IsoRay, Inc
(NYSE:ISR)
CEO: Dwight Babcock
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INTERVIEW TRANSCRIPTS:
WSA: Good day from Wall Street. This is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Dwight Babcock, the CEO of IsoRay Inc. The company trades on the New York Stock Exchange, ticker symbol ISR. Thanks for joining us today Dwight.
Dwight Babcock: Juan, thank you very much for inviting me.
WSA: Certainly, now starting off please give us a history and overview there of the company for some of our listeners that are new to your story.
Dwight Babcock: Sure. Juan, as you know, in the past when we have spoken that IsoRay was originally formulated by a group of highly recognized scientists and medical specialists for the use of using Cesium-131 to fight prostate cancer. That was its initial directive and that is what we have pursued since that original foundation of IsoRay. The interesting thing is that Cesium, which many of your listeners may not know and readers is that Cesium was really the choice of the Federal Government for prostate cancer for seed brachytherapy many, many years ago, but did not have the ability to bring it in at a cost-effective price. That has been resolved with IsoRay and in its patented techniques can now bring medical grade Cesium-131 in seed form and in liquid form to treat cancers, not only of the prostate, but now we have advanced into far more aggressive cancers such as brain, head and neck, lung, and GYN cancers. So we’ve come a long way in the last seven or eight years.
WSA: Yeah certainly and so yeah, in terms of Cesium, can you talk about the recent positive results there from UPMC.
WSA: Certainly, and I think for the readers to understand best what we have is we have an FDA approval that our isotope is allowed to be placed in any solid tumor throughout the body. It is a very large wide open market for us, and as I said early on, the destiny of IsoRay was geared to the prostate arena. Seeds were currently being used, they still are in seed brachytherapy, it is still probably the most successful means of treating prostate cancer if you are at a lower or immediate risk and can be used in combination with any other form of procedure. If people talk about chemotherapy, if people talk about external radiation, and ultimately even if you want to have a prostatectomy, the seeds would not inhibit that process if there was a failure.
Cesium recently announced it had just completed a 10-year study, which is required time for this particular body site being prostate. Obviously, prostate is considered a very slow growing cancer and it took a number of years to grow a proper database of patients who had been treated. While we have already treated over 8000 patients now to date, the initial population had to then go through a 5-year period because the first measurement point was biochemical control, PSA bounce at a 5-year mark. I am happy to say that we rank the highest of any of the prostate brachytherapy seeds at this point in time in control of the cancer as well as any other modalities that we do in fact compete with, such as external beam and prostatectomy. So it has been a fabulous result that we got from that last peer-reviewed report.
That followed on the heels of two other very outstanding reports where we are taking the company after more aggressive cancers that are killing people at a much faster rate and have no great cure and solution and that would be brain cancers and that would be three forms of brain cancer, true brain cancer, which is glioblastoma, that would be metastatic brain cancers coming from some other source to the brain, and meningioma, a tumor-based cancer. That paper was released by Cornell recently on metastatic cancer showing at the time 100% of local control as well as no necrosis and damaging other brain cells within the cavity that had been resected–phenomenal results.
And again, GYN is another paper that was released on a patient base and it was released after only a year-and-a-half of time because these women all who had recurring cancers were in a dire straits to have significant surgical procedures that would have left them really between one and two bags required to go through the balance of their life and our seeds I am happy to say were used in a trial there and all patients have avoided that surgery to date and with fabulous results.
WSA: Yeah certainly, and so what are some of the other key trends that you are focusing on right now in this sector. I guess we could primarily talk about the prostate cancer study there in Russia and how you position the company to capitalize.
Dwight Babcock: Well again, we have FDA approval for our products and we have a CE mark for all our products throughout the world. So what we are allowed to do in Russia, they were announcing a grand opening of a brand new mega center that was being geared totally to cancer treatment, at least a new wing that they had built, it’s state-of-the-art and they wanted to introduce Cesium because they think that is one of the few new products that is available in the marketplace that is showing that it can compete with the current standard of care, and you remember Juan, we are dealing with people who have failed standard of care, sometimes as many as four times before they try Cesium and this is just a typical process that the medical industry goes through where they don’t easily adopt, they are not fast to move, but they use them on their critical patients, who have failed other treatments. So we are very proud to have been chosen by the Russian Federation to join them in Russian and have several procedures performed before some 100 plus physicians watching around the country.
WSA: Certainly, and anything else Dwight that you feel makes IsoRay unique from some of the others players there in the sector?
Dwight Babcock: Well, I would say there is another press release that was out that is an anatomical type of answer, but what we really were able to do for a young lady in Peru, if you read this one, you saw that we for the first time really attacked cancer that was inoperable, but we were able to place our seeds within the tumor. We normally excavate the tumor and place our seeds or our balloon catheter, which we fill with liquid inside the cavity created by the excavation of the tumor, but in this case.
WSA: Right, for brain cancer, right?
Dwight Babcock: Yes, yes. There was a little glioma right on the top of the brainstem. This young lady was in a very sad state, not able to walk and stay awake, sit up and I can tell you after three weeks she was home walking on her own. She is back at school now at six months. The cancer has been reduced down by 70% and shows that there has been no re-growth and no fluid buildup, so we think we have a dead cancer body that is in there and we are very optimistic about how well this has gone. These are not always curative in any way, shape, or form, but they are certainly opportunities that people out there need to know do exist and we are having absolutely fabulous success.
WSA: Well good. And what are some of the key goals or milestones that you are hoping accomplish here over the next 6 to 12 months?
