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James West: Lee, thanks for joining us today.
Lee Buckler: Thanks for having me, James.
James West: Lee, let’s start with an overview of the value proposition for investors in Replicel.
Lee Buckler: Absolutely. So for those people who know what we’re doing, or maybe who don’t, the quick summary is, we’re a biotechnology company headquartered in Vancouver, based in Canada, trading on the TSXV and the OTCQB down in the U.S., focused on aesthetics, and sports medicine. And we do that through a culture of technologies really focused in this emerging sector of biotechnology called regenerative medicine.
We’ve got two biologics, two cell therapy biologics, that we’re moving through the clinic. So we’ve moved past the mice and Petri dish phase, we’ve got near term clinic re-outs on clinical trials in chronic tendon regeneration – so these are people who have chronic tendon injury. A dermatology trial looking at regenerating the layer under your skin that’s responsible for aging and sun damaged skin. And then we started out life looking at developing a biologic that was really responsible for re-growing hair, for those people who suffer from the primary reason for pattern baldness in men and thinning hair in women, called androgenic alopecia.
So we’ve got these three clinical trials, two biologics, and then along the way, we became convinced of the need and the enormous opportunity to really change the way things are injected in through the skin. So we’ve got a medical device that was the last product to come to our pipeline, but will be the first product that comes to market.
James West: Oh, okay. Tell us about that one.
Lee Buckler: This is a very exciting dermal injector, it’s a medical device on a CE mark pathway in Europe, 5-10K pathway in the U.S. This is a device that really optimizes, brings a lot more consistency and precision to anything you want to inject in and through the skin, including about $2 billion worth of dermal fillers injected, largely into people’s faces today, and other types of drugs, vaccines and enzymes that bring the market upwards of $3 billion. And you can put any kind of injectable into this device. We ultimately will use it for the injection of our biologics, but in the near-term, our goal is to get these prototypes; the design’s been all done, the prototypes manufactured and tested this year, to get it onto the market in Europe next year through a licensing partner that we anticipate executing on once the devices are built and tested.
I’ve made perhaps a rather aggressive goal of making this Replicel’s last pre-revenue year. So we’re really driving hard to get that thing finished and on the market at some point next year.
James West: Okay. So that leads me to my next sort of comment and query is, Replicel’s been working in this space for quite a number of years, and you say that this is its last pre-revenue year?
Lee Buckler: Yeah. You know, we’re very excited. I mean, as with a lot of stories or artists or anything, it takes a long time to become an overnight success, and that’s what we’re building here, James, in many ways. You know, we spent the first decade of our existence understanding, initially, the science of androgenic alopecia, understanding how we might develop a cell therapy approach to treating that condition and giving people a functional cure, re-growing their hair in the affected areas for men and women.
We then diversified into another cell population that’s highly expressive of tissue-building proteins, especially type one collagen. We moved that in 2015 into two clinical models, where the conditions – the underlying cause of the conditions are related to a lack of cellular function to maintain health and function.
So for instance, you know, for those people who suffer or know people who suffer from chronic pain in their ankle or their knee or tennis elbow, golfer’s elbow, rotator cuff injuries, this is the result of a chronic sort of tendon degeneration. When you ultrasound those tendons, what you often see, for those people who just aren’t responding to rest or physiotherapy, is a disaggregated tendon tissue. And that tendon tissue, when it’s healthy, is comprised of layer after layer after layer of type one collagen strands. And when you don’t have that, you’ve got a painful tendon that lacks proper function.
Every time you go out and do something, it gets aggravated. So what we saw in some initial and clinical studies done by collaborators of ours in the UK, was the ability to inject this kind of cellular product into the tendon and see not only patients reporting that they’re back doing what they love in terms of restoration of function and elimination of pain, but a really nice ultrasound picture that show a complete, very nice reconstruction, regeneration of the tendon tissue, be it the ankle, the knee or the elbow.
And so we have a readout of our own clinical study of that, which has just completed in the sports medicine clinic at University of British Columbia, coming up in the next few weeks, and it’s that same product that we put into a dermatology clinical trial for people with aging and sun-damaged skin in a leading dermatology clinical research site in Dusseldorf, Germany. Again, we’ve got the clinical readout from that coming up in the next few weeks. And then the original hair trial that we published six month results for in 2012 will report on some further efficacy results and five-year safety results here coming up as well.
We’ve been patiently building out this portfolio. This is a company that’s had one clinical readout during that first decade of its existence, and we have three clinical readouts coming up this quarter. So this is a very, very exciting period of transition and building for the company.
James West: Wow, that’s great. Congratulations to you on all of that, that’s quite the accomplishment. Now you’ve just recently ascended to the role of CEO as well, haven’t you?
Lee Buckler: That’s right. So January 1, 2016, I took over as CEO. We had, I guess, an interesting year, James. You know, it was a tough year to raise money in. We did some restructuring, we’ve reorganized the company, we did a consolidation of the stock, and we had some insiders being very, very supportive of keeping the clinical trials going while I was out restructuring, reorganizing and refinancing the company.
Bottom line is, we ended up doing a $4 million financing at the end of October, which was well-oversubscribed. We’ve righted the ship, we’ve got the bandwidth now to get us through these clinical data points, and are very excited about what we’re going to see in these data readouts and then raising some more money, likely by prospectus, to fund next-phase clinical trials and get us to that revenue generation point where people can really start to build expectations around revenue generation.
James West: Right. Okay, so let’s talk a bit about the market size and potential for each of your different business lines there, Lee. You’ve got in the tendons and the dermatology and the medical dermatological delivery device, those are three different business lines?
Lee Buckler: Yeah, you know, these are all marketing pattern baldness, anti-aging of the skin, and sports medicine injury, whether that’s professional athletes or just the mom who wants to run or the golfer who wants to extend his or her golf game, or the tennis player who wants to keep playing. Everybody understands these are intuitively large markets, certainly something that – I joke around that inevitably, I love telling this story: I’m inevitably talking to someone who’s got thinning hair, would love to look younger, or who has blown a tendon or two, and knows lots of people who have. Our whole business model, James, is to develop as much value as possible in the research and development of products that we then license to companies that have well-established commercialization records of products in the various markets that our products are looking to address.
So for instance, with hair, we did an early partnership and licensing deal with Shiseido Company. Shiseido has an exclusive license and co-development deal with us in Asia for that product; they’re there right now financing a clinical trial of that product in Japan. We own the rest of the world on that product still, and have plans to do next-phase clinical trials somewhere else in the world, likely Europe, on that product.
We own the global right sale on the tendon and the skin, and we’ve got some very, very interested parties in the upcoming data and expect that, in combination with regional licenses and the device that we expect will be our next major deal, that we’ll get this in the hands of licensing and co-development partners such that what shareholders can expect is upfront licensing fees, royalty payments on sales, and also milestone payments as we move these assets further and further towards the goal.
Our job, my job as the CEO is to do enough deals to keep non-dilutive capital flowing in, be able to leverage the expertise, infrastructure and capital of our partners, and yet also maintain some of the blue sky on these products to keep shareholders excited about the value creation opportunity that we present as a company.
James West: Yeah. Well, that sounds like you’re doing a great job there, Lee. Let’s leave it there for now. We’ll come back and dive in on some of the future episodes on those other businesses. Thank you very much for your time today.
Lee Buckler: James, I look forward to it. Thanks a lot.