DNAprint Genomics (DNAG)

[mingwan0]

Question 3

3. What exactly are Gabriel, Tamborini and Gomez doing for the company to earn their respective guaranteed non-performance based compensation packages? Where are these individuals located and how much of their time is actually devoted to company business?

This breaks down naturally into three subsidiary questions:

3.1 What are the duties of the individuals?
3.2 Where are these individuals located?
3.3 How much of their time is actually devoted to company business?

3.1 What are the duties of the individuals?

The duties of the three individuals can be ascertained from their employment contracts, which were included with the 10QSB filed on August 15, 2003, and which I produce relevant quotes from below. The specification of the term of the agreement is the same in all of the agreements:

“The Company hereby employs Executive and the latter hereby accepts employment by the Company for the one (1) year period commencing on May 16, 2003 (the "Commencement Date") and expiring May 15, 2004, which employment shall be automatically extended for unlimited successive one (1) year periods…”

Further details are provided in the press releases that were made concerning the individuals and I reproduce some relevant quotes from these as well. I think that these are fairly self-explanatory; and that the activities I have highlighted form the core duties for the executive concerned, and/or highlight the value they will be adding to the company.

Richard Gabriel:

http://www.sec.gov/Archives/edgar/data/1127354/000107087603000128/employmentrg.htm

“During the term of this Agreement, whether initial or extended, the Executive shall render to the Company services as Chief Executive Officer of the Company and shall perform such duties as may be designated by and subject to the supervision of the Company's Board of Directors, and shall serve in such additional capacities appropriate to his responsibilities and skills as shall be designated by the Board of Directors. During such period, the Executive shall devote his full attention, time and energies as necessary to the business affairs of the Company (subject to the terms of Section 4. below), and will use his reasonable business efforts to promote the interests and reputation of the Company; provided that he may pursue such non-competitive activities as do not interfere with the complete performance of his obligations hereunder. Any question of interpretation which may arise under the preceding provision shall be resolved by majority decision of the Company's Board of Directors.”

N.B. Section 4 relates to vacation.

http://www.dnaprint.com/2003/pressreleases/pr_04_09_03.htm

“Having Richard join the Company at this time and help with capitalization and business development allows me to return to the nuts and bolts of research and product development” said Dr. Frudakis.

In addition to Forensics and Consumer genomics, DNAPrint is also focused on developing drug and treatment solutions targeted for specific segments of the patient population. Mr. Gabriel and Dr. Hector J. Gomez, MD, PhD, DNAP Board Chairman, have significant experience in drug development and together, they have completed ten successful New Drug Applications (NDA's).

"Mr. Gabriel brings to DNAPrint extensive and complementary FDA regulatory and compliance expertise, as well as an extensive political and business development network", said Dr. Gomez. "Mr. Gabriel served an instrumental role in the development of Pharm-Eco into a profitable business. Given his considerable experience with development stage companies, his addition will help us accelerate our efforts to expand DNAPrint's products and services."

"Our immediate goals are to make DNAPrint Genomics, Inc. profitable and strategically financed for its future expansion, research and product development. Dr. Tony Frudakis and all the members of the Company are important elements to the Company's success." Mr. Gabriel added. "The single most important resource any company has is its people and their ability to generate novel and patented technologies that satisfy current and future customer needs. Clearly Dr. Frudakis and his team of researchers have demonstrated that spark, the entrepreneurial spirit so vital to any company's long term health and profitable growth."

Monica Tamborini:

http://www.sec.gov/Archives/edgar/data/1127354/000107087603000128/employmentmt.htm

“During the term of this Agreement, whether initial or extended, the Executive shall render to the Company services as Chief Financial Officer and Chief Operating Officer of the Company and shall perform such duties as may be designated by and subject to the supervision of the Company's Board of Directors, and shall serve in such additional capacities appropriate to her responsibilities and skills as shall be designated by the Board of Directors. During such period, the Executive shall devote her full attention, time and energies as necessary to the business affairs of the Company (subject to the terms of Section 4. below), and will use her reasonable business efforts to promote the interests and reputation of the Company; provided that he may pursue such non-competitive activities as do not interfere with the complete performance of her obligations hereunder. Any question of interpretation which may arise under the preceding provision shall be resolved by majority decision of the Company's Board of Directors.”

http://www.dnaprint.com/2003/pressreleases/pr_07_28_03.htm

As CFO, Ms. Tamborini will be responsible for DNAPrint's finances and operations. Her financial duties will include managing the Company's reporting compliance, developing and implementing internal controls/procedures and overseeing and directing all accounting and finance functions. In addition, she will be charged with securing additional financing for the Company's growth. In her role as COO, Ms. Tamborini will be responsible for managing and directing the operations of the Company in a way that will allow the Company to attain its long-term strategic goals.

