Interview with the CEO of Radient Pharmaceuticals (AMEX:RPC) Print E-mail
By Staff and Wire Reports   
Monday, 27 December 2010 08:43

During the past few sessions, shares of Radient Pharmaceuticals (AMEX: RPC ) have seen increased volume and appreciation in anticipation of several key developments slated to occur in the short term. In an exclusive interview Douglas MacLellan, the CEO of Radient Pharmaceuticals provides insight and perspective on the recent developments and explains what factors have put his company on the verge of seeing increased growth, stability and profits.

{bmrutiluty}BioMedReports: In the past few sessions, we’ve seen some growing excitement surrounding your company in the investment community. Why now?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals: 
We have been making steady and definable progress on laying the ground work for broad use of our Onko-Sure cancer screening and monitoring test in 2011. This is a test that we’ve worked really hard to make people aware of. It can detect up to fourteen different cancers very early on.  It has been clinically proven to identify cancer in its earliest stages and that’s important because it allows for better treatments and patient outcomes.  We have been busy implementing and aggressive commercialization strategy that targets the medical community, including physicians, clinicians, oncologists, reference labs as well as patients and consumers.  These efforts have kept us busy not only here in North America, but they have really been picking up momentum around the globe, especially in countries whose governments are backing general cancer screening efforts. We feel these corporate activities are really going to pay off in 2011. It’s a critical and exciting time for us as our profitability and financial strength as a company are two things that our board and shareholders are all helping to push forward and support.

BioMedReports: We’ve seen some some of the sales projections made during some of your corporate presentations and the difference n projected revenues to the company really jumps from 2010 to 2011and your group anticipates that they will continue to grow year over year not only for the Onko-Sure DR-70 Kit sales, but also for your Reagent/Antibody sales. Since you make these tests, one of the things that would concern investors is manufacturing capacity, for example. That can obviously affect your sales projections, so can you give us a sense of where you stand at the moment?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:
  Well, for example, we are in active discussions with India about some pending business and they have indicated that they are going to be placing some very big orders from us. So it makes it difficult for us to try to do accurate forecasting without considering many multiple factors. We just brought in a top flight kit manufacturer that has over 25 years of experience in building in detour diagnostic test kits. At this point we can produce 300 kits a day. To give you an idea, that's 1500 kits a week, 6000 a month or about 70 thousand kits in a year. That’s about capacity right now. But, If we need to, we can actually double that capacity by adding a couple of lab technicians and a couple of robots. So if you start looking closely at the numbers, and this is average pricing for us, you've got 70,000 kits times $500- which is $35 million in revenues for us with an 85% gross margin. Can we be at that type of capacity requirement by the end of 2011? I definitely think so.”

BioMedReports: Why do some of these developing countries want these tests? There has been some talk that some of these countries simply do not have the sophisticated early detection technologies and medical devices that we have in the U.S. Is that the primary factor?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:
Well, you know we are not great at early detection either. Nobody, I mean we are doing something that was never been done before. There is now for general cancer screening. There is no developed test on the market today that is general cancer screening tool other than Onko-Sure, so we are doing something that has not been done before. And having said that, there are screening programs for certain types of cancer such as breast cancer, mammography, you know a mammogram was considered a good tool up until a year ago and then DMA came out and said “Gee, we do not think mammograms are selected tool in capturing early stage breast cancer. We are not sure what to recommend but that is not the best tool.”

The other thing is you see the need for better prostate, lung and other cancer screening programs. So I think we have the opportunity here to better educate the medical community to our general cancer screen. From a developing country standpoint, they have not been able to interdict on cancer at all so they’ve got populations that are only getting in late stage when the curability of cancer is very low and the patient’s livelihood and impact on those people are extremely high. And of course in these countries, they are big numbers of smokers. In the United States, we have cut the use of tobacco dramatically but that is not the case of the rest of the planet. And so the largest numbers of smokers are in places like Brazil, China and India. Particularly for the absence of lung cancer that is particularly important.
Now, if you get cancer in stage one and you get people to adapt to use test, what happens is that you are curing a phenomenal piece of the population that was not getting that before and the cost of treatment is reasonable. I mean a full round of chemo in the United States is about $40,000 and it can be, I mean that is kind of the hard cost so that the insurance company made bill much higher, the hospital made bill much higher number but that is the average cost. Well, that is a lot of money for a per patient basis even for countries like India or China or Brazil and yet the type of chemo programs that they do in India, in Brazil and China are less expensive.

