The new DNAP newsletter:
Dear Shareholders,
I am happy to send you our second company newsletter. First, let me say that I consider DNAPrint’s scientific achievements thus far to be a great success. Rest assured, however, that our efforts are just beginning. We have written, applied and patented some of the most algorithmically complex and advanced genomics data analysis programs on the planet. In one year, these algorithms have helped us solve genetic problems (such as variable human iris color) that had perplexed geneticists for decades. I believe that your investment has helped create a formidable player in the genomics based testing market.
The Company has seen many developments since our last newsletter. We have changed the composition of our Board, announced several new scientific partners, and announced the discovery of three new forensics classifiers and their imminent product launches. We have also achieved a significant equipment upgrade that reduced our overhead and accelerated our throughput - at no cost to us. Further, we announced our foray into commercial genotyping, which we expect will help establish a revenue base upon which to grow. I will discuss some of these items one by one:
RETINOME - We have announced our intention to have either a beta trial or a partnership with a large company in place by the end of the year. This is an important part of our business strategy you should understand. We would prefer to partner our products with capable partners so we can devote ourselves to discovery and grow our revenue base more rapidly. However, if we cannot obtain satisfactory terms from a prospective partner, we will market a given test ourselves. This would provide us more profit from each test, but would increase product development costs and reduce the number of tests we could develop. We are currently in discussions with four large corporations to help us commercialize this test.
On a different note, my recent Washington D.C. presentation for RETINOME was very well received. In fact, I sensed that people are shocked that such a small company could do what we have done. Realize that RETINOME is the first complex genetics classifier to be presented in the post human genome age. Larger companies with more resources have yet to announce such a development - some have announced SNPs or haplotype associations, but we are the first to present a complex genetics classifier that performs well upon blind challenge. This bodes very well for our ability to make drug classifiers since most of these will also be complex! As we have always maintained, the key is our math.
OVANOME - Earlier this year, our University of Miami collaborators and I presented the results of our Ovarian Cancer pharmacogenomics study at the Society of Gynecological Oncology Miami and at BIOIT Boston. Our study is unique because we are focused on the variable response to firstline treatment (a pharmacokinetic problem, not a tumor genetics problem). To my knowledge, we are the only company with successful results there. We have applied for an NIH grant to fund a prospective trial at Miami, the data from which will go into an FDA application so that we could be approved to sell the kits. Until this process is complete, we will offer Taxol genotyping services (preferably through a licensee), which are not subject to FDA regulation. This brings up a second point that you should understand about our drug classifier strategy (as opposed to our forensics test strategy). For each kit we produce, there will be a service phase and a supply phase. Making an FDA approved kit (i.e., the supply phase) is more profitable, but it takes time to get kits approved by the FDA. So, until we receive FDA approval for our drug classification kits, we will perform services using our kits ourselves (i.e., the service phase). Companies like Myriad Genetics have had great success performing genetics testing services. In the case of the Taxol classifier, our licensees and affiliates will begin performing classifications for prospective Taxol patients at the University of Miami while we compile the FDA application. We will add future customer sites based on customer satisfaction at the primary sites, and we hope that word of mouth will travel fast since peoples’ lives are at stake. We believe that this service/supply commercialization model will help us maximize return on investment.
OTHER TESTS - We have finished both the genotyping and the computational screening for Lipitor and Zocor, and we have finished the genotyping but not the computational screening for about 15 other drugs we have good sample sizes for. As we complete these projects, we will disclose the results within a formal, peer-reviewed setting such as a professional meeting or in the scientific literature.
SNPs - From a screen of thousands of SNPs, we have settled on a panel of 346 SNPs in about 50 xenobiotic metabolism genes for our pharmacogenomics screening. These SNPs have good characteristics (minor allele frequencies) for the sample sizes we employ - which mean they are of potentially good statistical use. Validated SNP panels like this one, of potential statistical value, are not easy to find and impossible to purchase - the chip-based sets available commercially typically apply onlyto a few cytochrome P450s, but our set covers 50 genes. We are quite proud of this panel.
ACADEMIC DEALS - We have inked new deals with the New York University and Penn State University, and added a world-renowned geneticist to our Scientific Advisory Board. These agreements supplement our existing agreement with the University of Miami. The fact that some of the nation’s leading medical universities want to work with DNAPrint speaks highly of our science.
CORPORATE - Earlier in the year, we changed the composition of our board of directors. Our new board members are providing top-notch advice and are prospecting for new deals and corporate investors. To help with this, we have consulted with professionals to greatly simplify and update our business/marketing plan. Our existing $2M funding source for the next year or so has so far been quite reliable (about $650,000 of it has so far been funded). I think it reflects favorably on our company that friends, officers and directors prefer to fund it rather than offer the opportunity to an outside venture group. We are currently evaluating and planning for our research needs after the existing funding term, and we will continue discussing this topic in the upcoming months.
OTHER ITEMS - So far, we have filed for a total of 8 patents - 5 mathematical methods/software patents and 3 classifier patents. Four of these have been converted to date to regular utility patent applications, the other four are to be converted within the year. We add data to each provisional over the course of time to make it as strong as possible before converting it. The patent process is an ongoing process, of course, as they naturally flow from our work here. The patents filed here at DNAPrint are my life's greatest scientific achievements, by far. Mostly because of the challenging level on which the work has been performed, I find them more rewarding than others I have been involved with in the past. We have written 2 scientific manuscripts and are writing a third. For products that may be partnered, the publication dates are set through the process of negotiation (i.e. we are not a University and we do not rush to publish everything we have as soon as we have it.). We have 4 grant applications pending at present and 2 more in preparation.
While we cannot control the financial markets or the financial performance of our partners, we can control the quality of work we do. We believe our share price will ultimately reflect this quality, in addition to the quality of our business decisions. Keep in mind, however, that our aim is to build a company for the long term. I know most of you are long-term investors, and it is with your interests in mind that we shape every decision made here. I think we have performed well to date and I hope you agree.
Until the next newsletter then,
Respectfully,
Tony
