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| Letter
to Our Shareholders
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| Blue
Bell, PA – January 17, 2007 – |
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Dear Valued Shareholder:
The beginning of year 2007 provides an opportunity to review our achievements
in the past year as well as to share our core strategy for growth in the
new year.
Looking back, 2006 was another significant growth year for VGX Pharmaceuticals
in all aspects of our business, including R&D, Business Development,
and Finance. Our product pipeline, in particular, now encompasses not
only a solid infectious diseases portfolio but also includes novel drug
candidates for treating cancer and inflammatory diseases; and with the
addition of the VGX International (KSE 011000), our affiliate in Seoul,
Korea, we have begun building a strong foundation to become a truly global,
fully-functional biopharmaceutical company.
R&D
Our core strengths and value come from our multiple, novel drug
pipeline:
PICTOVIR™, our novel HIV compound, is currently in a multi-site,
multi-dose Phase II study for assessing anti-HIV effects in higher doses.
We are continuing patient enrollments at three different sites: the University
of Pennsylvania, Georgetown University, and the VA Hospital in Philadelphia,
PA. All of these steps are progressing as planned.
Moreover, we are making significant progress in testing VGX-410C,
our candidate for hepatitis C virus infection, in another Phase II clinical
trial. We have successfully completed the patient enrollment stage for
the lower dosage arms (150 mg & 300 mg), and we expect to start the
patient enrollment phase for the higher dosage (600 mg) study in 1Q 2007.
Currently, these studies are on-going at St. Louis University, the University
of Connecticut, and the University of Pennsylvania.
In the past year, we have also made a significant progress in bringing
our lead preclinical candidates closer to clinical testing. Among our
achievements is the successful establishment and completion of cGMP manufacturing
of these drug candidates in 2006. VGX-150 (Melanoma treatment),
our lead cancer drug candidate, is completing IND-enabling preclinical
toxicology studies and an IND for the Phase I clinical trials is expected
to be filed in early 2007. The preclinical efficacy data in animal models
for VGX-150 has been featured in the November issue of Molecular
Therapy (vol 14, no 5, Nov. 2006; pages 647-655).
Another of our exciting Phase I candidates is VGX-1027
(Type 1 Diabetes and Rheumatoid Arthritis). We are currently conducting
multiple IND-enabling pre-clinical toxicology studies for VGX-1027 at
Charles River Laboratories. Pre-clinical efficacy studies have been published
in the Journal of Pharmacology & Experimental Therapeutics
(JPET) (http://jpet.aspetjournals.org).
An IND for Phase I clinical trial is expected to be filed in the second
half of 2007.
Furthermore, we are making tremendous progress in developing VGX-100 as
a cancer therapy candidate and VGX-750 as a candidate to treat inflammatory
diseases. The progress from this research was published in the prestigious
Nature Cell Biology in 2006 (Vol 8, no. 2,
Pages 170-179).
The number of our novel drug candidates in our pipeline is very
competitive with that of other major biopharmaceutical and biotechnology
companies. Our efforts for advancing VGX drug candidates to the next stages
of development will continue to be the core growth strategy for 2007.
Business Developments
Strategic alliances and license agreements play a vital role in
advancing drug development strategy
In 2006, we entered into a worldwide non-exclusive license with Inovio
Biomedical Corp. (AMEX: INO) for the use of their patented DNA delivery
technology to use in the delivery of VGX-150 to control the growth of
melanoma and other cancers. This provides an opportunity to attack and
treat cancers recalcitrant to current therapies; thus positioning the
Company in a leadership position in the biotechnology field for the cancer
treatment. A peer-reviewed journal, Molecular Therapy,
recently published a scientific paper describing VGX’s data from
a mouse model showing complete regression of established melanoma tumors
after the introduction of (VGX-150) using electroporation technology.
Visit www.vgxp.com for further details.
Furthermore in 2006, we entered into a worldwide exclusive license with
VGX International, our affiliate based in Seoul, Korea to conduct research,
develop, and market VGX-1027 for Type 1 Diabetes (T1D). Under the terms
of this agreement, VGX Pharmaceuticals and VGX International will collaborate
on pre-clinical as well as all phases of clinical trials for the development
of VGX-1027 for T1D indication. Separately, we are developing detailed
plans for VGX International to play a key role in the marketing and sale
of VGX Pharmaceutical products in Asia as well as other developing regions.
A continuing and strong collaboration with VGX International will provide
important synergies and enhance the efficiency of our development activities
for new drug compounds, while allowing for a more rapid transformation
of both entities into globally competitive biopharmaceutical companies.
