RNS Number : 1605V
Phosphagenics Limited
23 May 2008
23 May 2008
PHOSPHAGENICS LIMITED
ANNUAL GENERAL MEETING
Attached is a copy of the Addresses to be given by the Chairman, Professor Andrew Vizard, and the CEO, Mr Harry Rosen.
The Company has been advised by Mr M D Preston, who is due to retire by rotation, that he will not now be seeking re-election as a
director of the Company. Accordingly, shareholder approval for the withdrawal of resolution no. 3 will be sought at the meeting.
Chairman's address to shareholders
AGM - 23rd May 2008
Starting out, as you aware Phosphagenics discovered a technology that improved the delivery and efficacy of numerous drugs. It is a true
platform technology, protected by a suite of 23 patent families with applications in the pharmaceutical, nutraceutical, dermatological and
cosmetic industries.
Our objective at Phosphagenics is to address unmet medical needs and provide innovative, patient friendly and efficient delivery
applications of existing drugs, and to generate commercial success.
To achieve this objective, our strategy is to formulate our world-class delivery technologies with high-demand drugs already in the
market - put simply taking high demand drugs and improving the delivery application.
Let me use insulin as an example.
Insulin is a high demand drug - the world diabetic population is forecasted to double to 350 million by 2025.
Insulin-dependant diabetics administer insulin with the age old and invasive injection.
We saw this as an opportunity, we're currently conducting a phase 2a clinical trial to provide a more patient friendly method of
administration using our TPM/insulin formulation.
This strategy offers Phosphagenics the commercial advantages of a pipeline of products with lower risk and a faster route to market
compared to developing new drugs.
I stood here last year and said that our strategy for 2007 was to accelerate our R&D product pipeline by undertaking extensive clinical
programs based on our successful pre-clinical study results from 2006.
I am pleased to report that during 2007, we commenced four clinical trials:
* A phase 1b and a 2a insulin trial;
* A phase 2 Phospha E® trial, fully funded by NestlNutrition, to establish the efficacy of our Phospha E® in reducing the risk
factors associated with metabolic syndrome; and
* A phase 1 trial for the leading pain-relief drug oxycodone.
During the first few months of this year, we have further developed our product pipeline, as shown on this slide.
Let me explain some of the rationale of why these particular products were chosen for development and what advantages this extensive
portfolio offers to the company.
Insulin and opioids have substantial markets: insulin global sales of more than US$7 billion annually and opioid sales of US$7.7
billion. Despite their widespread use, both insulin and opioids currently have significant issues associated with their administration. Our
transdermal insulin and opioids provide novel solutions to those delivery problems.
Without a doubt, transdermal insulin and opioids are potential blockbuster products for Phosphagenics - possibly the jewels in the crown
of our pipeline. But, being novel products, there is a defined pathway of clinical trials that must be navigated before the product can be
registered for use. This path is certainly shorter than the path facing new actives, but still substantial.
We've chosen to undertake these clinical trials and not to licence the products at this stage as this can diminish value, hence our
determination to continue their development.
In a phase 2 trial this year, we demonstrated that our TPM/Insulin formulation safely penetrated through human skin and delivered
insulin into the blood stream of patients with Type 2 diabetes over a sustained period of time, without any adverse events.
We recently expanded this trial to include patients with Type 1 diabetes. This trial is scheduled for completion in the coming months.
If successful we intend to immediately commence phase 2 trials in the U.S.
Transdermal opioids. Following successful results from our phase 1 clinical trial of Oxycodone in December, a collaborative program was
commenced and is currently underway with LTS, a world leading patch development company, to incorporate the current formulation into a patch
system. Plans are also underway to undertake a clinical trial of this patch in the second half of 2008.
As I said, potentially blockbuster products, but these will take time to get to market.
The next group of products in our pipeline, transdermal diclofenac, lidocaine and retinoic acid add a different dimension to our
portfolio.
All three are currently available as topical products. Diclofenac as Voltaren gel, lidocaine as a topical anesthetic and retinoic acid
for acne treatment. All three have topical limitations both in terms of penetrating the skin and causing irritation. The inability to
penetrate the skin renders these products largely ineffective. We have very good reason to believe our transdermal technology can solve
those problems.
Importantly, because these topical products already exist, and we're developing improved versions, we do not need to proceed through the
standard phases of clinical development - we can complete proof of concept studies within two years of commencing a project, thus a much
shorter, less expensive route to market.
