Brett Johnson: Good day. This is Brett Johnson with OneMedRadio in New York City. Today, I’m with Frank Reynolds who is the CEO of InVivo Therapeutics, a Cambridge, Massachusetts Company that develops treatments to improve function for those paralyzed as a result of traumatic spinal cord injury. The company was founded in 2005 with a technology developed at MIT. It’s traded on the bulletin board at NVIV.
The company recently announced that they had submitted an investigational device exemption to the FDA for a device to protect spinal tissue and prevent secondary injury following traumatic spinal cord injury. Thanks for joining us today, Frank.
Frank Reynolds: Thank you very much for having me.
BJ: Can you tell us first a little bit about InVivo the business and the significance of your submission to the FDA and what this might mean for InVivo?
FR: Sure. So today, there is no treatment for spinal cord injury other than treating from trauma to areas around the spinal cord itself. So there will be spinal fixation devices and maybe anti-inflammatory treatments to try and calm, you could say, the areas outside of the spinal cord. But there actually isn’t a treatment that actually is implanted into the spinal cord itself.
So we’ve submitted an application that doesn’t involve any drugs or cells that has only a one-year patient follow-up and we believe this treatment will provide neural protection as you mentioned earlier and then of course support neuroplasticity and regain levels of functioning in the patients in as fast as say four weeks after injury. So we’re very excited about the product. The product is also a true platform technology. So we have used the same product along with say human neural stem cells and had successfully treated monkeys with the human neural stem cells. So the first product we have submitted to the FDA will become a true platform to enable the delivery of other drugs and cells in a variety of different forms and in the end we should be able to treat just about every type of spinal cord injury there is.
BJ: When do you find out from the FDA the status of the exemption?
FR: Yeah. So we have obviously a very novel technology. No product like this has ever gone through the FDA. So we know that there will be a very collaborative, you know, cooperative conversation between InVivo and the FDA over the coming months and we hope to have, you know, final approval for a human study by the end of the fall.
BJ: Terrific. And then when would a study commence would you expect?
FR: You know, it could be at the Q4 2011 or early 2012.
BJ: Terrific. Can you tell us a little bit about spinal cord injury? And you mentioned earlier that often the paralysis occurs in a time after the injury itself. Can you tell us a little bit about spinal cord injury?
FR: Yeah. So we may all be familiar with people like Christopher Reeves who was injured falling off his horse who had a very significant traumatic spinal cord injury to his neck. There are all different types of spinal cord injuries, but in most cases, about 90% of the cases the patients are actually paralyzed and put in a wheelchair for life from a secondary injury that’s comprised of bleeding and inflammation, but inflammation really being the real problem. So that process occurs over 21 days after the initial injury and then that process puts them in the wheelchair.
So if you can mitigate that process, if you can somehow reduce that inflammation, that’s called neural protection, if we can reduce the inflammation then you’re going to have reduced scarring of the spinal cord. And with that reduced scarring, we expect to see the patients recover, that’s called neuroplasticity. So through neuroplastic effects, patients will actually regain levels of functioning that they couldn’t ordinarily have obtained without this treatment.
BJ: Interesting. How many spinal cord injuries are there in the US and/or the world every year?
FR: So every year, there’s over 167,000, I believe, worldwide. In the US, there’s about 12,000. Those numbers are put out by a variety of different organizations. But there’s also about 5000 to 6000 injuries a year that actually result in death that don’t make the official books, you could say. So the actual number is probably upwards of 17,000 to 18,000 in the US. Although the number sounds kind of small of course the cost of the care for a patient, quadriplegic’s first year course of care is going to exceed a million dollars. The net present value of the cost of care of a quadriplegic is over $6 million. So there’s a significant financial cost associated with the condition of course and then for anybody who does bring a treatment to market, we believe there’ll be a significant financial reward.
BJ: Can you tell us a little bit about how you got involved in the company and the company’s origins and this technology?
FR: We have an interesting organization. Some people call it serendipity. You know, I was paralyzed myself in 1992, I spent over five years in bed in a body brace from my knee to my neck. About three years into my ordeal, I began my own research, spent two years mastering the spinal cord and developed a rehabilitation program that was able to take endogenous neural cells, basically spared cells, you know, that people have in their spinal cord after the injury, and I was able to basically activate those cells and make good use of them and get myself back walking. And that’s actually what our technology supports. So our technology supports the sparing of the cells and then allowing the body through rehabilitation to make good use of those cells.
So anyway, I got back into normal walking, you could say, without bracing in 1999 and basically went on with my life. In 2005, I had been asked to go to MIT and completed an executive MBA program by Siemens. And while at MIT, I met Bob Langer. Bob Langer is number two in the history of patents behind Thomas Edison. He’s number one in the history of life science patents and he’s a true living legend. He’s had over 50 products already approved by the FDA. He’s actually the former chair of the science advisory board at the FDA. So anyway, meeting a person like Bob and Bob telling that he had a technology that could help people with spinal cord injuries and having recovered from one myself, you know, I just felt compelled to really try and help. So I agreed to help Bob try and raise some funding in 2005 for his research, but we ended up forming a company in the fall of 2005.
So since that time, we’ve added the former chief of spine surgery at Harvard Brigham and Women’s, Eric Woodard who is now our chief medical officer, the former CEO of Siemens George Nolen who is, you know, basically my mentor in training me how to be a public CEO myself is now our lead director on our board of directors. Our company went public back in the fall.
So basically, the company has been kind of put together through a lot of good relationships that we built over the years. Of course, some are coming from Bob, some coming from Eric Woodard, and, you know, from all members of our team.
