DNAprint Genomics (DNAG)

[Theo]

REPORT: Khandaker Partners, Inc.
http://www.khandaker.com/index.cfm?page=viewcompany&CoID=879#analyst_report

Corporate Overview
DNAPrint™ genomics, Inc. is a cutting edge company. We are concentrating our efforts in four distinct areas; Pharmacogenomics, Forensics, Genotyping, and Consumer Products. Our aim is to continue to research and develop novel products and services in each of these market areas and to be a leader in genomic-based technologies.

The Company’s core patent applied for and proprietary technologies for efficiently targeting single nucleotide polymorphisms (“SNPs”) enable us to provide novel predictive genetic tests at a significant cost advantage over our competitors.

We have identified and applied for patenteds to cover the maps of certain SNPs that we believe have broad commercial applications. These commercially valuable SNPs are called Ancestry Informative Markers (“AIMs”) and are an integral part of our proprietary Admixture Mapping (“Mapping”) method. With our mapping, we leverage known statistical data about population structure to substantially reduce the number of SNPs analyzed and therefore more cost effectively identify genes responsible for certain traits. Our proprietary data and analytical resources for using AIMs are integral to our strategy of offering DNA tests that provide value in other ways too – from better study design using more traditional methods, and generating valuable predictive results, including a person’s physical characteristics, BioGeographical Ancestry (“BGA”), and predisposition to respond to certain pharmaceutical drugs.

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Corporate News
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Contact Information
Address:
900 Cocoanut Avenue
Sarasota, FL 34236
Phone: Phone: [phone]
Web Site: Web Site: http://www.dnaprint.com
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Analyst Reports
Dr. Hector J. Gomez is the Chairman of DNA Print Genomics and the Chief Executive Officer is Richard Gabriel. Let’s start with an overview of DNA Print Genomics.

This company started a few years ago based on a pharmacogenomics technology and our main objective is to use advances in genomics to become a world-class pharmaceutical company. The founder is an expert in genetics. He has been working for a few years in this area and realized the potential of this technology in the medical and diagnostic fields. In building genetics-based systems to approach these markets, we found that we could also contribute to the forensics market. Thus, we serve three main markets from our common genetics intellectual property and know-how – pharmaceuticals and diagnostics, consumer genetics and forensics.

The technology underlying these three market opportunities is based on individual DNA analysis, and more specifically SNP’s or single nucleotide polymorphisms. This technology allows us to do several things. With a DNA sample, we can screen patients across their chromosomes and learn how to infer their genetic ancestry, whether they are likely to respond to certain drugs and certain model phenotypes that are not dissimilar to drug response – such as the color of the eye, the type of skin as well as the hair color. This technology, together, has various applications in our three core market areas.

Our history is interesting. Because of our ability to measure genetic ancestry, our R&D program is especially powerful. Initially we used this know-how for a gene-mapping approach some people call admixture mapping. As we build the systems necessary for executing this approach, we learned by trial and error how to quickly identify genes that underlie certain of the “complex” human traits such as drug response or physical appearance, and we learned that our abilities had something to offer for the consumer and forensics field as well. For example, the determination of individual genetic ancestry proportions – for example 90% European, 10% Native American – some people refer to this as the admixture of race. We call it genetic ancestry and this was our first product in the market. We labeled it ANCESTRYbyDNA™ and now have a very thriving consumer market for this product.

As we built our capabilities we attempted to apply the technology to “solve” the genetic basis of various physical traits, such as iris color. We call these model systems for drug response because they help us cut our teeth. Now it so happens that the early models we worked on, allowing us to infer eye , hair color and skin tone from DNA, actually allow us to construct a physical description of an individual. This has applications in the Forensic area, and we do have for that market a test called DNAWitness™, that has been used in over a hundred cases. Most of these cases are confidential, but few have become public information and have been advertised widely. We are enhancing the forensic technology with three dimensional biometrics capabilities.