Dwight Babcock: Well, what we are really looking to do is we are going to expand our prostate effort to now bring with the papers that we are starting to get released. We will bring those forward to the traditional users of seeds in the marketplace who may have been waiting for peer-reviewed papers before they run the risk of modifying their own personal practice. So we will be reaching out faster and with more definitive information on our product that we can stand behind in the prostate arena.
The brain results, I think that is going to become IsoRay’s Holy Grail, I mean we are finding a home there where we are doing marvelous things. If you look back at the Barrow Neurological Center Report and their results on all three forms of brain cancer, they are having fabulous results and they have a technique and a process, which we are supporting and want to move ahead with, so we think that is going to be an outstanding market for us going forward. And as well as now that we have good data being accumulated on lung, we have a paper out on GYN, although GYN is not going to be a huge market, we do see that as something that we really can be a standout in.
Part of the reason that we are so successful in killing some of these aggressive cancers compared to any other isotope that is available in the low-dose range is that our half-life is 9.7 days. So that says we give half our dose during that period of time and about at 30 days, we have given some 90% of the entire dose that we intended to give to that cancer site. This is in the range of six times faster than that of iodine and it makes a lot of sense even to a layperson that if brain cancer is doubling every 30 days, how can you attempt to win the battle if you don’t deliver even half your dose in 60 days. So you are losing ground. Cesium is the clear choice for its half life and energy qualities.
WSA: Right and perhaps you can talk to us a little bit of your background and experience there and the key management behind the scenes.
Dwight Babcock: Well, I think you know I have to always refer to myself as kind of the generalist. I run an insurance company. I have had a computer firm that automated insurance companies all around the world. I think I am in that generalist category and I think that is probably what IsoRay needed when I came from the Board down to be a CEO, but I am surrounded by world-recognized scientists and medical physicists, a tremendous staff that has never had a ride up by the FDA for any infraction or anything out of the ordinary occurring, the quality assurance systems that we have in place are absolutely fabulous.
So it is not really an individual, it’s just a great, great team that we have there in Richland, Washington. We have people schooled in medicine and they know the benefits of brachytherapy and the benefits you can bring to humanity and they are really driven to that end.
WSA: Well, good, and so as far as investors and the financial committee are concerned as the company last year was one of the top, actually the fifth highest percentage gainer in the New York Stock Exchange group, do you believe that investors are finally starting to realize the potential and your upside and what are some of the other things that you wish they better understood about the company?
Dwight Babcock: Well, I’d say there are two things. I think when we talk about the upside of the company, I think it has a tremendous upside and I think we are looking to do a lot of good things in the next 12-24 months, but I think first we are the only one that has Cesium-131 available. It is proving its efficacy in the marketplace. The market is beginning to recognize it. I think the things that I would tell you that the market doesn’t understand from time to time in my estimation is that when we announce a new body sector we are entering, that means a key opinion leader or a thought leader at a major medical institution probably is trying to do something positive for a patient that is so critically ill and is failing all other treatments.
That we hope leads to a study, which means we accumulate data on a number of patients with common problems and then we ultimately get a paper that qualifies with its integrity and we are never involved in the data collection or we are not involved in the data calculations. It is all institutional based. So we hope that those get peer-reviewed, we hope to get critical review, and we can then go out to the general market and expand the marketplace. I feel like I make a comment about a new body site or a new technique, even the stereotactic with this young lady in Peru and if someone thinks next month everyone is going to jump on board, when that’s not the case. The other thing I would tell you is that I think people don’t understand as well is that we are listed as a medical device being that we are seed-based product, meaning our radioisotope is placed into a titanium seed and it qualifies under the medical device field.
We are blessed in that we are able to sell our product into all our efficacy studies. We are very much like a pharma though. We have to prove the efficacy and compare ourselves to standard of care that exists today in all modalities, and in doing that, you know, IsoRay has had a relatively flat line, which says two things. One, we have been continuing to sell into our studies, which is a benefit to the shareholders because we don’t have to raise money and just give away the product like a pharmaceutical does, but if someone looks at it not recognizing that also some of the studies that have ended in their required data accumulation are still buying from us because those in house understand the results that their patients are having, but they are not yet able to broadcast it.
So I think people look at revenue. I often kid that we’d almost be a better off and compared much closer to a pharmaceutical if we had no revenue, but I do think we have avoided raising another $40,000,000 to $50,000,000 to this point by virtue that we have been able to sell our product to the market.
WSA: Certainly well, that is a very key point and so once again joining us today is Dwight Babcock, the CEO and Chairman of IsoRay Inc. trading on the New York Stock Exchange, ticker symbol ISR, trading $1.32 a share, market cap is $72 Million, and before we conclude here Dwight to recap some of your key points, why do you believe investors should consider your company as a good investment opportunity today?
Dwight Babcock: Well, I think we are a company that’s geared to ultimately be returning somewhere in the 50% gross margin range. I think our, well I don’t know that we will ever be in the near term what I would call that hockey stick look of growth. I think we are going to be slow and steady because each of the institutions and/or users will find one, two, or three cases a month coming on board that fit the criteria of the selection, until such time as we are accepted as a standard of care at which time the world will change for IsoRay.
Rather than just being kind of a newly build of slow growth, we are going to have a far more rapid growth when people are given a choice to have a procedure that is done at the time of surgery if they are going to have the tumor removed, we are placed at that time in the quality of life of them being able to return home and not return back to the hospital for 20 or 30 treatments or whatever the follow-on modality requires, ours says you are one-and-done and you can be with family, friends, and recuperate and never have to worry about coming back.
WSA: 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 Dwight and update our investor audience on IsoRay. It is always good to have you on.
Dwight Babcock: Thank you Juan. I really appreciate the time.