We will continue to look for additional strategic opportunities
(licenses and acquisitions) and potential collaborations with other biopharmaceutical
companies in order to strengthen our drug development programs and expand
our visibility in the global biopharmaceutical markets.
Finance
Maintain transparency and strong cash position.
In fulfilling a requisite milestone in the preparation to become a public
company, we have successfully completed the financial audits for fiscal
years 2003 to 2005. Ernst & Young, LLP was the independent auditor.
The audited financial statements are also an important tool for making
strategic decisions and attracting distinguished board members. We are
planning to complete the fiscal year 2006 audit during the first half
of 2007.
Our financial position has never been stronger than it is today. On the
other hand, we are well aware of the expected increase in expenses this
year as we make strides in advancing our pipeline. We are ever mindful
of our fiduciary responsibilities to our investors and will continue to
minimize costs and find creative ways to limit cash outlays. Our goal
is to become a public company this year and we will strive to achieve
this goal in 2007.
Human Resources
Our biggest asset is our people.
We have attracted and added key personnel in the areas of R&D, Clinical
Development and Product Development as part of our ongoing efforts to
build out our management team. In 2007, we will continue our growth in
hiring and managing capable people to carry out our ambitious development
and growth objectives.
Outlook for 2007
We take pride in VGX’s effective and efficient approaches to developing
novel drug candidates. This focused development strategy has allowed us
to build a diverse and strong pipeline with multiple drug candidates in
the short history of our company. This strategy has also benefited us
in minimizing overall expenses for developing potential treatments that
could someday improve the lives of many patients inflicted with grave
diseases worldwide. Our overall strategy will continue to provide us with
excellent growth opportunities for 2007 and many more years to come.
On balance, 2006 was a very positive year for VGX. We are also expecting
2007 to be a very exciting year as we continue to build upon the foundation
that we have been laying since our inception. It is my sincere hope that
we will have additional positive news to share with our investors in 2007.
Thank you for your continued support.
Sincerely,
J. Joseph Kim, Ph.D.
President and CEO
Cautionary
Factors That May Affect Future Results - Materials in this
Web site contain information that includes or is based upon forward-looking
statements within the meaning of the Securities Litigation Reform
Act of 1995. Forward-looking statements relate to expectations or
forecasts of future events. You can identify these statements by the
fact that they do not relate strictly to historical or current facts.
They use words such as "anticipate," "estimate,"
"expect," "project," "intend," "plan,"
"believe," and other words and terms of similar meaning
in connection with a discussion of potential future events, circumstances
or future operating or financial performance. In particular, these
include statements relating to future actions, prospective products
or product approvals, future performance or results of current and
anticipated products, sales efforts, expenses, the outcome of contingencies
such as legal proceedings, and financial results. Any or all of our
forward-looking statements here or in other publications may turn
out to be wrong. They can be affected by inaccurate assumptions or
by known or unknown risks and uncertainties. Many such factors will
be important in determining our actual future results. Consequently,
no forward-looking statement can be guaranteed, and forward-looking
statements may be adversely affected by factors, including general
market conditions, competitive product development, product availability,
current and future branded and generic competition, federal and state
regulations and legislation, manufacturing issues, timing of the elimination
of trade buying, patent positions, litigations and investigations.
Our actual results may vary materially, and there are no guarantees
about the performance or valuation of VGX stock. It is also important
to read the disclosure notice contained in many of the individual
VGX documents available on this Web site as many contain important
information on such cautionary factors as of the date of the individual
document. We undertake no obligation to correct or update any forward-looking
statements, whether as a result of new information, future events
or otherwise. You are advised, however, to consult any further disclosures
we make on related subjects in our reports. |
About VGX
Pharmaceuticals
VGX Pharmaceuticals is a leading biopharmaceutical company with strong product
candidates for the treatment of infectious diseases including HIV and hepatitis
C virus (HCV) as well as cancer and inflammatory diseases. The Company’s
clinical development programs include PICTOVIR™ for HIV infection
and VGX-410C for chronic HCV infection, which are currently in Phase II
clinical trials. In addition, a Phase I clinical trial will be initiated
in 2007 for the Company’s lead cancer drug compound, VGX-150 for the
treatment of Melanoma. Moreover, VGX Pharmaceuticals’ therapeutic
platform is designed to advance a strong and continual pipeline of additional
drug candidates into the clinic with VGX-100 for cancer therapy and VGX-1027
and VGX-750 for inflammatory diseases currently in development. The product
candidates and technology programs are protected by the Company’s
extensive global intellectual property portfolio. More information about
VGX can be found at www.vgxp.com.
Company Contact:
Kevin W. Rassas
Senior Vice President
Tel. 267.440.4208
Fax 267.440.4242
E-mail: Rassas@vgxp.com
www.vgxp.com
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