Of course the main application of our technology is for allowing a determination of drug response prior to medication – that is to predict if a patient will respond to a drug or a treatment, or if a side effect might be developed to a given drug. Clearly, prediction of response to drugs has very important applications in medicine. On a social level, predicting drug response is crucial – over 175,000 individuals die each year due to adverse drug response and many more are taken ill. A large part of this human suffering does not need to happen – and we intend that tests developed by our Company will help “optimize” or “personalize” the use of many drugs that are already on the market. On a business level, it is very helpful for us as a small pharmaceutical company to use our technology to maximize the possibilities of succeeding. This can be accomplished during phase II clinical trials, for example, by learning how to predict drug response for phase III. If phase III consists only of patients for whom response is genetically determined, we can reduce much of the risk and expense inherent to the drug development process. Since most pharma trials fail these days due to clinical trial failures, we feel this gives us a great advantage going forward. Once our trials are completed, we will use the genetics tests along with the drugs as combination products – making sure that prospective customers for our drugs are genetically compatible. In this way, our medicines will show the maximum benefit, e.g. greater efficacy and minimum side effects. This is what personalized medicine is all about.

There are critical market opportunities that we are addressing. For example, we are developing predicting diagnostics test for patients with cancer and cardiovascular problems.

Can you go into more detail about the applications and market opportunities of this technology platform?

In the consumer market, we did our initial group concept in trying to understand the family through molecular genealogy. The ANCESTRYbyDNA™ product permits the determination of the genetic ancestry – not on a recent time frame of say 100 or 200 years, but deeper ancestry that is on a level more anthropologically, medically and physically meaningful. We saw this as being the gateway for all of our market opportunities. For example, ancestry is correlated with response to many drugs, and understanding the relationship between ancestry and drug response allows us to hone in on the actual genes involved in response. Consumers will often find the test useful in understanding their deeper ancestry – the type of report for which genealogy records are typically unavailable, but is useful for learning about drug response or disease susceptibility but also learning something more about your genetic ancestry. We have developed genetic assays for ancestry on multiple levels – from the continental ancestry (Ancestrybydna 2.5) to European sub-ancestry (EURODNA 1.0).

The deep genetic ancestry can be used to hone in on drug response genes, but it also can be used in a more direct sense as a part of a diagnostic. In diagnostic tests we combine the genetic aspects of drug metabolizing enzymes with the genetic ancestry, and with other diagnostics like standard “off the shelf tests”, thereby providing a better view of the patient profile. Our most advanced product is called OVANOME – a genetic test for measuring the likelihood an ovarian cancer patient will respond to the standard first line of chemotherapy – Paclitaxel/Carboplatin... We are in the second stage of development and we are conducting a series of IRB approved clinical studies. We have completed about 80 patients and are in the process of enrolling 200 patients for validation studies. When those studies are completed, we will then sit down with the FDA, show them the results and look for some guidance to carry the test through to the next level. Alternatively, we could bring this product to the market as part of a trial for a new alternative drug to Paclitaxel/Carboplatin – whereby the test could qualify patients for the new drug based on their low or high likelihood to respond to Taxol/Carboplatin. Here, we would be working with physicians in the context of IND’s (Investigational New Drug applications), using our test as a platform to qualify patients. . The beauty of this test is that the doctor, can determine quickly and without wasting time, if the patient will respond or will not respond to the combination Taxol/Carboplatin. If the patient is genetically inferred to be a responder the patient will be treated with this combination. If the patient is genetically inferred to be a non-responder, without going through a trial and error, without wasting precious time, the patient can be placed in an alternative therapy. This test might therefore save lives and certainly reduce unnecessary morbidity – as Paclitaxel/Carboplatin chemotherapy is not easy on patients. As our more advanced product, we consider it to be a proof-of-principle or a gateway product. We would then turn around and apply that across the virtual PDR (Physicians Desk Reference), which is a catalogue of all currently FDA approved medicines - in other words all currently marketed drugs. We are mostly focusing on the chronic and more important medical disorders. They include metabolism disorders, cancer, heart disease, which are the top killers in America and across the world.

The consumer market is mostly based in the genealogy area. We think that market is somewhere between $75 million to $100 million dollars. We have tested about 30,000 people there so far. Our goal is to expand those services to the consumer. We currently have five products in the consumer market. Our ANCESTRYbyDNA, EURO-DNA, Mitochondrial DNA testing, Y-Chromosome and we also do Paternity testing as well.