Ms. Tamborini has extensive financial and management experience. She has served in Controller and CFO positions since 1988, and throughout the late 80s into the early 90s, she gained expertise implementing restructuring and turnaround strategies in the construction and printing industries. From 1992 to 2001, Ms. Tamborini was CFO for Calix Corporation and its subsidiary, Pharm-eco Laboratories Inc, where her main focus was operations and finance. At Pharm-eco, Ms. Tamborini was one of five core team members that set the overall strategic direction of the company. She was successful placing nearly $35 million in debt financing and was instrumental in building the underlying operations that made Pharm-eco a successful company. She has also served as CFO for UPT (Universal Pharma Technologies), a joint venture between Pharm-eco Laboratories, Inc. and UOP (Universal Oil Processors). She is a Summa Cum Laude graduate (Valedictorian) of Suffolk University.

Hector Gomez:

http://www.sec.gov/Archives/edgar/data/1127354/000107087603000128/employmenthg.htm

“During the term of this Agreement, whether initial or extended, the Executive shall render to the Company services as Chief Medical Officer of the Company and shall perform such duties as may be designated by and subject to the supervision of the Company's Board of Directors, and shall serve in such additional capacities appropriate to his responsibilities and skills as shall be designated by the Board of Directors. During such period, the Executive shall devote his full attention, time and energies, as necessary to the business affairs of the Company (subject to the terms of Section 4. below), and will use his reasonable business efforts to promote the interests and reputation of the Company; provided that he may pursue such non-competitive activities as do not interfere with the complete performance of his obligations hereunder. Any question of interpretation which may arise under the preceding provision shall be resolved by majority decision of the Company's Board of Directors.”

http://www.dnaprint.com/2003/pressreleases/pr_08_13_03.htm

Dr. Gomez is well known in the pharmaceutical sector, adding to DNAPrint a rich background in the business and science of pharmacology and the developing field of pharmacogenomics.

He received his M.D. from the National University of Colombia in 1963 and his Ph.D. in Pharmacology from Marquette University in 1968. In 1973 he also received a diploma in Clinical Pharmacology from Tulane. From 1979-1988, he served as Director and Senior Director of clinical research at Merck/MSDRL, where he was responsible for the clinical development of some of the very first ACE inhibitors (enalapril and lisinopril). From 1988 through 1991, he served as Executive Director of Clinical Research at CIBA-GEIGY Corporation. After a three-year term as Vice President of Medical Affairs at Vertex Pharmaceuticals, he became the President and CEO of the newly formed Transcend Therapeutics, Inc., which he successfully led through the Initial Public Offering (IPO) process to a Nasdaq listing and headed that company until 1998. During the interim from 1998 until joining DNAPrint's board, Dr. Gomez has consulted with a number of start-up companies. In 2002, he was added to DNAPrint's board of directors, assuming the Chairman position later in that same year.

"Dr. Gomez brings to DNAPrint his years of successful clinical development expertise, crucial to DNAP's future growth and development. Dr. Gomez and I have worked together in the past, accelerating the development and ultimate approval of pharmaceutical compounds, such as Vertex's product for AIDS, approved and currently being marketed by GlaxoSmithKline. He brings clarity to the process of drug development that is unique amongst his peers, and I am pleased to be working with him on pharmacogenomics projects," said Richard Gabriel, CEO/President.

3.2 Where are these individuals located?

As at the date of the employment agreements (May 16, 2003) Richard Gabriel was “currently residing” in MA, Monica Tamborini was “currently residing” in MA, and Hector Gomez was “currently residing” in FL. We do not know where they are currently residing, although we can reasonably suppose that Hector Gomez is still in Florida, but there has been speculation that Richard Gabriel and Monica Tamborini spend at least some of their time in MA where they presumably retain residences. We do not know for a fact if they spend any of their time in MA, other than during vacations as allowed for under their employment agreements.