We released the results of our pre-clinical studies of lidocaine last month. These results showed that formulating lidocaine with our
TPM showed a nine fold increase in the amount of lidocaine delivered into the skin.
These results were outstanding and clearly demonstrate the superiority of our
formulation over existing products.
The final product in development that I will mention is the orally delivered Phospha E®. This project involves an important strategic
alliance with NestlNutrition.
NestlNutrition has about 22,000 employees in more than 70 markets, it is an autonomous business within the Nestlgroup, one of the
world's largest food and beverage companies. NestlNutrition (Nestl manages and develops the group's specialty nutrition brands, its product
portfolio covers infant nutrition, healthcare nutrition, performance nutrition and weight management.
Currently, we have a phase 2 clinical trial underway, fully funded by NestlNutrition (Nestl, to establish the efficacy of our Phospha
E® in the management of metabolic syndrome.
In 2006, we began working with Nestlon two pre-clinical studies that confirmed that, when given orally, Phospha E® significantly
reduces many of the key biomarkers associated with metabolic syndrome.
We look forward to building on the already strong relationship we have with Nestland based on current recruitment rates, we expect to
complete our phase 2 trial in the next few months.
The companies have agreed the principal terms of a commercialisation agreement, granting a worldwide exclusive licence to Nestlfor the
use of Phospha E® in medical foods, and for Phosphagenics to be the exclusive manufacturer and supplier of Phospha E® to Nestl The final
commercial agreement is due to be signed on the successful completion of the phase 2 trial.
We also applied for and were granted Generally Recognized As Safe (GRAS) status for Phospha E®.
GRAS status allows manufacturers, such as Nestl to produce and sell foods that include Phospha E® in the US food and beverage market -
the world's largest food and beverage market valued at more than US$1 trillion a year.
This represents a tremendous commercial opportunity for Phosphagenics.
Obviously, appropriate funding is required to support the clinical programs that we have commenced. In 2007, Phosphagenics earned A$4.4
million in revenue and we were also awarded two government grants with a combined total of up to A$5.3 million over three years.
Subsequently, in May of this year, we raised A$9.1 million through a share placement.
This removed a significant risk that directors considered the company was facing: lack of funds. We now have enough cash to support our
R&D programs through to the end of year 2009.
Although we're Melbourne-based, Phosphagenics is a globally driven biotechnology company.
To support and leverage our R&D success, we expanded our international operations by establishing a U.S. office in New York.
Harry Rosen and Dr Esra Ogru spent a considerable time in New York and traveling in North America and Europe generating corporate
activity through an extensive investor relations program while seeking new collaborative and commercial partnerships.
To support our international efforts, this week we announced the appointment of Fred Banti as Senior Vice President and Chief Business
Officer.
Fred, who will be based in New York, has more than 27 years' experience as a pharmaceutical executive with strong management credentials
in corporate, business and strategy development, portfolio and project management, commercial assessments and R&D.
His thorough understanding of the drug development and commercialisation process will strengthen Phosphagenics' business and corporate
development.
In concluding, the next 12 months for Phosphagenics will be focused on continuing our extensive clinical programs and developing
additional products in the area of targeted, localised delivery.
I am of the opinion that all the elements required to increase shareholder value are in place: quality management, skilled innovative
researchers, intellectual property and a strong bank balance capable of funding our high value R&D pipeline that will support the
establishment of global commercial opportunities.
As Chairman and on behalf of the Board, I take this opportunity to thank all staff at Phosphagenics for their tireless efforts. In
particular I would like to thank Michael Preston for his contribution to the Company, as a Director, over the last three and a half years.
Andrew Vizard
Chairman
CEO's address to shareholders
AGM - 23rd May 2008
Mr. Chairman, fellow directors and Shareholders,
Patience is one of the key elements required when investing in any technology and our shareholders have shown an abundance of that. As
much as we like to believe that we can predict the timing and outcome of scientific research, unexpected events inevitably arise.
An investment in biotechnology has inherent risks, yet despite the risks, we do make these investments. While the reasons may be varied,
I suspect that many of you made your decision on a similar basis to me: our company has diverse and incredibly robust technologies; it is at
the leading edge of science in the field of drug delivery; and has multiple applications, whether in pain management, diabetes, food or
personal care products.