The second non-pharmaceutical/diagnostics area that we have developed a presence in is the forensics market. As mentioned earlier, our technology is well suited to help detectives paint physical portraits of individuals who have left DNA at crime scenes, or even remains. We wanted to evaluate and have our technology under a rigorous scrutiny, to help establish the technical foundation and specifications so we picked the forensics market as a sort of test market. It is crucial to understand that our participation in this market teaches us how to better position ourselves in the similar, but fundamentally different pharmaceutical market and to a certain extent we hope to do for the detective what we aim to do for the physician – to infer from DNA the relevant traits needed by each in order to do the jobs they need to do. As mentioned earlier, we are involved in about 100 cases to date. Some of those are very notable cases: The Louisiana Serial Killer, a current California case, and there are others. Some of these were discussed in a recent front page USA Today cover story, which focused on how our technology was helping to change the paradigm for suspect-less criminal investigations. We cannot talk about some of the cases, as the detectives are in the process of finding who those persons of interest are, but they are all fundamentally similar to the cases discussed in this article – through an assessment of ancestry and certain genes involved in determining physical characteristics, investigators are able to narrow the field of their investigation and focus precious resources along the most appropriate avenues. Our impact in forensics has also been covered by ABC News, CBS News, US News and World Report, and the New York Times. We are estimating this market to be between $600 million and $750 million dollars. It should be much higher, but unfortunately the purse strings are controlled by Washington. So having Washington and the State’s government involved in regulating the overall market and determining the sale of products, has always been a draw back to market growth. A very inefficient system but it’s what we are stuck with at this time. But this doesn’t mean that there isn’t a good market application for our products and services – as the media attention we have received would seem to indicate. Once we expanded our services and products into the Forensic market, we knew that we could apply this into the medical area more effectively. We believe that our next step is tying the diagnostic to the therapeutic, and that this is the best way to proceed into the pharmaceutical market. I think the best way to describe the size of the market for pharmacogenomics as it would be ‘incomprehensible’ at this time. There are too many factors outside of anyone’s control at this time for any sort of market projections that make any sense. What we do know is that the days of the ‘blockbuster’ strategy are numbered. We believe that in the very near future, patients will come into the doctor’s office with a chronic disorder, the physician will take a mouth swab or blood sample, send it off to a specialized laboratory. The laboratory will report the results to the doctor and based on these results, the doctor will recommend Drug A, B, C or D. The drug recommended will provide the best benefit-to risk ratio possible, that is to say maximum efficacy with minimum side effects. This is called Personalized Medicine. So our first product, OVANOME was designed to fit that criterion and we hope to expand our R&D into many other drugs, including our own, based on what we learn in forensics and our proof-of-principle drug studies.

Now it’s important to mention that we basically have the help of the FDA. In the last few years, the FDA has become extremely interested in the area of pharmacogenomics. They have realized the importance in drug development and the importance of pharmacogenomics in drug treatments. In April 2003, they put out the first type of guidelines, suggesting to the pharmaceutical companies that this type of test should be included in the NDA’s or new drug applications. In March 2005, they issued the first guidelines indicating that Pharmacogenetic studies should be part of the data submissions. So basically they are endorsing the use of these tests for the new drugs that will come into the market. In addition to this, we can expand our program to address many other drugs on the market, and apply this predictive technology to our own drugs to help mitigate the traditionally unfavorable reward/risk ratio inherent to drug development. One additional point from the FDA is that earlier this year they issued a concept paper entitled ‘Drug-Diagnostic Co-Development’. It describes the use of a predictive diagnostic test in combination or as part of the development of a new drug application. Therapeutic treatment in combination with the specific diagnostic test appears to be the modus-operandi for the FDA in the future – the way all pharmaceutical companies will someday submit NDA’s, so our intellectual property foundation should position us well for the future.

