Xpention Genetics (XPNG) - Description of business
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COMPANY HISTORY The Company was incorporated in the State of Nevada, U.S.A., on September 5, 2002. The Company has been in the exploration or development stage since its formation and has not yet realized any revenues from its planned operations. It is primarily engaged in the development of technology acquired under license for detection of cancer tumors. The prior business plan of mineral exploration has been abandoned. Xpention Genetics, Inc. is a biotechnology company that was formed to develop both immunological and molecular tests for cancer detection in animals and humans as well as therapeutic vaccines and other treatment methods for both canine and human cancers. The Company owns Xpention, Inc., a wholly owned subsidiary, which has entered into the Patent and Technology License Agreement with The University of Texas M.D. Anderson Cancer Center which granted Xpention the exclusive rights to patented technology for the detection of cancer based on a tumor marker known as p65 which has been demonstrated to show elevated levels in the blood of canine and human cancer patients.BACKGROUNDCancers Cancer is a group of diseases characterized by uncontrolled growth and spread of abnormal cells. If the spread is not controlled, it can result in death. Cancer is caused by both external factors (tobacco, chemicals, radiation, and infectious organisms) and internal factors (inherited mutations, hormones, immune conditions, and mutation that occur from metabolism). Causal factors may act together or in sequence to initiate or promote cancer development. About 1,300,000 new cases of cancer were diagnosed in 2003. This year about 550,000 Americans are expected to die of cancer, more than 1,500 people a day. Cancer is now the number 1 leading cause of death in the U.S. exceeding even heart disease in 2004. In the U.S., 1 out of every 4 deaths is attributable to cancer. The National Institutes of Health estimate overall costs for cancer in the year2002 at $171.6 billion. $60.9 billion for direct medical costs (total of all health expenditures) and $15.5 billion for indirect morbidity costs (cost of lost productivity due to premature death). An estimated 250,000 new cases of breast cancer in women and 220,000 new cases of prostate cancer in men occurred in 2003.Companion Animal Cancers There are 65 million pet dogs and nearly 78 million pet cats in the UnitedStates, most of whom are considered part of the family. U.S. expenditure on veterinary care for pets in 2004 has grown over previous years and is esti- mated at $8.3 billion with an additional $7.9 billion in supplies and medicine (APPMA 2003/2004 National Pet Owner's Survey). Companion animals are living longer and healthier lives, but are also experiencing a higher frequency of disease. Diagnosis of disease occurs more commonly in the late stages of life. Cancer is the number one cause of natural death in senior dogs and cats and accounts for nearly 50% of deaths each year. One of the most common forms of canine cancer, lymphosarcoma, has an annual incidence of approximately 100,000 new cases. Dogs, in fact, experience approximately the same rate of cancer as humans do, although the prevalence is slightly lower with cats. It is notable however, that of the other common geriatric veterinary diseases (e.g. congestive heart failure, renal failure and diabetes mellitus), cancer is the most treatable. Treatments include surgery, radiation and chemotherapy. Treatment success is often a function of how progressed the cancer is at time of diagnosis. Given the frequency of these diseases and the lengths to which pet owners will go to keep their animals healthy and happy into their senior years, the availability of a simple screening tool and monitoring method that would detect cancers would be extremely helpful for the future of veterinary medicine. This test could be used as part of a senior wellness evaluation, or as part of routine follow-up after detecting symptoms.INITIAL STUDY OF P65 P65 is a promising marker for the early detection of malignant tumor formation and a useful tool for monitoring therapy and remission. Levels of p65 also appear to have a direct correlation to tumor mass. In an initial study performed, at The University of Texas, 67 dogs with lymphosarcoma and 14 normal dogs were evaluated for p65 levels with the following findings: Sensitivity: 0.94 Specificity: 0.70 Predictive Value: 0.83 (elevated p65 & presence of cancer)Diagnosis Methods Current methods for diagnosis include costly imaging techniques and invasive procedures. Evaluation of the success of therapy is accomplished by using routine biochemistry and hematology testing, imaging and analysis of symptoms. Early detection and treatment would provide the best odds of attaining remission.PLAN OF OPERATION Through its subsidiary, the Company has the rights to a genetic marker in the blood called, P65. P65 is a promising marker for the early detection of malignant tumor formation and a useful tool for monitoring therapy and remission. Levels of p65 also appear to have a direct correlation to tumor