Transcript of the 5/30/12 10am EST Shareholder Meeting:
I am posting the full transcript of CEO Frank Reynolds talk at NVIV's latest shareholder meeting. I apologize for the less than perfect quality of the transcription but Mr. Reynolds tends to ramble quite a bit at times. He started off the call by introducing the NVIV people in attendance and then referred to Sean Moran to handle the formal business part of the shareholder meeting. This was followed by his presentation about the company’s operations. The webcast was not set-up to have an online Q&A section with interested investors.
Present at the meeting:
Lauren Mitarotondo (the company secretary, secretary of the meeting)
Lead Director George Nolen and BOD members: Christ Pedra, Adam Stern, Sean Moran (Director of Finance), and Dr. Ed Wirth (CSO). Bob Housler Jr. was also supposed to be there and may/may not have joined the meeting late.
INTRODUCTION:
Frank Reynolds: I am Frank Reynolds, I am the CEO, I am the chief financial officer, and I am also the chairman of the board of Invivo Therapeutics Holding Corporation. As you know, I have been [inaudible - maybe “funding”] the company since 2005 and, you know, I am pretty excited to see our shareholders meetings ... and it probably coincides, as you can say, with people getting more interested in what we are doing.
I am joined today by Lauren Mitarotondo, who is our company secretary as well as the secretary for this meeting. I would like to take this opportunity to introduce you to our directors who are present at this meeting. We have our lead director, George Nolen. We have our Board of Directors members Christi Pedra, Adam Stern. Sean Moran our Director of Finance is here today. Dr. Ed Wirth our chief science officer is here today. And I guess we have Bob Housler Jr., who has joined our Company today, will be arriving a little bit later. Bob just joined us from Stryker and we are very excited to have him after a spectacular 20 year career that was.. kind of you can say.. was led by his father’s own 40 year career in the orthopedic spine business. We are excited to add his incredible rare talents to our company. So, we have a lot of great commercialization talk coming up in our presentation today and that, of course, is going to be led by our newest hiree, Bob Housler, Jr.
I will now proceed to the formal business matters that come before this meeting as set forth in the proxy materials previously furnished to the shareholders. After the formal meeting is adjourned, I will make a brief presentation and answer any questions about the company that you may have. I now will ask Mister Sean Moran, director of Finance of the company, to continue with this portion of the meeting.
Sean Moran: Thank you Frank ….(this segment of meeting not transcribed)...Shawn Moran appointed Lauren Mitarotondo to serve as Inspector of Election...A quorum was present at the meeting -- Vote on the matters/proposals was held...all three matters / proposals were approved.
Sean Moran: I now turn the meeting back over to Frank.
CEO FRANK REYNOLDS' FORMAL PRESENTATION:
Frank Reynolds: Thank you very much Sean. As there is no more further business to come before the meeting, I move to adjourn. All those in favor please signify by saying “I”… all those opposed… all right.. So, I declare that the formal part of the meeting of the shareholders of InVivo Therapeutics is now adjourned and I begin my part of the presentation.
Actually, I think we have only one slide to discuss today but Sean Moran might be getting me some other information. But obviously we have had a very powerful 2011. You know, we went public just at the end of 2010 and really have had an opportunity to extend our platform to other indications. You know, really leading the new field of, really, neurotrauma. You know, we have opened up and… really created opportunities for scientists all around the world to use gels and to use time-release drugs to treat different kinds of conditions. We have published back at the end of 2010 an article in the Journal of Biomaterials, which is of course the top publication in our field, and it was about the hydrogel and how we can defeat bleeding and inflammation in the spinal cord for 21 days. And we got a call from Sloan Kettering at the time, Dr. John [inaudible – perhaps: Malhal?] who is the Chair of Neurology there, and, you know, he started discussing our gels and asked if we can treat bleeding and inflammation in 21 days, could we do it to a different timeline? And of course we developed gels that could release drugs up to a year and a half. So, I felt pretty confident but I asked him what the challenges would be. And again in the spinal cord we have a process, a bleeding inflammation process, that occurs for 21 days but in the prostrate nerve they have a process that occurs for about 3 months. So, we actually were able to refine the hydrogel. We worked with Sloan Kettering since that time to prepare a gel that would be able to defeat bleeding and inflammation with different profiles of inflammation. And that, of course, opens up a whole opportunity for other fields in medicine.