I don’t think that people realize what a motivator the FDA is and has been. They have taken a landmark lead in this cause for personalized medicine. There are approximately 175,000 deaths a year that can be directly attributed to side effects from medications. Now there’s probably, by all estimates, double or triple that amount that won’t get reported. The problem is a lot bigger than people might think it is – as Merck has learned with Vioxx and Bayer with Baycol – two drugs that have recently been withdrawn from market due to adverse events. We all know that it is virtually impossible to reduce all side effects from drug treatment. However, when we use our technology, we are minimizing the incidence of side effects. So in these areas of safety and efficacy, the FDA is going to be extremely interested. Because it improves the therapeutic benefits and even saves patients lives, it will also open up the door for more effective medications that only work in a small percent of patients, such as is the case of Herceptin, a drug for a specific type of breast cancer. This drug, in spite of the fact that only works in approximately 20 % of cases of breast cancer, was approved because Genentech was able to develop a diagnostic test that allows the doctor to determine if the patient is in that small group of responders. Our first clinical program is underway in collaboration with the Moffitt Cancer Center in Tampa, Florida.

Now I would like to talk about the drug development process. We know how expensive it is to develop a drug. The development of a new drug is approximately $800 million dollars. This number is actually increasing. More recent statistics show that now it is even more expensive, it exceeds $1 billion dollars. The reason these numbers are so high, is because the drug developing process runs into many failures. When you go into the more expensive final stages, Phase III clinical development, we don’t know what patients are responsive and what patients do not respond. Many drugs fail not only in the early stages but throughout the entire approval process. When we apply the pharmacogenomic techniques, we can learn from the early phase of a clinical trial how to target only those patients that will benefit from that particular drug in the later, pivotal phase. With this technology, the time it takes to develop a drug will be shorter, and less expensive. After the trial, and over and above the benefit to the pharmaceutical company in helping ensure clinical trial success, these types of predictive diagnostic tests are important to the patient, and the doctor because they will enable the doctor to prescribe drugs to the appropriate patient population – in other words, to do their jobs better. Now the patient will receive the maximum benefit of the drug, better efficacy with minimum or no side effects. The pharmaceutical company will also learn which groups of patients are not responding and study the problem and attempt to develop new drugs for that group. Instead of “one pill fits all”, we will arrive to a more fragmented but more efficient market and medical practices. The economic benefit to the pharmaceutical company will be decided by having a narrow market niche per drug, but with greater performance. We believe that that concept will lead to a long-term product life cycle. At the point of patent expiration, the pharmaceutical company can flip the technology into a specialty pharmaceutical strategy that includes the generic applications of the drug.

It is important to mention that HMO’s spend more money treating drug-induced side effects than on drugs in certain disease areas such as cancer and chronic heart problems. These predictive diagnostic test will, therefore be of great interest to the HMO’s because they may be able see a clear way to save money.

If you could take the two markets, diagnostics and drug development, what are some of the revenue potentials you see and near term opportunity?

Our goal with OVANOME, our first diagnostic product is to get it out to the clinics we are working with, provided that the FDA allows us to do that. It will be used initially as a clinical research tool. We will be working with the Moffitt Cancer Center and other cancer centers across the country. So we would hopefully look at screening a larger percentage of ovarian cancer patients, first for a modeling standpoint and then later to firm up the technology. Next, we will be manufacturing a kit, a diagnostic kit that can be sold to laboratories and hospitals. These all need to be looked into separately. The market estimation, at a minimum, would be $25 to $30 million on the diagnostic side, per test. If you were to marry that with an off-the-shelf Taxol product, we will have a much greater market. A single dose of Taxol varies between $500 to $700 dollars per dose, plus somewhere around $200 to $500 per patient for the diagnostic test. Adding both, diagnostic test and treatment will create a larger market. So I think that’s a better way to look at the future market. Also, when you marry a diagnostic product to that drug, the efficacy gets close to 100% but remember, there are still side-effects; Taxol is a toxic chemotherapy agent and so is Carboplatin. Optimally, we will have reduced the side effect rate below the response rate by matching the patient to the treatment. Over the entire patient population this targeting to the genetically compatible will serve to change the statistical performance of that treatment. The non-responder patient will have to be more closely monitored and probably given additional and/or alternative chemotherapy, radiation and surgery to prevent or at least improve their odds for survival. Treating a genetically determined non-responder patient with Taxol/Carboplatin is not a death sentence but it certainly is subjecting the patient to increased risks of failure. The doctor and the patient can jointly decide whether or not to proceed anyway with the treatment. It’s called informed consent – and the key to this is information, responder versus non-responder our tests will provide. So our goal is to look at the market of a diagnostic and the specific drug as a single product, this is what today is called a theranostic product. Actually, this is happening now in a small scale, Herceptin the drug I mentioned before is the first example, and several other theranostic products will be available in the very near future. This will be the way for doctors to practice personalized medicine...

