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November 4th, 2011

Entest Biomedicalconfertranscript

SPEAKERS:

Dominick Bianco: Okay, this is Dominick Bianco, senior analyst with smallcapprofit.com and editor in chief with the Transactional Investor Magazine 1.47. I am here today with Entest BioMedical David Koos, the CEO and chairman. David, how are you doing today?

David Koos: I am good; how are you doing, Dominick?

Dominick Bianco: I am doing very well. Well, before we get started, you want to tell us a little about the company and where you stand right now? David Koos: The business of Entest is the development and commercialization of therapies, medical devices and medical testing procedures for veterinary applications. To date, our research and development efforts have been primarily focused on the development of a family of cancer vaccines for dogs which we call ImenVax. The first generation of this family, ImenVax I, utilizes the patient’s own tumor cells to induce the immune system to attack the remaining tumor cells.

We are also actively seeking to acquire existing veterinary hospitals to serve as distribution channels for our products as well as to generate revenue to fund our development. In January we acquired the McDonald Animal Hospital in Santa Barbara and recently we entered into an asset purchase and revenue sharing agreement with a veterinary practice in Oregon.

So, it is kind of a unique model. Most biotech companies, as you are aware, bleed red ink for a long time until they get through clinical trials. In our case, we are looking at having a revenue stream prior to commercialization as well as a nice distribution channel for products.

Dominick Bianco: Okay, can you tell us a little bit about Entest BioMedical’s pipeline and what the timeframe is on those clinical trials?

David Koos: Currently, we are in the process of conducting a ten-dog safety study 3.24 for ImenVax I to assure that the actual vaccine and the encapsulation device that delivers it is safe for use in dogs and doesn’t create any deleterious side effects. We have protocols that are designed to weed out dogs that just don’t seem to be able to participate in the study for whatever reason so that may impact the length of time that the study will take but at the same time give us higher quality data. We also have Dr. Brenda Phillips from the oncology department of the Veterinary Specialty Hospital of San Diego acting as the contract research organization for the safety study. To date, we have completed three of the ten dogs. As far as timeline, we expect, within the next 12 months to 18 months, we will be offering ImenVax I therapy through our proprietary clinics.

Dominick Bianco: And, how big is the market for that product?

David Koos: The market is extremely huge. If you look at the market, one out of every three dogs will develop some form of cancer and 50% of dogs over ten years of age will develop cancer. So, it represents a huge marketplace and we would like to own a slice of that. The typical cost of treating dogs with cancer ranges between usually $5,000 to $10,000 per dog. We are looking to charge $3,000 for our proprietary treatment which, in addition to being less expensive, is expected to be less invasive and traumatic to the dog than current treatments commonly used. We expect a profit margin of approximately $2,100 per treatment.

Our objective is to acquire ten veterinary hospitals averaging one million dollars in revenue per hospital within the next 12 to 18 months. If that happens, we would generate approximately ten million in additional revenue from existing operations of those hospitals. Each of those hospitals can typically expect to treat seven hundred dogs with cancer during the course of the year with each cancer stricken dog being a potential candidate for our products. By the way, although we are currently working with dogs we assume that, once we have gone through our appropriate studies on each of these areas, our therapies will be applicable to many different species.

Another project we announced recently that we are excited about is a pilot study with RenovoCyte LLC using stem-cell therapy to treat osteoarthritis in dogs which we intend to begin in about two weeks. We expect that there are a number of other aspects of stem-cell therapy that we are going to be addressing further down the road as well.

Dominick Bianco: That sounds very exciting. Now, do you have a chief medical officer or a chief veterinarian who oversees the studies of both these products?

David Koos: Yes, we do. We have Dr. Greg McDonald who our chief veterinarian and we have, as mentioned previously, Dr. Brenda Phillips.

The joint venture with RenovoCyte is going to be conducted at McDonald Animal Hospital under the supervision of Dr. McDonald as the chief veterinarian while Dr. Phillips of Veterinary Specialty Hospital is acting as CRO of the ImenVax safety Study. So, two different locations: one is in-house, one is outsourced. The reason that we are outsourced ImenVax is in order that the study could be conducted by an experienced veterinary oncologist such as Dr. Phillips. We believe strongly in having the right people for the job. That’s why we feel we are fortunate to have Dr. Steve Josephs, PhD, formerly of National Institute of Health, the National Cancer Institute and Baxter Healthcare, as the lead researcher in the development of ImenVax.

Dominick Bianco: Okay, that sounds great. Now, just going back to the other things that you were discussing about acquiring veterinary clinics. Does the company already have revenues from the veterinary clinics?

David Koos: Yes, we purchased our first clinic which is McDonald Animal Hospital located in Santa Barbara, in January and the trailing 12 months historically reported by that hospital was around $600,000 a year so we expect by calendar year end that’s pretty close to what McDonald is going to be at. We are looking to grow our presence in the area by acquiring other clinics in the area and creating more or less a super veterinary hospital up in Santa Barbara.