And we have a wonderful event coming up this summer... Bob Langer has opened his home. As you know Bob Langer is the number one in the history of medical patents, for sure in life science patents , and we expect him to pass Thomas Edison to be number one in the history of patents by the time he is finished. But Bob [inaudible] at the Langer Neurotrauma Center . But he held these little summits at this home at his Cape Cod beach house and kind of created a little conference center for people to come in to work on tough challenges in the industry. And we are really excited to have a 3-day event in early July. Of course it’s a private event, but we do have -we are still actually speaking with some researchers who want to join the agenda you could say…we do have some very powerful ones and very powerful companies in our field that are going to be attending. So, we are very excited about that and we are hopefully coming out with a very important roadmap for strategic partnerships and leveraging our gel, you know, to defeat bleeding and inflammation in other parts of the nervous system. Of course, we have the same issue with peripheral nerves.
You all know that we spent, we took the money that we received from our investors and used it very wisely. I mean, today we only spent about 14 million dollars and already have 3 products ready to go to the FDA and we hope to have a 4th one that we hope to have in by the end of this year, if not early next year, but we are wrapping up our chronic pain treatment, you know, it’s a gel that delivers time-released steroids and defeats bleeding and inflammation. Which right now about 4.2 million people a year are receiving shots –three - each person spending about perhaps $17,000/year on chronic pain treatment. Many people that are listening to this call have friends that get nerve block shots, you certainly hear of the athletes getting cortisone shots -- all those shots are time released shots or tied to time release and there is a lot of different challenges and problems that those technologies have.
Of course with no other options in the market place the FDA has approved them. But we have a whole product portfolio now that will definitely provide new options -- better options. You know, think about it, we can time release drugs and the delivery mechanisms pretty much work. You know, the hydrogels – what residual is there. Any doctor that has ever used cortisone knows that the challenge is of the carriers that are used to deliver cortisone and what they refer to as a pasting material that they find in patients many months later. I have talked with some spine surgeons who say they find the carrier nine months after injection. Many people know you can only get a few cortisone shots per year, and that is limited by the carrier. We have a new carrier for that entire area and we are going to change it. So, we have some very exciting things coming up this summer.
The slide that Rick is showing is really speaking to the fact that we are expanding and extending this platform that we have developed. You know, again only 14 million dollars, multiple products, and that speaks to the parent’s strength of it. You know, our first one in our belly wick for the company will always be in spinal cord injury. It’s our lowest hanging fruit at the FDA. The ones as we go forward though have a different kind of distribution systems you can say. That’s why our partnerships and our efforts to develop partnerships and the hiring of Bob Housler Jr. today will be very important to get those other technologies to market. You guys might remember that, when it comes to spinal cord injury, about 80% of all spinal cord injuries are treated at very few Level 1 trauma centers. Only about 75 in the US collect about 80% of all the patients. So, it’s so easy to tap that market for us, we can do that with a direct sales force with probably under 20 people. However, when it gets into chronic pain - thousands of providers around the United States pain centers - you know, we are going to have to partner around that. We already in great talks with some companies about that right now.
And of course, I tell you, we brought in a great team, and I know people are starting to wonder if we are going to become Stryker [inaudible].. but we are not. I think we probably maybe sell when some of the key recruits we have from there. You know, after 7 years in this industry and getting relationships with some of the best in the industry, as a CEO I have been really looking forward to hiring my first key business people. You know, as a life science company with a very efficient use of capital, we have always hired and spend our money on the science of course. And, you know, our small business team really comprise of me and Lauren, you could say, and of course our strong business board, that run this company. But now that we are bringing in some real talent to commercialize our technology, we are excited about some additional products that we are going to have on top of spinal cord and chronic pain, and the next step that you’ll see is called dural sealant.
So, it turns out that in developing our gels there was this company called Provideon(?) that acquired a company called [inaudible – Chon..? ). And in the early parts of InVivo we actually had a couple of consultants from [inaudible – the same company] working for us because they had developed this dural seal, a gel, that could seal the dura after a spinal cord injury. And it turns out that of course if the dura is not sealed, the patients die. So they developed a product that actually prevents a nice tight seal because it expands so much. The problem is that it expands so much - because it expands, it actually causes spinal cord tissue damage. And by the way, those gels usually expand about 30% and have a significant amount of spinal cord damage. If they don’t use the duraseal the patients die. So, again, if you are the FDA, the consequence is death. You let a product on the market that can cost 30% damage. Our gels we can literally ramp up gradually in 1% expansion, 2% expansion, 3% expansion… get a nice tight seal without causing more spinal cord injury. So, that is a great product now that we have, had for a long time you could say. A lot of investors are of course concerned about using our money wisely and not spreading it too thin. So we have not pursued it aggressively but now because of all the other pieces of science we have done with our gels, we think that we can get that through the FDA very quickly. So we now, again bringing in the team from Stryker, they identified that as an application right away and we are aggressively pursuing that. It is possible that could be at the FDA by the end of December. We are tying into….it’s definitely an objective for this year..but it maybe slip to early next year. But still, that’s by the way a 400 million market where there is really only one or two players. Now one player really dominates it, and again, all of them cause spinal cord damage and we won’t. So we think we have an excellent [inaudible].
