Stephen Brozak: Changing The Way Money Is Made And Diseases Are Cured

by The Life Sciences Report
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Submitted by The Life Sciences Report as part of our contributors program.

This interview was conducted by George S. Mack of The Life Sciences Report (1/24/13)

Stephen Brozak doesn’t mess around. He focuses on technologies poised to change the way medicine has been practiced for thousands of years. As president of WBB Securities, Brozak is talking to his clientele about revolutionary stem cell therapies that deal with disease in totally new ways. He’s also bullish on new antibiotics?important innovations in a world facing a shortage of effective drugs and a potential crisis of catastrophic proportion. In this interview with The Life Sciences Report, Brozak talks up must-hear ideas that growth investors need to consider.

The Life Sciences Report: Steve, for medicine in general, what’s the allure of cell technologies?

Steve Brozak: For the first time in the history of medicine, instead of providing a drug treatment that “addresses a problem,” we can actually harness the body’s own immune system to provide the treatment. It’s always been feasible theoretically, but now we’re starting to see that it is possible. The cells provide treatment rather than molecules: That’s the differentiator. There is still a place for traditional treatments, but that model will no longer be tenable.

TLSR: Do you believe that cell technologies portend the greatest growth potential in all of life sciences for investors?

SB: I believe that cell technologies have the potential to be the greatest breakthrough in all of healthcare, and in all of medical understanding as we know it. I’m not telling you that it’s going to be a smooth path, because nothing ever is. But yes, that’s a very easy statement to make.

TLSR: Why then are cell technologies taking so long to develop as therapeutic modalities? We see a lot of small companies innovating cell therapies, but I don’t see big pharma in the game in a big way.

SB: You just hit the nail on the head. That is the case because big pharma doesn’t develop drugs. They market?they market very well, and to some degree they overmarket. Drug discovery has been left to the small companies. Who are these small companies? Well, once upon a time, Amgen Inc. (AMGN:NASDAQ) and Celgene Corp. (CELG:NASDAQ) were small companies.

TLSR: Do you think big pharma companies want to just sit back and wait on proof of concept, proof of principle or clinical proof of concept in cell technologies before they jump in? Or is there unwillingness for other reasons, such as fear of hurting current pipelines and product lines in some way?

SB: I wouldn’t go in either direction. I would say that big pharma operates exactly the way it’s incentivized to operate. No one ever lost a job for saying no to a new program, but lots of people have lost their jobs for saying yes to a program that turned out differently or that didn’t have the backing of everyone, including the janitor.

The problem with large pharma is you need to get everyone to agree to a program, and that’s just not possible. As a result, you have “me-toos” and the monstrous acquisitions that take place. What happens is that the really creative people spin themselves off, saying, “I’d like to go out there and try this.” It’s easier to get something developed outside of large pharma than it is within large pharma.

TLSR: Steve, let me shift to antibiotics and infectious disease. What is the greatest need today in the antibiotic realm?

SB: Right now, we need a “911″ antibiotic that will address the fact that we are facing an antibiotic canyon. That’s the reality. There are plenty of bugs out there right now that are nasty and incurable. The good news is that they haven’t spread yet, but that’s just a function of time. How do you quantify that time? To quote Clint Eastwood: “Do you feel lucky?”

TLSR: Do you see a solution?

SB: People often say the government’s the problem, but in this case it is the answer. Governments have spent, and need to continue spending, money on dual-use strategies. They can find a use for something the average pharmaceutical company couldn’t justify spending money on, and they can get it developed and approved based on the therapy being useful in several indications. With bacteria, if a drug works for the treatment of one type of infection, it usually is effective in the treatment of multiple pathogens.

TLSR: An antibiotic fits its target like a key fits in a lock. Any tiny change in that lock will make that key ineffective. Likewise, a lone mutation in a bacterium will render it resistant to an antibiotic. Is there any development going on that will prevent antimicrobial agents from being easily circumvented by mutated strains of bacteria?

SB: There are prototypes out there, different approaches that researchers are looking at. An antibiotic is not going to be an orphan drug. We’re talking about something that’s going to be used for mass consumption, so drug developers have to make sure that it’s incredibly safe. Candidly, right now what we’re doing is triage 101. We need an antibiotic not for tomorrow, but for yesterday.

TLSR: Let’s talk about your ideas. Go ahead and give me some names that you’re recommending to investors. You can start with cell technologies if you wish.

SB: On the stem cell technologies front, Cytori Therapeutics Inc. (CYTX:NASDAQ), in San Diego, is an example of the corporate side and the government working hand in hand. The company was awarded a Biomedical Advanced Research and Development Authority (BARDA) contract to deal with radiation burns. The highlight here is that the same treatment protocol can be used for all other burns as well. A burn is a burn is a burn. Additionally, the novel part about this contract is that Cytori has to go back into its preclinical animal models and repeat what it has done in humans. That’s not a heavy lift, is it?

The company is starting to show that it can use the patient’s own stem cells to restore the native function of the body’s systems. That’s something no one has ever done before. Cytori is looking to vascularize, or I should say revascularize, tissues with its adipose-derived stem and regenerative cell (ADRC) technology so that the patient is assisted by his or her own healing mechanism through a continuous blood supply.

TLSR: The deal with BARDA was signed at the end of September, and it is worth up to $106 million ($106M) if all contract options are exercised. When could this be monetized?

SB: As soon as the company gets its preclinical work done it will have a live contract. We believe that Cytori is a benchmark company that can provide entr

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