They have their own developed products and their cost of doing a round of chemo is about $9,000. And they are using maybe slightly less effective machines, maybe. I mean we have not clarified that but we do know they can afford to treat based on their current government funding. They can afford to treat cancer patient and they want it. So getting early detection will help save a lot of money. And there I said we tried to quantified that in the paper that I wrote earlier this year and we are going to be doing some more work on that going forward and in really defining how much money we start saving particularly as we start getting data from the programs that we are running in India, Brazil and China.

BioMedReports:You’ve talked a little bit about launching some of these programs in other countries. Actually we’ve seen a number of press releases from your company touting some of the progress you’ve made. What can you share with us on that front?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals: I can say this. What is represented in our press release is just the tip of the iceberg in a sense that these are the initial programs that are underway. We are in discussion with multiple provincial governments and the national government to develop much broader programs. So we expect in that once we announces that we started with the first one, we believe that that will kick off the completion of commitments by other state health agencies to participate and develop similar programs. As I mentioned before, the potential in the India could be dramatically higher in 2011 than we have already predicted publicly which was only a few million dollars. I think it could be many multiples higher.

BioMedReports: Which countries have the potential to become your biggest customers and why?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:
We have big plans for 2011. RPC is currently focused on primarily international cancer screening programs that along with North America kit sales could generate up to 38,500 Onko-Sure kit sales in 2011 at an average price of approximately $400.00 per kit. If achieved this would provide RPC with up to $15.4 million in gross sales and approximate net earnings of $8 million. The largest anticipated 2011 market is India followed by Latin America, North America and Asia.

[Note: Here are some projected sales figures obtained by BioMedReports, listed by country/region:
India: Distributor, Gaur Diagno Distributor: up to 25,000 Onko-Sure Test kits;
Latin America: Distributor, Procaps S.A.: up to 5,000 Onko-Sure Test kits;
North America: In-House Sales: up to 5,000 Onko-Sure Test Kits;
Asia-Pacific: TBA: up to 2,500 Onko-Sure Test Kits;
Korea: Naroo DiTech, Inc.: up to 1,000 Onko-Sure Test kits; ]

BioMedReports: Tell us about the developments surrounding your Onko-Sure technology as a screener for lung cancer.

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals: 
RPC and ProVista Life Sciences announced on October 13, 2010 some important validation study results of a blood test for early detection of lung cancer. Provista is planning to broadly introduce this new test to market and we see that as a game changer on many levels.

The study which was completed focused on the requisite analyses and data evaluation which was needed to validate Provista’s test- which is based on Radient’s antigens for fibrinogen degradation products. It successfully detects lung cancer with a high degree of accuracy. The study itself included men and women between 20­76 years of age and the data generated in this study proved consistent with previous findings and produced positive clinical performance marks of 87% sensitivity; 95% specificity; and an ROC Accuracy of 0.97.

Let’s put that into perspective. By industry standards the study proved very successful and will serve as one of the cornerstones to Provista’s efforts to introduce that new lung cancer detection assay- which they have branded “LC Sentinel”- to the market. Provista intends to introduce LC Sentinel as a CLIA Laboratory Developed Test (LDT) for use in high­ risk lung cancer patient populations in the U.S. through its standard clinical channels which include physicians, medical clinics and hospitals.

Also of note is the fact that the company expects to seek FDA registration for LC Sentinel in 2011. Those increasing revenue projections you mentioned for our Reagent/Antibody sales are directly tied into these types of developments.

[Note: Provista’s CEO William Gartner has said told Wall Street that his company was “exceptionally pleased at the test results and will aggressively market and commercialize this important and potentially life­saving lung cancer test beginning in the fourth quarter 2010.” Gartner also expressed high praise for the quality of the RPC’s manufacturing facilities and chemicals indicating the Company is pleased to be an exclusive partner of RPC in the development of the test. In conjunction with today’s announcement, RPC and Provista also announced the two Companies will execute an exclusive lab partnership agreement where Provista Life Sciences will purchase RPC reagents exclusively for the development of LC SentinelTM.

