It would seem that Benjamin Franklin’s famous axiom, “An ounce of prevention is worth a pound of cure,” is one the global health care community is finally taking to heart. As the economic and political debate on medical spending continues to heat up, preventive medicine is gaining broader acknowledgement as major factor in reeling in out-of-control healthcare expenses. Not to mention, preventive medicine can reduce, and even eliminate, so much undue suffering from various avoidable diseases and illnesses affecting a significant portion of the population.
For PreveCeutical Medical Inc. (PMI)(CAA:CNX), this creates presents an opportunity to create an entirely new market segment in the healthcare field. PreveCeutical CEO Stephen Van Deventer estimates that preventive medicine is a $3.8 trillion market annually, and his company could be positioned to lead its transformation into a household category, such as the pharmaceutical and nutriceutical markets. PreveCeutical’s lead product is the CellB9 supplement, which harnesses the effects of scorpion venom. The company is in the process of developing a pharmaceutical treatment around on the venom to validate its health benefits. In addition, PreveCeutical is working on a cannabinoid delivery agent known as Sol-Gels, as well as conducting research on gene therapy treatments.
Equities.com spoke with Van Deventer to discuss the company’s ambitious vision, the impressive team its assembled to carry it out, it’s burgeoning product portfolio, and how it came to coin a major emerging industry.
EQ: How would you describe PreveCeutical’s operations and target market?
Van Deventer: Our target market is preventive healthcare, and we develop products that can help people prevent getting sick and different ailments that they might be genetically predisposed to. We want to find out what can be done to prevent these different ailments rather than having to fix them after the fact.
We currently have one product online in the CellB9, and are in the process of developing other products. We’ve brought a lot of talent together that can lead us through the different processes in developing these different items. Ultimately, once we get those items developed, then we outsource a lot of our product manufacturing and distribution because it reduces our costs and expenses.
EQ: Your leading product is the CellB9 oral solution. It contains a natural compound extracted from the Caribbean Blue Scorpion. Can you tell us about this product and its health benefits?
Van Deventer: Well, years ago in the Dominican Republic, people were getting stung by these scorpions and they started noticing some positive effects that would happen to some people that were stung, mainly that different sicknesses and ailments were starting to be reduced. So, some scientists did some research into it and they found that the blue venom actually looks for abnormal cells in your body and attaches onto them, but it also stays away from normal cells in the body.
By doing this, when the body’s immune system goes to attack the venom to destroy it and get it out of the system, it removes the abnormal cells as well. So, it helps in many different ailments. Unfortunately, because it’s a homeopathic supplement right now, claims cannot be made for what they do, but it really could, in our view, help the immune system to fight various ailments and diseases. So, the only way that we can prove that is by synthesizing the venom, which is what we’re doing, to be able to create it into a pharmaceutical drug and run tests to prove out the benefit claims.
EQ: While you’re working on that long-term strategy, the company is currently selling the CellB9 online as a supplement. Can you talk about your current distribution and future plans with the CellB9?
Van Deventer: Right now, everything we do is online sales and word of mouth. We have started the process in the EU, Canada and the United States to get it registered as a homeopathic dietary supplement and get the different licenses to be able to sell them in stores. Once we have those ready, then we will be able to market it in pharmacies and natural health stores. In terms of expanding our distribution, we are currently in negotiations with some larger companies around the world, including in China, South Korea and other parts of the East. These companies are interested in taking the product from us and distributing it through their clinics, private centers and pharmaceutical areas while we go through our registration process.
EQ: PreveCeutical is also in the process of introducing additional product offerings. You have the cannabinoid delivery agent via insoluble gels, called Sol-Gels, as well as a long-term R&D on curative gene therapy for diabetes and obesity. Can you tell us about your approach in building out your product portfolio and some of the progress you’ve made on that front?
Van Deventer: We have partnered with the University of Queensland in Australia, particularly with their Pharmaceutical, Medical and Pharmacy departments on Sol-Gel. It’s led by Dr. Harendra (Harry) Parekh. Sol-Gels is currently a patented gel and its basically a liquid solution that is delivered into the nasal cavity and the mucus membrane behind your nostrils. It’s instantaneously becomes warmer, and as a result, turns into a gel.
Most people take substances like Dristan where they put it into their nasal cavities and it goes back into their throat and down into their stomach system, where basically your stomach would have to deal with this. Sol-Gels doesn’t do this. It actually goes to the back of the mucus membrane and instantaneously gels. The gel can last up to a week.
With this platform, we’re working with six different potential treatments. Treating seizures is one of them. What we’re hoping to do is to put these into the Sol-Gel with a nano-bubble technology, which is available to us through the university, and enables us to time release the cannabinoid. It will slowly provide you with the dosage as required to prevent the seizures.
EQ: Going back to the CellB9 product. You mentioned plans to synthesize the Blue Scorpion venom for testing. What does that process entail?
Van Deventer: Well, whenever you synthesize anything, which is a three-to-five-step process, you sacrifice a part of the original element during each step. You lose a part of the identity of the molecules each time. But now, there is a linker technology that is also being developed by the University of Queensland that is a one-step process, and what it’s going to give us is a nature-identical product that will be synthetic. That will then be used in the different approaches to seizures, arthritis and cancers, and where we will run the trials to see if it has the effect in eliminating those types of ailments or reducing the tumors and such.