However, as important as any financial rewards, we also want to make a difference in what we do and what the companies in which we chose
to invest in, do. A successful biotechnology company makes invaluable contributions to society by extending the longevity and improving the
quality of life.
In 1895, when the first U.S. pharmaceutical laboratory was established, the average life expectancy was around 50 years of age. Since
then, it has increased by 56 per cent to around 78 years.
It is not difficult to imagine that by the close of the 21st Century, the majority of people will live to 100 years or more. We can
hardly attribute this explosion in longevity to evolution. Undoubtedly, biotechnology and medical research have played the central role in
the changing life expectancy, and the continuation of this research is being funded by your investment and people like you.
For those of you who are not motivated solely by altruism, let me share with you the way we are positioning your company for success.
So that you can better understand our commercial strategy, I will briefly touch upon our primary technology, which involves
encapsulating drugs into spheres using our proprietary product. We have patented a formulation that produces spheres that are ultra
deformable and therefore change their shape so that they are able to get through the tight spaces within our skin.
Our technology differs from any other technology in the world in two important ways. Firstly, we are able to load a very large
percentage of the drug into the spheres, often beyond 90 per cent. Secondly, we can control the size of spheres and consequently have the
flexibility of delivering drugs either into the skin or through the skin. Small spheres readily get through the tight junctions of the skin
to deliver drugs into the blood stream. On the other hand, large spheres are trapped in these tight spaces where they burst and deliver the
drug. We refer to this as targeted, non-systemic delivery.
Currently we have seven products in our pipeline that are either in clinical studies or about to enter the clinic - consequently, we
have many shots at goal.
Our portfolio is diverse and comprises of: insulin for diabetes; morphine, oxycodone and lidocaine for pain management; diclofenac for
inflammation; retinoic acid for acne treatment and Phospha E® for regulating inflammatory biomarkers and metabolic syndrome.
Insulin, morphine and oxycodone are being developed for delivery into the systemic circulation, that is, the blood stream. Lidocaine,
diclofenac and retinoic acid, recent additions to our portfolio, are being developed for targeted, non-systemic delivery. Phospha E®, by
contrast, is an oral compound.
Today we have ongoing clinical studies for insulin and Phospha E® in Australia, and retinoic acid in the U.S.
We are developing a patch for oxycodone and morphine in collaboration with LTS in Germany and plan to re-enter the clinic with oxycodone
as soon as the patch development has been completed, which is expected to be later this year.
We have completed our pre-clinical development for lidocaine with outstanding results and we are currently conducting pre-clinical
studies for diclofenac, which is sold as Voltaren.
To give you an idea of the market size of the drugs we have under development, annual sales for insulin exceeds US$7 billion, for both
oxycodone and lidocaine it exceeds US$1.2 billion each, for diclofenac it exceeds US$700 million and for retinoic acid and morphine it is
around US$350 million each. The market for Phospha E will need to be developed, but we are partnering with the world's largest food
producer, Nestl
In the past year or so, our scientific team has substantially improved our technology. Commercially, we needed to develop a strategy
that would leverage their work.
We were already developing insulin and oxycodone, which are relatively long term projects. What we needed was to develop a strategy that
would deliver shareholder value quicker.
The criteria we set were: speed to market; easier regulatory pathway; lower development costs; indications that have unmet medical needs
and sizeable markets. Targeted non-systemic delivery readily fulfilled these characteristics.
This strategy will enable us to complete proof of concept, phase 2 studies within two years of commencing a project at a cost that will
be significant less than the cost of developing new drugs.
As we are targeting localised non-systemic delivery, our regulatory pathway will be relatively easy. There are many instances where it
would be preferable to deliver drugs transdermally yet pills are prescribed because there are no adequate technologies available, or where
transdermal delivery is available, it has poor bioavailability or causes severe skin irritation.
Another important aspect of our strategy is that we have selected compounds with a partner in mind. This arose as a consequence of
discussions with several pharmaceutical companies over the past year, who have expressed an interest in co-developing the drugs we have
selected. Having said this, insulin and oxycodone remain our priority. While insulin is a long-term project, the rewards to our shareholders
for success will be incredible.
Having seven compounds in, or about to enter, the clinical stage is a large undertaking for a small company. Until such time as we enter
into licensing arrangements, we will not expand our clinical pipeline. However, we will remain opportunistic. We believe that there is a
ready market for our products once we have sufficient clinical data, but so that you understand the length involved in the process, it
normally takes between six to 12 months to negotiate these types of arrangements.
