Critical Outcome Technologies (TSXV:COT) CEO Interview

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Critical Outcome Technologies
CEO: Dr. Wayne Danter




Juan Costello: Good day from Wall Street.  This Juan Costello with the Wall Street Analyst.  Joining us today is Dr. Wayne Danter, CEO and President of Critical Outcome Technologies Inc.  The company trades on the TSX Venture, ticker symbol is COT.  Thanks for joining us today Dr. Danter.

Dr. Wayne Danter: You are very welcome.  Thanks for the opportunity.

Juan Costello: Certainly. Now, starting off, give us a brief history and overview of the company for some of the listeners that are new to your story.

Dr. Wayne Danter: Sure, the company was formed around a core technology based on Artificial Intelligence. So, the principle was very simple–If you start off with better starting points you will likely end up with higher quality products at the end of the drug discovery process.  So, following that concept we took a partly traditional drug discovery process, created computer simulations of each one of those individual elements, validated the simulations on external data, and then put it back together into a platform that we currently are applying to drug discovery and preclinical drug development.

Juan Costello: Great. So in terms of COTI-2 can you talk about some of the positive results there?

Dr. Wayne Danter: Sure.  COTI-2 is the first commercial project out of our core technology, which is now heading towards the clinic and should be Phase I ready by the end of this year.  It was originally discovered in a project done for a big pharma company looking at treatment for small cell lung cancer.  They subsequently lost interest in that project, and based on the early results we took it internally as our first commercial project.  We have had a lot of success in the preclinical development of COTI-2.  It has behaved very much like the computer simulations have predicted and the most recent data that appeared in our press release this morning has to do with the mechanism of action of the drug candidate based on experiments carried out at MD Anderson Cancer Center in Houston.  We have done a lot of work in cell lines and animals and we are pointed in one direction towards a slightly different pathway but with the help of Dr. Gordon Mills from MD Anderson we have focused in on p53 gene mutations.  So, for your listeners p53 is particularly important because mutations of that gene are found in at least 50% of all human cancers.  Finding a drug that will impact that particular gene mutation has a great potential– it will benefit a lot of people.

Juan Costello: All right, and can you expand on some of the recent trends right now in this sector and how you are positioning the company, some of your patents to capitalize on them?

Dr. Wayne Danter:  Sure.  The trend nowadays is moving more and more towards gene-based types of therapies and by that I mean focusing in on gene mutations that are common in different cancers and trying to find small molecule solutions to mitigate those gene mutations.  So, the basic concept is that the gene mutation ends up producing abnormal protein and that abnormal protein, either through increased signaling or decreased signaling in the cell, tends to lead to a cancer like transformation in many cells.  And the trend I think used to be trying to find blockbuster drugs for organ type tumors.  Everybody has heard about the blockbuster drugs for lung cancer, colon cancer and breast cancer, but I think the trend really is away from that and towards drugs that specifically target gene mutations in a number of different types of cancers.  For example, there is a wide range in the presence of p53 mutations across all human cancers.  It may go from 10% to 20% in some types of lung cancer up to more than 90% in ovarian cancer.  And most of the human cancers would be scattered in between that 20% and 90% in terms of the prevalence of a p53 mutation.  So, I think that explains where I see things going and where the focus is being placed in drug discovery and that’s on small molecules and large molecules to target specific gene abnormalities.

Juan Costello: Certainly and what do you feel makes COT unique from some of the other players in the sector?

Dr. Wayne Danter: Well, I think it’s primarily our underlying technology, which has been validated in a number of ways including our lead compound going into Phase I, which is a direct result of the technology.  The technology itself has many applications.  So, while we use it currently for internal projects we also have a number of co-development projects with external pharma and biotech partners to help them discover new compounds with a higher probability of success against their targets that they think are important internally.  And we are also going to be expanding the access to our technology through a web portal in which small biotechs and pharma companies could access our technology much in the same way that you can access iTunes and the going model that we are seeing for that is very much like the iTunes model.

We also will be bringing out new application of the technology called CHEMFIRM, which is the use of our core technology to assist investment banks and investment organizations in trying to identify early where the skeletons may be hidden when it comes to developing new compounds.  So, we think of CHEMFIRM as another objective pair of eyes on the data that helps to augment the human expert.  And we are also going to be spending more time in repositioning of the drugs, our technology is very well situated to identify compounds that are 2-3 years away from coming off patent and identify new uses for those compounds.  The advantage there of course is that compounds that are currently on the market have a very detailed safety history and a lot of the early work doesn’t have to be repeated when you can find a new indication.