Given the respective obligations that they have under their employment agreements their location at any particular time is not particularly relevant as long as it does not interfere with the fulfillment of those obligations. Having said that it can be reasonably argued that it would be difficult to fulfill certain normal duties reasonably expected of a CEO and a CFO/COO, if they were not present at the company’s location for the time required to perform any such duties that are dependent on their physical presence. We do not know if there are any such duties (but might reasonably suspect that there would be), and it can also be reasonably argued that with modern communications technology and the advantages of tele-commuting for both the company and the executives that they do not need to be located in Sarasota full-time.

So the bottom line here is we do not know where they are located and if their location has any impact on their duties. However, it is my belief that we can reasonably expect professionals such as Gabriel and Tamborini to act as professionals and for the company Board of Directors to exercise the governance function that is their responsibility.

3.3 How much of their time is actually devoted to company business?

In each of the employment agreements referred to above, the clause that outlines their duties specifies that:

“…the Executive shall devote his/her full attention, time and energies, as necessary to the business affairs of the Company…”

Although:

“…he/she may pursue such non-competitive activities as do not interfere with the complete performance of his/her obligations hereunder. Any question of interpretation which may arise under the preceding provision shall be resolved by majority decision of the Company's Board of Directors.”

There is also a “Restrictive Covenants” clause in each of the contracts which is as follows:

“During the term of his employment hereunder and for the two (2) year period following the termination hereof for any reason other than (a) the Company's discontinuance of activities; or (b) an adjudication of the Company's material breach of any of its obligations set forth in Sections 1-4, inclusive, the Executive shall not, directly or indirectly, engage in or become an owner of, render any service to, enter the employment of, or represent or solicit for any business which competes with any activity of the Company conducted at any time during the Executive's period of employment and which is located in the United States. The parties expressly agree that the duration and geographical area of this restrictive covenant are reasonable.”

So there is a clear-cut legal framework, within which they are obliged to operate, that requires them to devote their full time to the company and that precludes them from undertaking certain activities which would be against the company’s interests.

We know that in the real world people (especially senior individuals) typically act as Directors, Scientific Advisors, etc for more than one company while being ostensibly employed full-time by a single organization. As far as we know Monica Tamborini is not engaged in any capacity with any other organization. We know that Richard Gabriel and Hector Gomez are or were involved with other organizations as follows.

A relevant IHUB post from July 2003:

http://www.investorshub.com/boards/read_msg.asp?message_id=1247532

Hector Gomez is certainly a busy guy. Here are some of the things that he is involved with.

http://www.dnaprint.com/pr_bod.html

February 26, 2002: press release announcing that Hector was on DNAP's board. At that time "He currently serves on the Board of Directors of Zengen, Inc."

http://www.tbtf.org/article.cfm?article=29

November 1, 2002: A new chief executive officer sits at the head of the table at Saneron CCEL Therapeutics Inc., a biotechnology company located at the Center for Entrepreneurship at the University of South Florida.

Paul Sanberg, the former president and CEO of Saneron, said Dr. Hector J. Gomez has taken over that role. Gomez was a local consultant for about a year before coming on board at Saneron, said Sanberg, who also founded the company.

http://www.sema4usa.com/Company/events/LifeSciences2002.htm

November 7, 2002: From the Semaphore press release about their due diligence expansion into life sciences "Richard Gabriel former CEO of Calix Corporation is the point person for the firm as head of Life Sciences diligence services practice...His team includes: Hector Gomez, MD, Ph.D, former CEO of Transcend Therapeutics, Inc. and Lonnie Bookbinder, Ph.D, an experienced large Pharma executive."

http://columbus.bizjournals.com/tampabay/stories/2002/12/02/daily27.html

December 4, 2002: Gomez gone from Saneron. After little more than a month on the job, Dr. Hector J. Gomez is no longer the chief executive officer of Saneron CCEL Therapeutics Inc., a biotechnology company located in the business incubator at the University of South Florida.