BJ: So you’ve indicated that you’ve been doing some studies on primates and you’ve seen some good results. Can you talk a little bit about those studies and what you’re finding?
FR: Yes. So basically, it is actually very difficult to study spinal cord injury in primates. The injury model we use is Brown Brown-Séquard, which basically leaves the left leg paralyzed and the right leg functioning. So we basically used this Brown Brown-Séquard injury model and then treat with different types of treatment. So we have a scaffold technology without drugs or cells and that has provided therapeutic effects. Those monkeys are up and walking and running in two, three, four weeks. We also have an injectable version, a hydrogel that time releases drugs over a few weeks. That technology also has our monkeys up and running. We have used a scaffold and combining it with human neural cells and those monkeys were up and running in just a few weeks. So it’s very exciting. We’ve also done scaffolds in growth factors and those also have monkeys up and running. We know that the scaffolding material, the extracellular matrix that cells, you know, would love to adhere to, that’s a real key competitive advantage for us.
Our patent portfolio covers the use of those biomaterials in combination with drugs, in combination with cells. We know that there’s nobody who will take a product to market in the spinal cord injury without us. We do believe the biomaterials are what we call the picks and shovels of the tissue engineering and drug delivery space. You know, as we all know from the gold rush, the only people who really made the money were the picks and shovels sellers and we know that there’s a lot of investment going around right now in the field of neural protection or regeneration and we think the biomaterials are the key to that whole field. And with our patent portfolio, we believe that we have a defensible position that will prevent anybody from entering the market space without us.
BJ: So you talked about sort of some milestones on the horizon, one of which is you indicated you had a primate study that the results of which would come back some time in the fall. Can you talk about some of the other milestones in the future for the company?
FR: We recently announced a significant patent expansion. We do have over a hundred patents licensed from MIT and Harvard through a joint license, they are exclusive and worldwide. And we just expanded outside of the spinal cord to include the peripheral nervous system where there are hundreds of thousands of surgeries per year also, the retina, cranial nerves, brain, and prostate nerve. And actually, I just spent time this week in New York City at Sloan-Kettering working with Dr. John Mulhall who we are partnering with to develop a treatment for prostate nerve damage as a result of prostate surgery. So, basically of course we know upwards — I guess it’s 90% they say of all men who die at 90 have prostate cancer upon autopsy. The numbers are staggering about the number of men affected by prostate and then there’s hundreds of thousands of surgeries a year around prostate surgery and they do result to nerve damage the same type of process that a spinal cord injury goes through and resulting in nerve death. So bleeding and inflammation as a result of the surgery ends up in the prostate nerve death and we are successfully treating it in the spinal cord. We believe we’re going to transfer that into that nerve and our early work with Dr. Mulhall is very promising.
So we have basically a portfolio of products. Our peripheral nerve applications are going to involve epidural shots and other nerve block shots early and then of course regenerative technologies later on. So we basically have a nice portfolio of products, you know, going forward and we’re looking forward to developing all.
BJ: Sure. Can you talk a little bit about the stock and how it’s traded and also sort of your capital needs outlook in the future?
FR: We’ve been trading now for really about six months. We are probably going to receive an S1 registration approval very soon, which will expand our float. We’ve had a float of somewhere around, I believe, 3-1/2 million shares. We’ll be heading 13 million shares in the market space and that’s going to significantly increase our trading volume. We know that we have a lot of pent-up volume. We have a lot of people telling us that they’re interested in buying large blocks of stock, of course, with the float being so small, you know, they haven’t been able to do that.
So although, our volume has been low, what I find kind of, you know, very comforting for me is — by the way I am the largest shareholder in the company with about 30% of the company so it’s comforting for me as although the volume is low, we don’t have any sellers. You know, there’s not a lot of people dumping stock. Everybody has faith in our company. Our shareholder base is strong. We’d like to of course and are looking forward to getting the S1 approved so that these additional millions of shares can hit the market and get a long, a get a wider base of institutional investment. So, that’s what we expect to happen in the near term.
We have enough cash right now to make it through probably Q2 of 2012. We’re in the talks right now with a number of bankers for a round that’s probably going to occur in September, but we’ll see where — we have a lot of different possibilities depending on the valuation that’s put on the company right now. You know, we could be raising upwards of $20 million. Of course, we believe right now that we can defend a $400 million valuation. You know, our valuation of course is very low right now.
BJ: But what’s the market capitalization of the company today?
FR: The market cap I believe is around $70 million.
BJ: So assuming you get the S1 rolling and get some shares in circulation, you expect that the market cap could dramatically increase over the next few months?
FR: Yes. Yeah, absolutely. And, you know, again, we’re in the talks with a significant number, not just two or three but a significant number of banks right now for a good important round that we think is going to take our valuation up. And then of course followed by the publication of our large primate study and approval of the human study, along with the other advancements, you know, of course, we’re going to be reporting on progress in our other technologies. You know, we just hired an important new scientist for our organization, a real experienced neuroscientist that have been working in the spinal cord for probably about 20 years and we’re really excited about building our team up and getting these other applications out. So, you know, we think that there’s a lot of value creating events that come up for our company and certainly not in the stock today.
BJ: Yeah. It sounds like a very exciting story, Frank. Congratulations on the great progress and we’ll look forward to hearing more about how these studies are coming along and the IDE and the S1.
FR: Yeah, sure.
BJ: Thanks for joining us today.
FR: Thank you very much for your time. We really appreciate it.
BJ: That was Frank Reynolds, chief executive officer of InVivo Therapeutics traded NVIV on the bulletin board. This is Brett Johnson signing off from New York City and OneMed Radio. Thank you.