We have other avenues that we are also exploring right now and I think the long term for us sees us heading towards more of an intellectual property technology type of company that right now is focused in the pharmaceutical space.

Juan Costello: Right.  And so perhaps you could walk us through your background experience Dr. Danter and talk a little bit about the management over at COT.

Dr. Wayne Danter:  My background is as a physician.  I trained in Canada and did post graduate training in Internal Medicine and Critical Care and did some postdoctoral work in Clinical pharmacology, which is where much of this current process comes from.  We started the company as a private company in 1998 and went public on the TSX Venture Exchange in 2005.  We have a small company but I think we are very sort of trim and nimble in terms of how we spend money.  We have tried to set up a combination of a physical company and virtual company to minimize our costs and our current burn rate would be amongst the lowest in the entire industry depending on how many projects we have going, it could be anywhere from $100,000 to $200,000 or so per month, which in this industry is an exceedingly low burn rate.

We have our – our management team currently has three individuals on it including myself.  Gene Kelly is our Chief Financial Officer.  He has got a long history in finance and ran a Canadian farming company that had over 800 million dollars in revenue.  He does an excellent job of watching over our financial resources, watching over our investors’ money.  And the third individual right now is Dr. Brent Norton who is a life sciences biotechnology sort of serial entrepreneur and has been previously CEO of Canadian company that now trades on the NASDAQ.  The fourth important element is the Chairman of our board, Mr. John Charles Drake who is a lawyer by training but a serial entrepreneur and has been a stalwart supporter of the company and in addition to his management job with the company he also is the Chairman of our board of directors.  So we are small and nimble and I think represent at least one way of a future being small, nimble and accountable to shareholders.

Juan Costello:  Right, what are some of the specific goals and milestones that you and the team are hoping to accomplish over the course of the next year?

Dr. Wayne Danter:  Sure, we have a number of those.  The first goal is to partner our lead asset COTI-2 with a pharma biotech partner and that’s going very well.  We’re looking to out-license that asset in the next 6-8 months.  Behind that we have our second program, which is an AML project which has partial funding from Canadian government and we will be bringing that along as our next commercial asset.  In addition to that we will be doing more research and development, co-development type projects with universities, pharmas and biotechs and we have three of those ongoing right now and other one in the works that we hope to announce shortly.  And in addition to that will be brining on our other revenue streams that I mentioned before, namely, the web portal to our technology and the CHEMFIRM application.  We are also at present filing patents around new intellectual property that includes a computer simulation of a programmable cancer cell.  So, we have a lot of plans for the next year and so far we have done very well hitting our milestones.

Juan Costello: And as far as investors in the financial community are concerned Dr. Danter do you believe that the Critical Outcome Tech story and your message and upside are completely understood and appreciated by them? And if not, what do you wish investors better understood about the company?

Dr. Wayne Danter:  Well, I think that one of the main things to understand about our company is that we are not a one-trick-pony.  The technology allows us to have multiple projects, both external and internal going on simultaneously.  And most of our investors have been aware that if one project for whatever reason doesn’t come to fruition there is one or two or three other projects that are going on simultaneously.  So, it’s a much different type of investment than the traditional biotech investment around one or two assets, they either fail or they are successful.

So, I think in the long term also we plan to put down a footprint in the United States and grow in North America in the next couple of years.  So, we intend to be around, we intend to grow, we think we have a very robust core technology and given the non-sustainable nature of the traditional approach to drug discovery, we think that we are very well positioned for the future.

Juan Costello: Well great, and so once again joining us today is Dr. Wayne Danter, CEO and President of Critical Outcome Technologies.  The company trades on the TSX Venture, ticker symbol is COT, currently trading at 18 cents a share, the Market Cap is north of $13 million and before we conclude here Dr. Danter to briefly recap some of your key points, why do you believe investor should consider the company as a good investment opportunity today?

Dr. Wayne Danter:  Sure, I think we have a very sound core technology that has been validated.  I think we have a very nimble and open-minded management team, we are very flexible, we have adapted numerous times to changes in the reality of the market environment and our technology is very easily adapted to multiple revenue streams and I think over time we will evolve towards intellectual property company that will always have at least part of its activity in drug discovery and preclinical drug development.

Juan Costello:  Well, we certainly look forward to continue to track the company’s growth and report on your upcoming progress and we would like to thank you for taking the time to join us today and…

Dr. Wayne Danter:  You are welcome and thank you for the opportunity.

Juan Costello:  Definitely.


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