June 5, 2008
Valued shareholders:
The following is a summary of the Company's activities in the first two quarters of this year.
BUILDING DEFAULT:
The Company entered into a Construction Agreement with GSL Constructors, Ltd. (GSL) as part of a business plan to commercialize the production of the Company's proprietary process for synthetically manufacturing DNA (synDNA™) and to sell synDNA™ compounds to the market.
Following the initiation of the construction project, the Company found the synDNA market slow to develop. This may be attributed to the reluctance of other companies working in the field of DNA based drugs to adapt their processes using plasmid DNA and move to using synDNA™ even while acknowledging the advantages of using synDNA™. Additionally, companies in the market hesitated to incur the additional costs to repeat tests using synDNA™ to meet FDA requirements to validate a change from using plasmid DNA to synDNA™. Given the condition of the financial markets and the increased difficulty in maintaining financial support, it became clear that the Company could no longer support both payments for the building and continued product development. The Company attempted to find a financial partner or buyer for the building or to find a party to assume our contract, but with no success, so the Company was forced to relinquish the project and the investment made to that point. CytoGenix is continuing its efforts to identify companies working at early stages who could adopt use of synDNA™ without undue expense. However, it is increasingly clear that developing this market will occur at a slower pace than was originally anticipated.
Consequently, the Company has refocused its efforts to emphasize the commercial development of its three leading product candidates: an anti-herpes therapeutic; an avian flu vaccine; and an anti-Methicillin Resistant Staphylococcus Aureus (MRSA) therapeutic.
The Company's current facilities are adequate for its current needs and the loss of the building is not anticipated to effect the Company's future operations in any material respect.
Financial Update:
CytoGenix's ability to continue as a going concern and to advance its research into commercialization is dependent on continued funding of its operating expenses and outside testing. The Company's current cash position is weak but management is optimistic that additional funding will develop which will allow the Company to complete its business goals. The Company is in the process of raising a small amount of funds to meet immediate operating needs while an institutional funding to cover the full budget can be raised with the help of an investment banking firm.
DNA VACCINE PLATFORM:
Avian Flu - H5N1 in Ferrets
We are currently conducting studies in ferrets under a sponsored research agreement with the University of Texas Medical Branch at Galveston (UTMB) to test the response to our H5N1 synDNA vaccine construct in ferrets. This construct has previously conferred about 93% protection in mouse challenge experiments. The immunological response in ferrets is currently being monitored and challenge experiments are planned.
Fish DNA Vaccine
The Company is collaborating with Taiwan Cobia, Inc. to develop synDNA™ vaccines and novel vaccination approaches against fish viruses in Groupers. The Company intends to initiate similar contacts with other aquaculture entities as well.
The Company is working in collaboration with USAMRIID to develop new Ebola and Equine Encephalitis (VEEV) synDNA based vaccines. These studies are ongoing.
ANTI-BACTERIAL PLATFORM:
MRSA (methicillin resistant Staphalococcus aureus)
The term methicillin-resistant Staphylococcus aureus (MRSA) was originally used to describe Staphylococcus aureus strains resistant to all methicillin. The term, MRSA, is more used now to describe strains of multi-drug resistant Staphylococcus aureus, resistant to common antibiotics such as penicillin, oxacillin, amoxicillin, etc, besides methicillin. We have completed a battery of efficacy studies on a promising DNA construct which effectively kills resistant Staphylococcus aureus strains and prevents fatal MRSA infection in mice. The completion of additional studies including those leading to an IND filing (including ADME, toxicology, stability, and spectrum studies) is the current focus.
ANTI-CANCER PLATFORM:
The Company plans to pursue the application of its existing platform technologies to the treatment of breast cancer and Melanoma. Several promising compounds showing inhibition activity against both breast cancer and Melanoma have been characterized in cell culture experiments to significantly inhibit cell growth while being well-tolerated by normal cells. Efficacy testing in mouse tumor models is currently planned, and improved variants having greater activity and efficacy are also being characterized.
SCIENTIFIC PUBLICATIONS:
During the past quarter we had the following paper accepted for publication in a peer reviewed journal:
Kendirgi, F., Nadezda E. Yun, N.E, Linde, N.S., Zacks, M.A, Smith, J.N., Smith, J.K., McMicken, H., Chen, Y.*, & Paessler, S. Novel linear DNA vaccines induce protective immune responses against lethal infection with influenza virus type A/H5N1 (Human Vaccine, accepted for publication).
GRANT SUBMISSIONS:
Within the past few months we have submitted the following grant applications:
SBIR: Submitted to National Institute of Allergies and Infectious Diseases (NIAID); cycle 3, 5 December, 2007
Gates Foundation Submitted 29 May, 2008; awards to be announced 1 September, 2008.
LEGAL ACTIVITY:
Employment Arbitration Matter (former Management)
The arbitration arising from the resignation of our former executives, Lawrence Wunderlich (CFO) and Frank Vazquez (COO) was completed on May 13, 2008. The parties are working to complete and execute a final settlement agreement which will resolve all issues in the case. The Sarbanes-Oxley (SOX) whistle-blower complaint filed with the Department of Labor (DOL) by Mr. Wunderlich in conjunction with his resignation, is pending before the DOL, and is subject to dismissal by the DOL in conjunction with the draft settlement agreement.
Issued Australian Patent (No. 2004205192) - ssDNA Expression
The Company has received official notice of the grant of an Australian patent which covers our earlier plasmid versions of the ssDNA expression vector system to utilize a cell's genetic machinery to synthesize small 'oligo-like' fragments of single stranded DNA inside the cell. These ssDNA fragments then bind to target components within the cell to regulate the cell's activities. This is the first Australian grant owned by the Company, and accompanies thirteen other patent grants in domestic and foreign markets on similar technology. This patent will protect our single stranded DNA expression technology for exclusive use in Australia until the year 2019.
Israeli Patent Allowance - ssDNA Expression
We have recently received a Notice of Allowance from the Israeli Patent Office for the original ssDNA expression vector system as described above.
United States Patent Allowance - Anti-Herpes Compound (Simplivir)
We have received official notice of the issuance of our second US patent which covers the therapeutic currently being developed as our leading anti-herpes compound, Simplivir. This is the first in the chain of worldwide patents to issue on this variation of our basic ssDNA expression system, and provides the basis to move forward with commercializing Simplivir both here and in foreign markets. The Company has filed a divisional application to clarify some unresolved matters which may extend the term of some of this technology.
The Company is continually assessing its intellectual property strategy to reflect the evolution of its technology and the need for patents vs. proprietary knowledge.
Thank you for your ongoing interest and support.
Malcolm Skolnick