Beyond the California region, we entered into an agreement with a clinic in Oregon which generated revenue of over $800,000 in 2010 whereby we will receive 97% of that clinic’s revenue as well as assistance with our R&D. We couldn’t buy that clinic outright as Oregon law generally only permits clinics to be owned only by licensed veterinarians, but we feel the agreement allows us to participate in the clinics growth as well as providing us with a presence and distribution channel in the State of Oregon.

As far as our acquisition program, we have announced several letters of intent to acquire several other clinics and we are currently working on getting those transactions closed. So, we would expect that we will ramp the revenue up dramatically in the near term by closing a couple of these clinics. If we are, I guess I have to caveat that by saying assuming that they close, we are anticipating probably before years end, our goal is to get our revenue ramped up somewhere in the annualized bases to a million and half, in that neighborhood.

Dominick Bianco: And, your current revenue is expected to be $600,000, that’s the only source of revenue? David Koos: The projected revenue you mentioned is applicable only to the McDonald Animal Hospital. It doesn’t take into account revenues we may take in under the Oregon clinic deal.

Dominick Bianco: That’s great. Now, can you tell us a little bit about the, how long the company has been around and the history of the company?

David Koos: The company was founded in 2008 as a wholly owned subsidiary of Bio-Matrix Scientific Group, a company involved with stem cell banking. In July of 2009, it completed a reverse merger with a public company and now it trades on its own on the OTCQB under the symbol ENTB.

Dominick Bianco: How many shares are currently issued and outstanding?

David Koos: As of November 11 we had 20,890,501 common shares outstanding

Dominick Bianco: And, what do you see as the short-term targets for the company?

David Koos: If by short term you mean over the next six months; our goals are to acquire at least two more clinics and get those blended in and integrated into the company and complete the ten dog safety study .

Dominick Bianco: Can you tell some of our subscribers really the difference in getting approval for a pet pharmaceutical product as opposed to a human product?

David Koos: Veterinary pharmaceuticals are regulated by the FDA and the requirements for approval of veterinary pharmaceuticals are similar to those for new human drugs with the exception of human trials. Veterinary Biologics, such as ImenVax I, are regulated by the USDA and a U.S. Veterinary Biologics Product License must be obtained for each product produced for sale. Prior to being granted a U.S. Veterinary Biologics Product License, the applicant must submit detailed information including test reports and research data sufficient to establish purity, safety, potency and efficacy of the product, an Outline of Production, and information regarding labeling and facilities that are to be used in preparation. We would be allowed, however, to distribute ImenVax to our clinics’ own patients prior to obtaining a license under an exemption provided by law which exempts a veterinary biologic from federal regulation if the product was manufactured by veterinarians AND intended solely for use with their clients' animals under a veterinarian-client-patient (VCP) relationship. Bear in mind we are fully committed to obtaining all licenses required to market our products outside our patient base as well.

Dominick Bianco: Is that pretty common in the industry for the veterinarians to use these exemptions? David Koos: It is a fairly common practice.

Dominick Bianco: And, just one more quick question here for you. On the veterinary clinics, are there any other values to the company, we already covered I guess the revenues, we covered the fact that you can actually bring your products to market through the marketing requirements for veterinarian clinics that are associated with Entest BioMedical or are actually owned by Entest BioMedical, but do you have a veterinarian that is going to be in-charge of overseeing all these veterinarian clinics or you are going to have the individuals run each clinic?

David Koos: Typically, what we look to do as we move forward is to not only acquire the hospital but also retain the veterinarian who previously owned the hospital keeping in mind that this person is integrating the newly acquired business into our system and we are learning nuances of their existing system. If it works, there is no reason to bring one person in to try and oversee all the clinics. Remember it is the veterinarian that has a relationship with the patients. In many cases we are seeing veterinarians that are looking to retire a couple of years out in which case the existing veterinarian stays onboard for a few years managing the practice while training a successor to assume full control of that practice under the management of Entest.

Dominick Bianco: Now, I think we covered just about everything. You think there is anything that our subscribers would like to hear about Entest BioMedical or about your background?

David Koos: We feel that Entest's is unique in our “veterinary first” approach to product development, believing once efficacy in animals is established and near term revenue achieved, viability in transitioning to human applications can be made via joint ventures and license agreements with large pharma or biotech companies. This is the reverse of developing products for the human market first, at a much higher cost, and then finding veterinary applications for those products. That’s a unique trait of Entest. Another unique trait of Entest is that we are a biotech company that actually has as part of its business model the notion of generating revenue while developing product. That’s fairly unique to Entest. Most of these biotech companies do not do that, they focus on developing their product and are required to constantly be looking for more and more outside capital. Our goal is really to develop enough revenue and net income from the clinics that we acquire to sustain and support our future research activities. Yet another unique trait of Entest is that, by acquiring clinics, we are creating readymade distribution channels for our products which most biotech companies do not necessarily have.

I think that the people that are associated with the company are associated with the company because they truly love animals and we derive a real sense of joy over the fact that our mission is to provide a higher quality of life for the millions of beloved pets that are considered family members by their owners. That’s our goal, that’s our mission, and I think that’s one thing that makes us a great company to be a part of.

Dominick Bianco: Well, that sounds great. I really appreciate your time tonight, and our subscribers look forward to hearing more from your company in the future.

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