, our future
is very exciting for a number of reasons. First, is that we have a commercial effort that
is in its infancy. In the last seven years, we have been building infrastructure and an
organization that has been focused on building an innovative pipeline and expanding our
commercial operations. We now have the critical mass built in sales and marketing. We have
been investing heavily in the last 24 months. We are poised to take our category through
significant growth in the next five years and to be a market share leader.
Innovation in biotech is always fun to be apart of. In our field, we are an organization
that has built the infrastructure to capture technology breakthroughs. We are
well-positioned for commercial growth, cash flow positivity, and innovational
breakthroughs and all of that is on a solid financial platform. I think it is an exciting
time for investors to make a strategic bet on our category, a company that is focused on
operating success, and a company positioned to grow in new product offerings. The last
thing I would say is I like to invest in companies that are under-leveraged with
management teams that know how to leverage an organization. In the last nine months, we
have been focused on bringing in additional products in the women’s health field. We
have a dynamic sales and marketing machine that could leverage two or more products and we
are planning to bring in additional products.
CEOCFO: What
should people take away from the interview?
Mr. Beer: “The big picture message from an
industry and investment standpoint is that within biotech one of the most exciting fields
to be in is cell therapy and within cell therapy. ViaCell is extremely well-positioned to
capture the value on both the commercial and the innovation side. I believe that
breakthroughs in this field on both sides are going to be significant. I think we are well
positioned to capture them.”
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