"We brought him in on a trial basis, and there just wasn't a strategic fit," said Nicole Kuzmin-Nichols, vice president, business development and operations for Saneron. She declined to give further details.

http://www.dnaprint.com/pr_04_09_03.htm

April 9, 2003: press release announcing that Richard Gabriel is CEO also tells us that "Dr. Hector J. Gomez, MD, PhD, DNAP Board Chairman"

http://clinication.com/advisory.htm

Clinication's Advisory Board includes: Hector Gomez, MD, Ph.D. Partner, Genbiomics, Tampa, Florida. Click on his name and it tell's you that "He currently serves on the Board of Directors of Phase 5 Sciences, PRB Pharmaceuticals, and DNAprint Genomics, where he is Chairman of the Board."

(Incidentally, the other partners in Genbiomics are none other than Richard Gabriel and Lonnie Bookbinder...)

http://www.foleylardner.com/resourcecenter/r_sem_full.asp?ID=193

One of the participants at the 7/9/03 meeting: Hector Gomez, Chairman/President DNA Print Genomics, Saneron, and Cellgenica.

Let me throw in the following:

http://www.leespharm.com/ce/media/Ora-Flu.pdf

April 16, 2003: Lee's Pharmaceutical Holdings Limited (www.leespharm.com), a research-driven and market-oriented biopharmaceutical group engaged in the development, manufacturing and sales of quality biopharmaceutical products in the Peoples Republic of China, today announced that the Group obtained the exclusive distribution rights from a US biopharmaceutical company, PRB Pharmaceuticals Inc. based in Long Beach, California for OraFlu and OraFlu Plus, two products developed as treatments for viral infectious diseases. The exclusive covers the territory of Hong Kong SAR.

http://www.zengen.com/

July 15, 2002: Zengen, Inc. announced today that one of its strategic partners, Lee's Pharmaceutical Holdings, Ltd., a biopharmaceutical company based in Hong Kong, began trading today on the Hong Kong Growth Enterprise Market...Zengen entered into a licensing agreement with Lee's Pharmaceutical on February 2, 2002.

http://www.beverlyglen.com/

This is Phase 5 Sciences (previously known as Beverly Glen Medical Systems Corp.). They have a number of cardiologists associated with them (Timothy Callahan and William Shell are the names on the patents), and some interesting people behind them and on their advisory board.

Their technology "has been used successfully in many phases of clinical trials, and is of particular interest in the early Phase I environment. It's designed to help you identify early on in the drug development process, potential problems with QT-interval prolongation."

Then of course there are some updates:

http://www.prbpharmaceuticals.com/company/management.asp

Hector J. Gomez, M.D., Ph.D., Chief Medical Officer, Head of Research and Development.

Dr. Gomez has over twenty years of experience in the biopharmaceutical industry. From 1994-1999, as President and CEO of Transcend Therapeutics, a biotechnology company in Cambridge, MA, Dr. Gomez defined its strategic planning and oversaw its implementation. He led the transition from a private to a public company (IPO). He was also CEO of Zengen, Inc., a private Biotech Company in California. Before joining Transcend, he was Vice President of Medical Affairs for Vertex Pharmaceuticals in Cambridge, MA, where he was responsible for planning and implementing the Pre-Clinical, Clinical Research and Regulatory Affairs departments. Prior to that he was a senior executive for two large pharmaceutical companies: Executive Director, Cardiovascular for Ciba-Geigy in Summit, NJ, and before that, Senior Director, Cardiovascular Clinical Research for Merck in Rahway, NJ. Dr. Gomez received an M.D. from the National University of Colombia, and a Ph.D. from Marquette University and a Diploma in Clinical Pharmacology from Tulane University.

http://biz.yahoo.com/bw/031120/205377_1.html

UTEK Corporation Appoints Hector Gomez, M.D., Ph.D., to Scientific Advisory Council
Thursday November 20, 10:29 am ET

PLANT CITY, Fla.--(BUSINESS WIRE)--Nov. 20, 2003--UTEK Corporation (AMEX:UTK - News) announced today that Hector J. Gomez, M.D., Ph.D., has joined UTEK's Scientific Advisory Council. Previously, Dr. Gomez served as a Senior Director of clinical research at Merck/MSDRL, Executive Director of Clinical Research at CIBA-GEIGY Corporation, VP of Medical Affairs at Vertex Pharmaceuticals and President and CEO of Transcend Therapeutics. Dr. Gomez is currently a Member of the Board of Directors of PRB Pharmaceuticals and Apollo Pharmaceuticals and is the Chairman of the Board of Directors of DNAprint Genomics.