Everybody heard about the Geisinger project that we have been working on, our peripheral nerve project that is chronic pain application - that data will be back on schedule. We expect it [inaudible] the FDA by the end of August for that. So, we have been careful of our amounts as we always set out.
We had a very, very productive meeting with the FDA just on April 12th. I can tell you that everybody’s assessment was that we got everything we asked for - that basically is what our experience was in that meeting. Of course, the meeting was led by Bob Langer who is the former head of the science advisory board. Some of the people on the committee from the FDA even commented about their wonderful experiences in working with Bob in the past. They used words like “legends” and things like that – more words that we use to describe Bob. But to hear your committee using them certainly provides a lot…a little excitement and, you know, as we left the group, I think we had about 12, 13 people from InVivo in that meeting, we were chased out, we were literally by our [inaudible] let out of the building. You know, Chance Hogan, who everybody knows has represented us from day 1 of the company from a regulatory standpoint [inaudible].. says in their 20 something years of representing companies he has never seen anybody chased out of the FDA building. And his first comment to us was: was this the best thing that we have seen in 100 years? And of course, we felt the same way. And then the second question was, when are you getting your gel through? It is so exciting and can change everything. And then, of course, we had a great little productive conversation on the next steps, even outside the building.
So, anyway, we are very excited to start the second half of this year. Of course, we have our new global headquarter ribbon cutting coming up in July. We have had a number of suggestions on people involved in our ribbon cutting so we may be publicing it to have some attention brought to that. But, it’s just a quarter mile from where we are located right now. I bet you it’s going to be 200-300 yards away from Bob Langer’s labs. So, as you all know, we emerged from Langer lab at MIT and we worked in a very collaborative way with a number of universities including Harvard, of course, and UCLA, the University of Miami, and others, but having Bob as our lead research team, you could say, we have about 8 people now at MIT that we fund just 200 yards from where we just now open up as the global development center, right? So, we have our continued private [inaudible] early research work over at Langer lab and then we will bring it over to our new global headquarters at 1 Kendall Square and we will develop it there. So, we will have our vivarium there, which is very important – I can tell you that InVivo will be recognized as having the best – best animal research center in the world for spinal cord injury which, of course, no one will top it. We will definitely have ideas basically developed in the morning. Our vivarium will have a capacity of 400 rats. Nobody in the world has that. I can tell you I have worked now for 7 years with contract rodent work and, you know, most of those projects take months of contract negotiations and you usually get about 30-40 rats, you don’t get many rats at all, and its hundreds of thousands of dollars, and of course at InVivo, we are going to being doing all that work in-house.
For acute spinal cord injuries, we are really assessing tissue analysis and tissue activity for just 21 days to a month. You know, we are going to push this out a lot for all the great science in all these different areas that we are developing now. So, in addition to the vivarium, we also will have our clean room for GMP – no- FDA approved manufacturing. Very excited about that. You guys may have saw our recent press releases that we did capture the great team from PervasisTherapeutics. Pervasis was one of the local companies in business for, I think, close to a decade and we are using biomaterials combining them with cells for different treatments in cardiology and in other areas of the body..and, just have an outstanding knowledge base for us to really bring over to InVivo. So, when they ran into financial struggles at the end of last year, we were kind of ready to upgrade – you can say- to an experienced development team, and we now providing them with a great clean room that they needed to join the company. That clean room, again, will be coming online on July 9th – whole equipment and everything has been ordered. I ordered to make sure we are prepared to get the rats in, and I guess we just have some few biopermits we need to get with Cambridge here but that’s all - things are going very smoothly.
So, again on July 9th, I think that we will change the world of neurotrauma by opening up our own research center and really are looking forward to that. And, of course, joined by Ed Wirth in the room, I can tell you, Ed has been with us now for about 6 months. He got me off so many different ideas. I can tell you we have been filing a lot of patents...you know we filed now, I guess we will have an update on patent statements to people at some point in the near future ... but we have been filing a lot of important patents. Ed coming on board, and having a lot of outstanding ideas after spending 25 years in developing new treatments for spinal cord injury, you know ,that have in his case, of course, been all cell based. You know, he is a real cell scientist and working at Geron and leading the only regeneration study in the world his expertise is cell based, but now coming on and seeing the power of biomaterials and even pharmaceutical combinations, you know, I was really excited and as a [ inaudible] announcements that will be coming in the future.