Diagnostics tests like OVANOME will be developed for other drugs in the treatment of cancer and other diseases. Depending on what drug it is, we can add a partner by offering the diagnostic as a tool for the new drug treatment. We might also develop the diagnostic ourselves and sell it wholesale through the partner’s channel or we might just have them as a distributor.

If we look at the drug markets and look at each cancer market in a different category, revenue would be in the $300 million dollars?

Our range is not as big as pharma, so we are very content with a $100 million dollar market. We don’t have the overhead burn rate burdens. Our product application is lucrative enough for us. I think the answer to the question is anywhere between $50 and $300 million dollars, this is the range per category. It is safe to say that we are interested on both the diagnostic and therapeutic side, with either the diagnostic alone or both.

If we look into the revenue model, what is the revenue model you would be implementing to enter into the market?

We are looking at licenses and acquisitions in the pharmaceutical area. In addition to PT-401, our first drug candidate for the treatment of anemia, we are looking at bringing in three or four new drugs for our own pharmacogenomics-enabled drug development pipeline, two are pre-clinical and two are in clinical Phase II. We are considering to either partner or license them, and we may create a joint venture to accelerate development. Similarly we are looking for mergers and acquisitions in the consumer area, as well as in the forensics area. The rationale behind that strategy is to develop an underlying base for revenue support while we continue to develop other products thereby reducing somewhat the risk involved in the development of pharmaceuticals. Using this strategy we are reducing our risk as well as our demand for equity capital. That helps us optimize our business strategy and go forward. A couple of acquisitions in the forensic area are now targeted. Really what we are trying to do is develop a full blown strategy for doubling our efforts and our revenues as quickly as possible. In the case of the Trace Genetics acquisition, we added on two new tests, a new location, and a level of expertise in ancient DNA and Native American populations. We have a Native American population database as well, but these guys are experts. So that is the strategy we have. Underneath the pharmaceutical applications, we will continue to shore up the revenues and we will do this through acquisitions, through mergers, through licenses. Thus, in any event, in which we have a demand of capital with one or more of the pharmaceutical applications, we have underneath the ability to withstand those financial pressures.

Looking at all these partnerships, will you set up a royalty stream arrangement with out-licensing this pharmacogenetics platform or do you plan to sell it on an individual drug category. How do you plan to implement that platform into the market?

The problem with licensing revenue models is that you are then subjected to the speed of the partner. Unfortunately, we think that it might not be such a good model, and we are looking for possible trade-venture partners. Partners who are willing to contribute directly to the development, but it would have to be with a new entity and a new management team. We would have to include an outside channel, let’s say a pharmaceutical company. Pharmaceutical companies have a lot of money and a lot of people, and a partnership with large pharma might be the model that gets the technology into the market. And our goal is to get the technology into the market, sooner rather than later, faster, and at the lowest possible cost to our customers and our shareholders. We are going to sell our products and services rather than licensing them. In other words, revenues are actually going to come in through sales rather than through licensing revenues.

So there will be a sales force implemented in order to sell the product to different markets?

Yes or our partner will have a sales force. They would not just be a part of this; they would have to dedicate financial resources. Actually, it could be a separate entity. Also, trying to get a big pharma salesperson to focus on an outside product is challenging. The trick is getting the VP of sales to turn in the direction of your competition. If this happens you might have a winning strategy. But how often does that happen? We want partners that want their sales people’s performance tied to our products and services revenues, not just part of a portfolio of products and services or a laundry list that they may or may not talk about.