The American Cancer Society's estimates of the impact of lung cancer in the U.S. during 2009 include approximately 219,000 new cases (both non­small cell and small cell) and 159,000 deaths resulting from the disease, accounting for 28 percent of all cancer deaths. Lung cancer is the leading cause of cancer death among both men and women -- 62% of those diagnosed in late stages die within 5 years. Provista estimates there are approximately 18 million high-risk patients who stand to benefit from the test’s US introduction.

According to Douglas MacLellan in previously released press releases, "The detection benefit observed in this study represents a meaningful additional to tests available today. We are very encouraged by the potential benefit of this test to patients who are facing the deadly threat of lung cancer. As previously announced, RPC is actively engaged in acquisition negotiations with Provista and with the success of the deal; we expect to combine both companies to achieve a leadership presence in the global cancer diagnostics market."

Also, on September 27, 2010 RPC signed an extension of its original agreement dated July 13, 2010 to merge with Provista Diagnostics Inc., making the agreement between Provista Diagnostics and Radient Pharmaceuticals effective through December 31, 2010. Both Companies have confirmed continued interest in the merger and to pursue completion of the deal within a timeframe that suits the needs of both companies and shareholders.

Lastly, RPC announced on November 11, 2010 that  it has entered into an exclusive 5-year Laboratory Services Agreement (LSA) with Provista Diagnostics Inc. (Provista). Provista conducts diagnostic research and provides CLIA laboratory developed tests and services to the general public. Under the terms of the LSA, Provista will have the exclusive rights in the U.S. to develop and market CLIA laboratory developed tests (LDT’s) for lung cancer screening purposes using RPC's proprietary polyclonal antibodies for fibrin and fibrinogen degradation products.]

BioMedReports: What are your biggest challenges as a company right now?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:
  Convincing the market that all of the Onko-Sure marketing and outreach efforts we have completed in 2010 will pay off with significant Onko-Sure sales in 2011 and beyond.

BioMedReports:  What will the debt restructuring plan recently approved by your board and shareholders mean for your company?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:  We anticipate receiving shareholders approval of various debt financings and the convertibility of those this debt into to equity on December 3rd, 2010. Based upon this shareholder approval and antcipated AMEX approval of the various note transactions and subsequent anticipated debt to equity & warrant conversions, RPC will be in a position to eliminate up to $32,789,322 in liabilities in the near team. This $32,789,322 in liabilities is made up of $14,165,687  derivative liabilities, $1,090,738 in accrued interest, $13,055,301 in convertible notes and $4,477,596 in the current portion of the notes payable. Based upon all of these liabilities being eliminated, RPC would then have approximately $22,130,106 in total shareholder equity.

BioMedReports: What needs to happen for that debt-to-equity swap to become official and how are you feeling about that?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:
  On Thursday we announced that the last step in approving the debt to equity swap is approval by the American Stock Exchange, anticipated on January 6th, 2011. On that day, the notes offerings that took place in 2008, 2009 and 2010 (these are the issuances that were approved by the Company's shareholders at the annual shareholder meeting on December 3, 2010) are scheduled to be reviewed by the AMEX listing committee. Again, we anticipate that the listing committee will approve all the share issuances noted in the application at that meeting. If we are correct, then we will file a Form 8-K to report, disclose and announce that when the Amex listing committee submits its approval.

BioMedReports:  What haven’t we talked about that could come into play as a positive development or milestone for RPC during 2011?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:
I want to make sure that everyone takes a close look at our December press releases on the spin off our Chinese subsidiary JPI (iThera) and our CIT technology CIT (NuVax).  This is something that the media has not really focused a great deal of attention on so far, but we anticipate that these two key transactions could bring as much as $80 million in additional value to the RPC shareholders in 2011.

BioMedReports:  Is there anything else you want to add?

Mr. Douglas MacLellan, CEO of Radient Pharmaceuticals:
I don’t know how familiar people really are with our technology or our programs, but we have launched three corporate websites in order to help everyone fully understand our goals and objectives. I would urge anyone who is interested in our company to please take the time to watch some of the video content on these sites:

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