Here is the new Phase 5 Sciences website:

http://www.phase5sciences.com/index.htm

http://www.nanobaclabs.com/Newsroom/PressReleases/Article.aspx?shortname=News_2004-02-05

Nanobac Pharmaceuticals, Inc. announces the Creation of a Corporate Advisory Board

TAMPA, Fla. (February 5 2004) — Nanobac Pharmaceuticals, Inc. (OTCPK:NNBP) (“Nanobac” or “The Company”), Alex Edwards, Chief Executive Officer and President, announces the creation of a Corporate Advisory Board. This advisory board is in keeping with the Company’s plan of strengthening the organization for the successful implementation of its business plan.

The initial members of the advisory board are Hector Gomez, MD, PhD; David Filer, PhD; Daniel A. Shoskes, MD, FRCS (c); and Benedict S. Maniscalco, MD, FACC.

I dealt with Apollo Pharmaceuticals in this IHUB post:

http://www.investorshub.com/boards/read_msg.asp?message_id=2160876

We still know nothing whatsoever about Cellgenica.

I dealt with Richard Gabriel in this IHUB post:

http://www.investorshub.com/boards/read_msg.asp?message_id=2282097

Gabriel, Gomez and Bookbinder joined the Life Sciences practice of Semaphore (the US office of which is in Boston) in 2002. We knew that from this (now invalid) link:

http://www.sema4usa.com/Company/events/LifeSciences2002.htm

MBO Announcement
... Richard Gabriel former CEO of Calix Corporation is the point person for the firm as head of ... I am delighted to join the quality team represented by Semaphore. ...
www.sema4usa.com/Company/events/LifeSciences2002.htm - 43k - Cached - Similar pages

At present there is no mention of personnel in Semaphore's Life Sciences practice on their website and I would imagine that Gabriel and Gomez are no longer involved with Semaphore, but I have no factual evidence of this per se.

Gabriel, Gomez and Bookbinder are also partners in Genbiomics - a Florida registered consulting company. We know very little about Genbiomics and I do not know why it was reinstated in November 2003.

The most revealing item is from the bio about Gabriel on the DNAP website:

http://www.dnaprint.com/2003/corporate/officers.html

"From 2001 until becoming the Chief Executive Officer and President for DNAPrint, he consulted for several start-up companies while working as a partner at Genbiomics, LLC and as head of Life Sciences Practice at Semaphore, Inc."

Now this is still slightly ambiguous in that it is not absolutely clear that he ceased being a partner in Genbiomics and working as Head of the Life Sciences practice at Semaphore on becoming the CEO and President for DNAP, but that would be my reading of the text.

For the avoidance of doubt, it is my belief that Gabriel and Gomez are no longer involved with Semaphore and that Genbiomics is essentially a dormant (though reinstated) entity. Therefore there is no conflict of interest and no undue lack of focus on DNAP as a result of involvement in these entities.

To summarize what we know:

Hector Gomez is on the Advisory Board of Clinication, a Partner in Genbiomics, a Director of Phase 5 Sciences, a Director and CMO of PRB Pharmaceuticals, the Chairman/President of Cellgenica, a Scientific Advisor to UTEK, a Director of Apollo Pharmaceuticals, and an Advisor to Nanobac Pharmaceuticals. Richard Gabriel is a Partner in Genbiomics.

How much of their time is taken up with these activities? Difficult to quantify, but I would think that acting in the capacity of either a Director or an Advisor is a part-time activity that involves commitment of the order of days per month at a maximum. Being involved as a CMO as a different matter and we might reasonably suppose that Hector Gomez’s commitment to PRB Pharmaceuticals would entail more effort. The other thing to bear in mind is that we do not know if there is any connection between DNAP and any of these other entities that would mean that the commitment was not a detraction from DNAP itself.