Could you mention some of the other products that are in your pipeline and ones you would be addressing in the near term?

The second diagnostic test for the prediction of response to drugs is Ondansetron, a compound used for the treatment of postoperative nausea and vomiting. This is probably going to be the first test in the market; simply because it is easy to find patients to stock our research protocol with. There are quite a few surgical cases everyday where this drug is used, and so collecting patients is easier than for Paclitaxel Carboplatin, for instance. In addition to six other diagnostic tests currently in development, I should reiterate that we also initiated the development of our first theranostic drug, a “super EPO” licensed recently from the Beth Israel- Harvard Medical Center

Could you talk about the rational behind the restructuring and some of the near term milestones an investor should closely keep an eye on.

The restructuring is absolutely necessary. We looked at the company and thought, at some point, this company is going to have to restructure itself. We also went out and sought investment capital. But the VC’s, the ones that we spoke to are not interested because there is no control in a public company and the VC’s like to control the company. We also looked at Pipe Equity Placements and came to the conclusion that they are exactly like, and that they are just about the same cost as a VC finance deal. The only problem that people have with PIPEs is that investors in general, don’t understand how they work – investors do not realize that dilution caused by executing a PIPE is no different than dilution experienced through a VC structure. It’s like lemmings to the cliff over the ocean – the lack of understanding has hurt our public image and we find ourselves in an uphill battle to fund our programs. However, fund them we must if we desire to succeed – a development stage pharmaceutical company without vast cash reserves cannot succeed without investment. We have been fortunate in that our technology is well-appreciated, and due to the fact we are a publicly traded company, we have the ability to raise the funding we need. Even if this hurts the share price in the near term, it is crucial for building the value that we hope will make the investment worth while for long term investors. One of the problems we have experienced with the PIPEs is that it has lead to downward spiral in our share price – due to the fact that in the current market it is sometime difficult for a small company to attract buyers for the shares that are sold on the market. Our share holder base is increasingly becoming more of a ‘venture capitalist’ type base, but a revolutionary type of VC – a larger number of smaller players who buy PIPE shares on the open market. The company cannot purchase its shares back; otherwise I can tell you that it would be. Economically the costs of PIPEs are about the same, the dilution is about the same. If we were to take $30 or $40 million dollars from a venture capitalist, they would come in and change the direction of the company. And quite frankly who knows what kind of show we would get at that point.

We realized that what we are doing is the only course of action we have until we become profitable. Once we become profitable, there are many other financing vehicles that we plan on taking advantage of. So we encourage our shareholders to look at our values in comparison to other companies. Our market valuation is presently very low compared to other companies in the drug development area. Personally we believe that our company is being grossly under valued. Our plan is to restructure the company to help offset the problems created by using the PIPE strategy, take advantage of the $30 to $40 million available to us, build a strong infrastructure by acquiring technologies, improving shareholder value through increasing intellectual property, expanding market opportunities, building staff, improving operations, closing acquisitions that bring revenues and forming joint venture and spin-out strategies that reduce our risk and enhance shareholder value . For the past two and a half years, that’s what we have been doing. We’ve improved the operations, we’ve increased revenues, and licensed in new technologies. Many of these technologies come from our previous contacts. I think all these things are important to a shareholder.

Could you talk about the competitive landscape of DNA Print Genomics and what makes it unique?

The competitive landscape mainly includes Affymetrix, Perlegen, and Genaissance – companies that also have the ability to learn how to target drugs to segments of the population. We actually use Affymetrix tools, and the same tools that Perlegen and Genaissance would use. What makes us unique is our scientific approach, in general to pharmacogenetics and to genomic technologies, and how it relates to products. We very quickly translate our Pharmacogenetic knowledge into product application or services, then field test them very quickly. There is a very short cycle in terms of identifying an opportunity, creating a value add product, developing it in the laboratory, putting it out into the field, data testing it, and then actually launching it into the market. So we already have products and services out in the market – most of our revenues for example are directly enabled by our patent-pending and innovative products – fruits from our R&D program. This is in contrast to a company that merely licenses products to provide revenues. The other thing that makes us advantageous is that we are not platform dependent. We can use any platform technology that is available and should a new platform technology come around that is less expensive, more flexible and more competitive, we can move to that platform in a very short period of time.