We are committed to establishing our commercial operations in the U.S. and have recently appointed Fred Banti as our global Chief
Business Officer and Senior Vice President.
Fred has more than 25 years' experience in the pharmaceutical industry. This appointment is a strong indication that we believe that we
have reached a pivotal point in our corporate development where greater emphasis will be placed on commercial outcomes as we are now in a
position to do so.
We expect that other commercial appointments will follow in the U.S. as we start allocating a larger percentage of our financial
resources towards commercial development. We have been in discussions with several multinational companies for some time who continue to
show great interest in our technologies. However, like you, we are running out of patience and consequently have made the decision not to
rely solely on these negotiations but to take control of our own destiny and we are considering the merits of launching our own products in
the U.S. for dietary supplements and personal care, so long as we remain focused on our main game, pharmaceutical, and the costs are
minimal.
The final two matters I need to touch upon before vacating the podium are our recent capital raising and our current share price.
The greatest risk to our company was to run out of money before attaining our commercial goals. We had been in discussions with U.S.
investment bankers since the beginning of 2007 with many interested in undertaking a capital raising on our behalf. Along came the sub-prime
bubble and the world changed. While we still had U.S. Bankers wanting to raise the money, the rules of the game changed so much that we
started looking for alternatives.
In the end we approached our largest shareholder and through BBY, who were incredibly good during the process, one US fund. In a matter
of a week we raised sufficient funds to see us through to the end of 2009. This is a testament to the strength of our technology.
Yes, we could have waited until getting results in the second half of the year however to mitigate financial risk in the current
marketplace, where capital raisings for biotechnology companies are extremely difficult, we thought it was prudent to do it now.
I have made it a policy not to discuss share price. My reluctance is greater in today's volatile market where small companies are being
decimated for no apparent reasons. I have spoken to you about our clinical trials. Although no-one can predict the outcome of a trial, it is
fair to say that the likelihood of one or more of our trials succeeding is extremely high. The value of just one successful trial is several
times greater than our current capitalisation.
In addition to having many opportunities in our pharmaceutical division, the same is true of our nutraceutical division. We believe that
by transitioning into non-systemic delivery, and with our recent capital raising, we have removed significant risks from any investment in
our company.
From what I have said, you can readily ascertain my view of our current share price. I can assure you that we will do everything
possible in the coming months to get this message across to potential investors.
I thank you for coming along this journey with us and look forward to delivering future successes.
Harry Rosen
President & CEO
ANNUAL GENERAL MEETING ("AGM")
RESULT OF RESOLUTIONS
At the AGM of the shareholders of Phosphagenics Limited held in Melbourne today the following resolutions as set out in the Notice of
Meeting dated 4 April 2008 were each carried by the required majority on a show of hands.
As a result, shareholders resolved:
* Resolution no. 1 - to adopt the Remuneration Report;
* Resolution no. 2 - to re-elect a Director - Mr J A Addison
and, as announced, the resolution proposing the re-election of Mr Michael D Preston, was withdrawn with the approval of the Meeting.
A table detailing the results of the voting, by resolution, inclusive of the proxy voting is attached.
Yours faithfully
Phosphagenics Limited
per Mourice Garbutt
Company Secretary
Phosphagenics Limited
Annual General Meeting 23 May 2008
SUMMARY OF VOTING
Adoption of the Re-elect Mr J A Addison Re-Elect Mr M D Preston
Remuneration Report
Type of Resolution ORDINARY ORDINARY ORDINARY
Carried By Show of Hands Show of Hands WITHDRAWN
PROXY VOTING
No. of Valid Proxy Forms 432 432 432
Shares Proxy Forms Shares Proxy Forms Shares Proxy
Forms
FOR 206,692,629 245 209,714,991 314 209,403,266 309
OPEN 9,125,345 95 8,834,451 92 9,048,901 94
AGAINST 4,971,679 49 3,917,061 12 3,912,670 14
Sub Total 220,789,653 389 222,466,503 418 222,364,837 417
ABSTAINING/ 1,807,072 43 130,222 14 231,888 15
EXCLUDED
Total 222,596,725 432 222,596,725 432 222,596,725 432
This information is provided by RNS
The company news service from the London Stock Exchange
END
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