EQ: Looking at the company itself, PreveCeutical announced an amalgamation agreement in March that, upon closing, will enable the company to begin trading publicly. Can you tell us more about this transaction and how it puts the company in a better position to execute on your long-term strategy?
Van Deventer: Both Carrara Exploration Corp. and PreveCeutical issued a joint circuit that went out to all our shareholders to vote on the transaction. The voting has been completed and the transaction was approved by shareholders. That helps us moving forward because we’ll now have access to the capital markets and will be able to raise more funds for these programs and to add products to our portfolio.
EQ: Now upon closing the deal, is the company seeking additional financing to fund your growth strategy?
Van Deventer: The funding we’re doing right now is for up to $5 million, and it comes with $1 warrants. All three programs that we’ve just discussed—the Sol-Gels, the drug synthesis and the gene therapy—that total cost is going to be about $4.7 million. So, the $5 million covers most of that. Ultimately, if the stock gets quite strong and the interest in the market grows, there is an accelerator on the warrants. So, potentially, all the investors could exercise their warrants, which would give the company another $10 million. So, the $15 million would absolutely cover everything we want to do, gets us through the four years on all these programs and keeps the company fully funded. We don’t really require any more funding after that.
However, as time goes on, we will consider it if there are potential acquisitions or products that we want to acquire or develop. But at this point, all we really need is the $5 million we’re raising, and the additional $10 million will be there to help carry us through.
Henry: PreveCeutical has assembled quite an impressive team with stellar track records in the industry. Can you talk about your background as well as the leadership you’ve assembled at PreveCeutical?
Stephen: Well, I have been in the business since I was 19 years old. I’ve had my own private businesses and have been involved in a lot of public companies, building them up and managing them. I would say my strength is in my relationships with people around the world, and being able to put together a strong team together. The team is very important, because you can have the worst product in the world, but you’ve got the best team, then it would be successful. On the other hand, you can have the best product in the world, but if you have the worst team, then you’ll still fail because they just don’t know how to handle it.
So, I’ve aligned myself with some very strong people. For example, Brian Harris, our Director/Vice President of Corporate Development. He was the founder of TicketMaster and also the founder of Russell Breweries, which is a massive brewing company in Canada.
Our Chief Science Officer is Mak Jawadekar, who was at Pfizer for 28 years and is responsible for the drugs like Zoloft and others.
Shabira Rajan is our CFO/Controller, and was the Director of Finance for the Canada Line Rapid Transit, which was a $2 billion project in metro-Vancouver. The project was delivered on time and within budget.
Of course, Dr. Parekh is our leading scientist. He is our Chief Research Officer and will basically be hands-on, putting all this together from that standpoint.
So, the team is very strong, and we have a very good and successful track record with them all. Everyone sees things in a different light, so the diversity that we have in the company helps us come up with a much stronger global solution, and because of their experience and knowledge, they will be able to guide us through the systems and get things done very efficiently in both time and costs.
EQ: You’re obviously in a good position to execute on your strategy. In terms of milestones going forward, what are some things we should watch for this year and perhaps maybe next year?
Van Deventer: Well, the company is just starting on its scientific research and has not started pre-clinical trials, but the cannabinoid program is over 18 months, so we expect there to be some very good test results that are going to come out in the future. Some other milestones include maybe seeing us partnering with some of the current licensed producers in Canada to license our technology once we get that there over the next 12 to 18 months.
On the gene therapy side, there are very interesting things happening. In the first six months of the program, there will be certain markers that will come out, which will show if this is viable and if it works as a program. Those are very strong markers and if we can hit those marks, which the scientist will lay out in the near future here, the market is tremendous. Diabetes has a $1.3 trillion impact on the global system. So, if the diabetes treatment works out in the direction that we expect it to, the market is massive for that.
Of course, cancer and arthritis are other big markets. So, on the synthetic drug, we were hoping that we could start targeting those and use it as an alternative treatment possibly for the future. But once again, it’s got to go through the human trials. We’ve got to get all that done before we can make any claims.
EQ: As you said earlier, it’s better to prevent diseases and ailments as opposed to treating them after the fact. Preventive medicine does seem to be gaining wider recognition as a critical component in addressing soaring global healthcare costs. How does that help to serve as a tailwind for PreveCeutical?
Van Deventer: Well, part of the reason for our name PreveCeutical is that there are three different segments in the market right now. There is the pharmaceutical area, the nutraceutical area, and then there’s been this whole preventive thing for years, but no one has really coined it. So, Kimberly and myself coined the word “PreveCeutical”. There has been this area that’s never been platformed that we’ve platformed. So, we really own the space now. PreveCeutical is globally trademarked.
So, maybe you own the word nutraceuticals, or maybe you own the word pharmaceuticals, and everyone would have to pay to use those kinds of terminologies. So, in the preventive medicine space, we basically see in this area that’s been growing massively. Our assessment is that it’s a $3.8 trillion-a-year industry in preventive medicine globally with all the different paths, and we’ve coined it and platformed it. So now, for us, taking that product forward is what the whole plan would be. It’s to have a whole new recognized segment as preventative medicine called PreveCeuticals.
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