mass/ size. Initially, the Company will utilize its licensed technology to develop an immunological test for the detection of cancer in canines. The development stage of the test is anticipated to last approximately six to eight months. If develop -ment of the immunological test is successful, the Company hopes to commercial- ize the test through licensing the test to third parties for sale and distrib- ution. Simultaneously, the Company will utilize its licensed technology to attempt to develop a molecular assay for detection of cancer in both humans and canines. The molecular test would be designed to be a more sensitive test to be used both as a confirmation test as well as providing an ongoing measure of therapeutic success in canines and perhaps ultimately for cancer screening in humans. The duration of the development stage for the molecular assay is anticipated to be approximately twelve months. If successful development of the molecular assay occurs, the Company hopes to commercialize the molecular test; however, unlike the immunological test that will be licensed, all molecular testing will be conducted by the Company in a CLIA-certified laboratory.P65 THERAPEUTIC VACCINE Following development of the molecular assay, the company intends to pursue development of therapeutic vaccines utilizing RNAi (interference RNA) technology. Any changes in the genetic dynamic of P65 appear to steer cells toward abnormal growth resulting in tumor development. The hallmark of P65 alter -ation is a pronounced increase in the level of gene expression. Other oncogenes such as ERB2 are found to be elevated primarily in breast cancer. It has been shown that once the level of ERB2 goes back to normal, cancer growth slows down or disappears. Xpention's approach to vaccine development would rely on the use of RNAi technology. RNAi is a novel technique capable of manipulating the level of a target gene by "interfering" with its genetic expression. This technology has been successfully applied to a variety of genetic targets including cancer and viral genes. Xpention intends to explore and evaluate developing adenoviral vector based delivery systems that contain genetic elements unique to P65 sequences. By interfering with the genetic machine responsible for the altered levels of P65 in cancer cells, Xpention would attempt to revert or slow down the neoplastic process. An "in vitro" and mouse model for P65 related cancer growth has already been developed. The company also intends to employ the "Integrated technology platform system" (ITPS) to determine the efficacy of adenovirus vector RNAi based vaccine (AVVRNAi). Levels of p65 are measured before and at different time points after AVVRNAi injections in mice. Different dosages of vaccine would be tried to determine the proper concentrations based on the highest levels of P65 gene inhibition. The company hopes ITPS will expedite the preclinical stage of the P65 vaccine development allowing a faster and more efficient start of human clinical studies.LICENSE TERMS The license of Patent #5310653, #5411868, and 5,773,215 obtained by the company from The University of Texas contains the following material terms: The Board of Regents of The University of Texas System, an agency of the State of Texas, through the University of Texas M.D. Anderson Cancer Center, a component institution of The University of Texas System, hereby grants to Xpention a royalty-bearing, exclusive license under inventions and discoveries by patent rights or technology rights within the licensed field, to manufacture, have manufactured, use, import, offer to sell and/or sell licensed products within licensed territory for use within licensed field. It is subject to the payment by Xpention to the University of Texas M.D. Anderson Cancer Center of $50,000, the timely payment of all amounts due under any related sponsored research agreement between University of Texas M.D. Anderson Cancer Center and Xpention in effect during the agreement, and is further subject to the following rights retained by Board of Regents and University of Texas M.D. Anderson Cancer Center to: (a) Publish the general scientific findings from research related to the inventions and discoveries; and (b) Use the inventions and discoveries for research, teaching, patient care, and other educationally-related purposes.EMPLOYEES The Company is a development stage company and as of May 31, 2005 had one salaried employee. Upon the completion of its reorganization the Company's former officers resigned and President and Chief Executive Officer of Xpention Inc., David Kittrell, became the President and CEO of Xpention Genetics in February 2005. The Company expects to continue to use consultants, subcontract labor, attorneys and accountants as necessary, and may find a need to engage additional full-time employees as necessary.RISK FACTORS Need For Additional Financing. The Company has very limited funds, and such funds may not be adequate to develop the Company's current business plan. The ultimate success of the Company may depend upon its ability to raise additional capital. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Company. If not available, the Company's operations will be limited to those that can be financed with its modest capital. Regulation of Penny Stocks. The Company's securities will be subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-deal- ers to sell the Company's securities and also may affect the ability of purchasers in this offering to sell their securities in any market that might develop therefore. In addition, the Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended. Because the securities of the Company may constitute "penny stocks" within the meaning of the rules, the rules would apply to the Company and to its securities. The rules may further affect the ability of owners of Shares to sell the securities of the Company in any market that might develop for them. Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The Company's management is aware of the abuses that have occurred historically in the penny stock market. Although the Company does not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to the Company's securities. Lack of Operating History. The Company was formed in 2002 and has had a limited operating history. The acquisition of a subsidiary holding a license has provided the Company with a new opportunity for business development which carries continued special risks inherent in a new business opportunity. The Company must be regarded as a new or start-up venture with all of the unforeseen costs, expenses, problems, and difficulties to which such ventures are subject. No Assurance of Success or Profitability. There is no assurance that the Company will successfully commercialize its proprietary patented technology. Even if the Company should successfully commercialize its proprietary patented technology, there is no assurance that it will generate revenues or profits, or that the market price of the Company's common stock will be increased thereby. Lack of Diversification. Because of the limited financial resources that the Company has, it is unlikely that the Company will be able to diversify its operations. The Company's probable inability to diversify its activities into more than one area will subject the Company to economic fluctuations within a particular business or industry and therefore increase the risks associated with the Company's operations. Dependence upon Management. The Company currently has only two individ- uals who are serving as its officers and directors. The Company will be heavily dependent upon their skills, talents, and abilities to implement its business plan. Indemnification of Officers and Directors. The Nevada Business Corporation Act provides for the indemnification of its directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of the Company. The Company will also bear the expenses of such litigation for any of its directors, officers, employees, or agents, upon such person's promise to repay the Company therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by the Company which it will be unable to recoup. Director's Liability Limited. The Nevada Business Corporation Act excludes personal liability of its directors to the Company and its stockholders for monetary damages for breach of fiduciary duty except in certain specified circumstances. Accordingly, the Company will have a much more limited right of action against its directors than otherwise would be the case. This provision does not affect the liability of any director under federal or applicable state securities laws. Dependence upon Outside Advisors. To supplement the business experience of its officers and directors, the Company employ's accountants, technical experts, appraisers, attorneys, or other consultants or advisors. The selection of any such advisors will be made by the Company's President without any input from stockholders. Furthermore, it is anticipated that such persons may be engaged on an "as needed" basis without a continuing fiduciary or other obligation to the Company. In the event the President of the Company considers it necessary to hire outside advisors, he may elect to hire persons who are affiliates, if they are able to provide the required services. Competition. The Company expects to be at a disadvantage when competing with many firms that have substantially greater financial and management resources and capabilities than the Company. No Foreseeable Dividends. The Company has not paid dividends on its common stock and does not anticipate paying such dividends in the foreseeable future. Limited Public Market. There is only a limited public market for the Company's common stock, and no assurance can be given that a market will continue or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should continue, the price may be highly volatile. Factors such as those discussed in this "Risk Factors" section may have a significant impact upon the market price of the securitiesoffered hereby. Due to the low price of the securities, many brokerage firms may not be willing to effect transactions in the securities. Even if a purchaser finds a broker willing to effect a transaction in these securities, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such securities as collateral for any loans.