The biotechnology sector presents a host of opportunities and risks for investors. Biotech firms ostensibly develop technologies and treatments that can save lives by making serious diseases, injuries, and other disorders livable, if not preventable. Relatively new processes such as bio imaging are allowing doctors and scientists to peer into the details of the human body in ways that were unthinkable until recently. Given the experimental nature of much of what goes on in biotech and the inevitable costs associated with research and development, however, getting a project off the ground can present significant challenges.
Enter Tauriga Sciences, Inc. (TAUG). Through a number of means, Tauriga helps to secure capital for small and micro-cap biotech and life sciences companies that it believes are working on the breakthroughs of tomorrow. Under the leadership of Seth Shaw, who took the helm as CEO late last year, when it was still known as Immunovative, Inc., Tauriga has emerged from a challenging first two months of 2013 and has started building an impressive potential portfolio of life sciences joint ventures. The Company is currently evaluating additional opportunities as well, and with a newly revamped management team an board, the Company is very excited about its future prospects. Equities.com recently got the opportunity to speak with Mr. Shaw about his company and its current projects, as well as Tauriga’s prospects for the future.
EQ: Could you provide us with a brief overview of Tauriga Sciences and its operations?
Shaw: Tauriga Sciences is a diversified company that works in biotechnology, particularly with medical devices and proprietary drug treatments. Our goal as a company is to create shareholder value through the acquisition of a portfolio of medical technologies that are in need of financial and human capital. Our business model is predicated on the acquisition of licenses, equity, exclusive and non-exclusive rights, and entire businesses.
EQ: Given the company’s focus on medical technology, in which markets do you see your greatest prospects for growth, and how do you plan to capitalize on them?
Shaw: Because we are a diversified company, we have a number of opportunities. I would say medical devices and drug compounds present significant growth opportunities for us. Essentially, we have the ability to secure and invest capital through our company to help fund technologies that are having a difficult time getting funding right now. A number of these technologies, if successful, can be worth many multiples of the investment valuation at some point in time, but they need money to get off the ground and we are providing that support. However, we have a three-pronged business approach. First, we have straight equity or minority equity investments. Second, we have full acquisitions. Third, we have our licensing model.
Shaw: Constellation Diagnostics is a Cambridge, Massachusetts-based company that is currently developing a camera interface system with an embedded algorithm that helps detect early alterations in the skin, blemishes that change color shape, or suspicious lesions that change, and are thus more likely to become skin cancer. Essentially, it’s a way of mapping the body. Every month or so, a full-body photo is taken and electronically stored, and an algorithm then identifies any potential areas of concern that may exist. At that point, both the dermatologist and the patient are electronically notified. The deal we struck consists of approximately 35 percent aggregate equity ownership in Constellation for a total invested capital of $2.5 million, of which $100,000 has already been invested. We believe once successfully completed and approved, this medical device has substantial market potential.
EQ: Going forward, what are the strengths that you feel enables the company to meet any challenges that may arise in the future?
Shaw: We have a really good management team. We have a world-class COO in Stella Sung, who is a chemistry Ph.D from Harvard, and is someone who has been in the life sciences venture capital space for 20 years. She actually runs a biotech venture capital fund now, and has been an advisor to several other funds. We have access to a number of interesting technologies, as well as institutional investors, and we are providing an opportunity to invest in companies that are under the radar. What that means is life sciences companies that have yet to be discovered, and where a little bit of money can go a long way for creating value.
EQ: You just brought on Stella Sung as COO, and there’s Dr. Lawrence May who was brought on as a member of the Medical Advisory Board. With these additions in mind, could you tell us about your background?
Shaw: Well, I have a lot of experience building and financing companies. I graduated from Cornell in 2001 with a degree in Policy Analysis Management, and I started off at American International Group (AIG), after which I spent some time at a hedge fund in Manhattan. From there, I founded Novastar Resources Ltd., now known as Lightbridge, Inc. (LTBR), a mineral exploration company focused particularly on the element called thorium, which is used, among other things, in nuclear fuel reactors.