So, I guess at this point, I already mentioned the Sloan Kettering – we talked about the project with them. Once we have our facility opened up July 9th, I will probably have something signed with Sloan Kettering on July 10th. Yes, there were some questions by the people at Sloan where the intellectual [inaudible] would be built if we did not have our own in-house center. So, we have been able to kind of work around all that. And now that we have our own center on July 9th, we certainly expect to add John [inaudible – Malhal?], again is the chair of Neurology at Kettering. We expect to add him to our scientific advisory board and he would be our lead subject matter expertise in that area of course.
And we talked about a project ..I don’t know if the shareholders are aware of a project we have been working with Boston University for about a year. But, you know, one of the challenges we have in spinal cord injury is the...we have limited amount of funding that spinal cord research has really received over the years. You know, when you hear numbers like 81 million was spent by the US government last year on research and 39 billion spent on care, it definitely happens to be imbalanced. But, as a result, InVivo has really started to identify some of what we belief are some of the important brain experts, you could say, there are experts in neuroscience and there are experts in the tissues that we deal with in the cord and [inaudible] focus their expertise on the brain. And because I am friends with somebody over at BU: Harrick Artivisn? [inaudible] and Satary Gy? we have been working with. He has actually and amazingly published a paper where he, in real time, recorded, what you would call, the gene defect of a stem cell for down syndrome - which is incredible. You know he has actually in real time recorded a stem cell as it defects into down syndrome. And so, we are using that now - same technology - we have a study planned with him and he is in the process of getting his lab up to speed to start our study. It will be pretty expensive for InVivo but we are literally going to record in real time over a four day period what happens in the spinal cord those first few days. Of course, some of the animals won’t have our devices, they will be control animals, and others will actually have our devices. And we can see when our devices are surgically implanted and what they are literally doing in real time. Right now we have, what we would call, an analog version of that, where there are all kinds of ways to analyze your rodent work, to analyze what is happening in the first few days, but potential recordings in real time using microscopes with life animals has never been done before. And we think that is going to be kind of a real gift to science, but really important for InVivo. And to actually have our device implanted into the cord on day two, and then watch what happens around that device over the first couple of days in terms to mitigate that scaring process, that is going to be really unmatched in science. I really am looking forward to taking that step.
And this is the last bullet that I was going to discuss today. There is no doubt that we are now trying to focus on commercialization with our new facility opening up just around – really less than a quarter mile from here. Four hundred rats ready to roll in, you know. It’s a facility that can hold about 16 people - so we have some room to expand. We actually have been offered some additional space in there. And I guess I’ll just end with InVivo we had a lot of coincidences and a lot of great people cross our paths. It was funny when we looked at the space, they said to us it was Genzyme’s first office and, of course, I love Genzyme because of their efforts to help, you know, orphan status drugs and conditions in people that they typically would not focus on, and they certainly built an outstanding business model. Some people know my office of course looks right at their building and I watched their thousands of employees roll in their building every day and, you know, I think that that might be us some day. And it turns out, in doing our work there last week, we actually came across some Genzyme material in our new office space. So we actually [inaudible] Genzyme’s very first office and we hope to draw good luck from that.
But, with that, we are putting our heads to the grind stone. I have only spent 14 million and have multiple products ready for the FDA. We are now, of course, commercializing with a great outstanding development team. Keep your eyes open for announcements coming up. You’ll see that we have some important relationships being developed that is going to bring revenue to us a lot faster than we thought. Of course, we always talked about revenue at the end of 2013 when our first product hits the market but we do think that we can drive some revenue with some strong partnerships or relationships that we are already in talks with. So, with that, I guess well maybe we end my part of the meeting and I am not sure if anybody has any questions. I can take any questions. I know that people who are listening on the webcast – they won’t be able to. So, if they are trying to figure out how to do that, they won’t be able to but anybody live here in the meeting can.
And obviously we are not going to force people to ask questions. I guess, what happens with that, maybe we just call the meeting to an end. Of course InVivo will be holding its board meeting today to continue to drive our company forward. But with that, I guess, we just wrap it up. If anybody does have any questions, you can always email them to info@invivotherapeutics.com. Those emails actually do come directly to me. I do want to know what people are contacting our company for. So, if you do have any questions directly for me, email me at info@invivotherapeutics.com and we’ll get back to you. Thank you very much.
End of call.