Our analysis is done in a cost-effective way, that money has been spent efficiently and we haven’t yet applied for some patents. The patents we have applied for are undergoing review on a world wide basis right now. From time to time, due to limited financial resources, we have found it necessary to prioritize patents and even abandon earlier, less important ones mainly in the software area, but in doing so we free up cash to prosecute those we feel are critical for establishing our foundation going forward. We are focusing on our patents that describe markers and tools useful for looking across the genome, in a much more economically way, 10 and 20 fold cheaper than our competitors. That is really what separates us. At the last ASCPT meeting, Perlegen presented reports on Taxol/Carboplatin with well over 1,000 samples. They were not able to make heads or tails of their data. They were not able to predict responders or non-responders. At the same conference, we presented similar Taxol/carbo data with our first go around of 80 patients, where we had 96 % sensitivity and 95 % specificity for the test that predicts responders and non-responders. So that is proof to the point. That’s what separates us from the competition.

During the next 18 to 20 months, what are some of the milestones DNAG would like to complete?

As I mention before, we are looking at acquisitions, mergers and licensing opportunities. So over the next 18 months, our shareholders will see the results of our efforts in those areas. We hope our first diagnostic tests should be in the market in approximately 2 years. We had originally intended at least one would have made market by now, but the realities of raising money in a difficult market for development stage biotech’s has forced us to take a more deliberate approach – which benefits us because we can focus more time and energy on those crucial proof-of-principle projects that will define the company going forward. We will continue to develop new products and new applications and as quickly as possible launch those products in the market.

Could you briefly talk about yourselves and the expertise you bring to the management?

Myself, Richard Gabriel: I have a BA in Chemistry and an MBA from Suffolk University’s Executive MBA program in Boston. I have been in the entrepreneurial market since 1984, and I have been working with pharmaceutical companies since about 1985. So that is about 20 years. I have built, started, and run a profitable business. I have been involved with 60 plus IND’s and probably 40 or so drug master files, and more recently, I have been involved with five NDA’s on drugs that are going to be approved or are approved. I also have been involved with a half a dozen to a dozen Phase II and Phase III drugs. I have been inspected by the FDA in my previous companies three times with no recorded 483 violations. I think that DNAG is the most exciting opportunity I have come across in my last twenty years of developing businesses and technologies. A truly remarkable approach to drug development and I am absolutely thrilled to be on the cutting edge of this new technology and paradigm shift, not just in pharmaceuticals but in Forensics and consumer products as well.

My education (Hector Gomez) includes an MD, a PhD in Pharmacology and a Diploma in Clinical Pharmacology. I was an investigator for pharmaceutical companies for about six years and in 1979 Merck offered me a position that I accepted. I worked for Merck for 10 years. Then worked for another large company, Ciba-Geigy and in 1992, I moved into the biotechnology world. First I work for Vertex Pharmaceuticals as VP of Medical Affairs and from 1994 till 99 I was the President and CEO of Transcend Therapeutics a biotech company in Boston. I had the opportunity of taking this company from the private to the public sector. We had a successful IPO in 1997. At the end of 1999 the company was acquired and I came to Florida. Over the 20 plus years in drug development, I have been responsible for the development of several new drugs. Ten of these resulted in drugs which are currently in the market. Examples are Enalapril, and Lisinopril. During those years, I feel, I was doing drug development the difficult way, kind of blind, research was undertaken by trial and error because at that time we were unable to target the appropriate patient populations that would get the benefit of the drug. No more than 50% of patients responded to a drug. The DNAG technology, allows as identifying the patients that will respond to the drug as well as those that will develop a side effect and that, therefore, should not be treated with this drug. In other words we improve the efficacy and minimize the incidence of side effects of the new drugs that we are developing. The efficacy will be close to 100% and the incidence of side effects will be close to zero. This is a very useful application of pharmacogenomics to the development of new drugs. Now we can do it in a much more cost effective way, less money and shorter development times and at the end will deliver more efficacious drugs. That’s why I’m fully committed to this company.