Since then, I’ve helped a number of companies raise capital from institutional investors, most notable I secured $12,000,000 in 2007 for Uni-Pixel, Inc. (UNXL), which is actually one of the best performing stocks in the United States so far in 2013. My background in biotechnology goes back to 2004, when I was the founding Chief Financial Officer of Physician Therapeutics LLC, a Los Angeles firm that eventually merged with a company called Targeted Medical Pharma (TRGM), which went public last year. I’ve raised about $60 million in capital for small and micro-cap companies, and I’ve been working in biotech for some time, so Tauriga is a natural fit for me.
EQ: Looking at some of the current and future investment opportunities for Tauriga, are there any developments you would like to discuss?
Shaw: We have a number of potential catalysts that are in play right now, and we are continually working on creating value through investment opportunities, acquisitions, or licensing rights. We have a number of other discussions that are ongoing as well, and we feel strongly that we will be able to consummate additional opportunities that could significantly increase shareholder value. So we’re confident as well as excited about that.
EQ: Is the deal with Marvanal one of these additional opportunities to which you’re referring?
Shaw: Sure, that’s one of the opportunities. Marvanal is a food protein modification company that modifies milk protein to remove the lactose and fat content without removing additional nutritional benefits. Those products are then eligible to be used in school lunches as a substitute for the regular dairy to which many people are allergic. The cheese has all the benefits of dairy minus the lactose and fat on a molecular level. We are moving ahead with this proposed transaction as quickly as possible. They’ve already received approval from the Connecticut state lunch program, and we’re excited to target school districts because we think there’s a big market there.
EQ: What are a few milestones or goals over the next 12 months that the investment community should be looking out for?
Shaw: Best case scenario, we raise a little more money at terms that are not too diluted, and we complete the prototype for Constellation, which means we complete the prototype for the actual camera, including the embedded algorithm. We hope to be able to start selling those products within the next 12 months, or at least apply for 510(k) Premarket Notification regulatory approval from the FDA for those products. Maybe we will make one or two additional strategic acquisitions or investments, and continue to increase our management team and our board of directors, and build a lot of intrinsic value. We believe that the decisions we are making are smart ones. All it takes is a little bit of money down at the right time, and that gives you the potential to make many times your money. That’s the great thing about microcaps and life sciences companies: if you find the right opportunity and invest a little bit of money early on, you have the opportunity to see major returns in the future.
EQ: Recently, you personally accumulated additional shares of the company. Is this a personal vote of confidence for Tauriga’s future prospects? Do you feel the market currently undervalues Tauriga?
Shaw: We announced our proposed transaction, our MOU with Constellation Diagnostics, the developer of the skin cancer prevention camera; what’s known as the corrective oncology medical device. Obviously, I think there’s potentially a tremendous amount of upside in that transaction for us. Of course, there will be collaboration with professors at Harvard and M.I.T., and they’re especially closely related with the latter. Last Thursday, however, somebody (or somebodies) very aggressively sold our stock and it started sharply declining. Feeling as I do that there’s substantial value to be generated here, and even though it wasn’t a huge amount of money, I thought it crucial to show, as a CEO, that I’m putting my money where my mouth is. Once again, I’ve put an awful lot of stock on the open market over the past six months, over two hundred thousand dollars’ worth, and I felt that this was the time for me to stand up and say, “Yes, I have a lot of confidence in what we’re doing!” I think this company is in a very strong position, and our stock was really getting hammered. It almost felt like there was something wrong with our company, and I wanted to make a statement that this is simply not the case. It was a technical sell-off that had nothing to do with fundamentals. If we execute, I think our shares are significantly undervalued. If we don’t execute, then our shares may be fully valued right now, and I believe very strongly that we have the team to execute. I feel as though I’m making a very good investment for myself, but more importantly I’m showing that I have confidence in our team.
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