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Technology & Key Products
DNAPrint™'s genealogy product, ANCESTRYbyDNA™ 2.5, is a pan-chromosomal assay for genetic ancestry. The test surveys 176 Ancestry Informative Markers (AIMs) to provide an inference of genetic ancestry or heritage. The AIMs were carefully selected from large-scale screens of the human genome; and are characterized by sequences of DNA that are more prevalent in people from one continent than another. Using complex statistical algorithms, the test can determine with confidence to which of the major bio-geographical ancestry groups, Sub -Saharan African, European, East Asian or Native American, a person belongs, as well as the relative percentages in cases of admixed peoples. It’s a great tool for those individuals or groups interested in more deeply understanding their ancestry and lineage, or for certain people (i.e. some adoptee of mixed heritage) learning about their genetic ancestry.

The EURODNA 1.0 product is similar except it measures European sub-ancestry. “European” ancestry from Ancestrybydna 2.5 actually refers to a type of ancestry shared by people who derived from the fertile crescent of the Middle East some 50,000 years ago and spread to occupy Europe, the Middle East, parts of Eurasia and South Asia. EURODNA 1.0 breaks the European ancestry into 4 groups, reporting individuals’ percentages for each: Northwestern European, Southeastern European, Middle Eastern and South Asian.

We are currently developing more advanced versions of both ANCESTRYbyDNA™2.5 and EURODNA 1.0. These advanced versions are expected to provide greater sensitivity and accuracy, involve many more AIMs per test, and will be considerably more expensive. Why are we improving a product that already is a world’s-first technological leap from what was available prior to the human genome project? Some individuals who take Ancestrybydna 2.5 and EURODNA 1.0 will find interesting, unexpected results and may desire to obtain a second opinion provided by a different, more extensive marker set. Others have very specific questions about their genetic ancestry that the current Ancestrybydna 2.5 assay may not be sensitive enough to answer.

DNAWitness™2.5 to the forensics market. Law enforcement officers use this testing service to determine genetic heritage from DNA samples obtained from crime scenes, narrowing the potential suspect pool to a more focused group of likely candidates. The test enables law enforcement agencies to reduce both the cost and time needed to apprehend suspects. Current forensic DNA products in the market act like a fingerprint and can only be used to match DNA specimens. DNAPrint™ is the first forensic product that provides predictive capability. DNAWitness will provide the percentage of genetic make up amongst the four possible groups of Sub-Saharan African, Native American, East Asian, and European. When appropriate, DNAWitness allows for a breakdown of the European ancestry into four components: Northwestern European, Southeastern European, Middle Eastern and South Asian. The names of the components/groups is meaningful but not exact, since they are cast in modern-day terminology but the assay is an anthropological one that reports affiliation with populations who share common ancestry extending back many thousands of years. The real value of the percentages reported are as population (rather than individual) bar-codes, which are very useful for inferring certain elements of physical appearance.

OVANOME™ - DNAPrint™ scientists are working on a genomic-based diagnostic tool to match ovarian cancer patients with the most suitable form and dose of chemotherapy. Currently, cancer patients are treated with anti-cancer drugs whose efficacy is known in terms of population averages. In reality, individual cancer patients exhibit unpredictable and unique responses to virtually all commonly used chemotherapeutic compounds. Individual genetic differences have long been suspected to play a role in this variable drug response and this is particularly true for the current standard of care for ovarian cancer – Paclitaxel (Taxol) / Carboplatin (manufactured by Bristol-Myers Squibb). For cancer patients, decisions about treatment regimes are often fateful, and second chances at treatment are sometimes not successful. A better understanding of the relationship between genes and drug response can replace the current trial and error process of chemotherapy treatment and guide physicians and patients toward the optimal treatments at the outset of therapy. In early March 2000, DNAPrint™ announced success with this project at the Society of Gynecological Oncologists meeting in Miami, and at the BIO IT World Expo in Boston