Russ: This is the BusinessMakers show, heard here and seen online at thebusinessmakers.com. It's guest time once again on the BusinessMakers Show, and with me now I have Danguole Altman, cofounder and CEO of Vapogenix. Danguole, welcome to the BusinessMakers Show.

Danguole: Thank you very much. I'm pleased to be here.

Russ: You bet. Well let's start by you telling us about Vapogenix.

Danguole: Vapogenix is an early-stage pain management company. We are developing non-narcotic drugs that work on localized pain and don't need to work through your entire body to be effective.

Russ: Okay, well cool. I don't think anybody likes pain, so that must be feeling good about being in such a worthy cause business.

Danguole: Absolutely. It's one of the things that keeps me excited and working in this area. One of the problems with pain, besides that it hurts, is that when you think about it, a lot of sources of pain and a lot of places where you feel pain are really just in certain parts of your body. Rarely do people feel that their whole body hurts, and yet the drugs that are used typically to treat pain end up having to work through your whole body, through your brain, through your spinal cord in order to be effective. The area that we're working on is with certain types of drugs that are effective locally, so that you can just put the drug on, apply it to the place that hurts, and then in a way that doesn't have to go through your brain, doesn't make you addicted, can relieve a lot of that pain.

Russ: Gee, sounds like magic. So, but it's still a drug?

Danguole: Mm-hmm. Absolutely.

Russ: And we're still talking about going through all of the processes to get it approved and so forth. And so from there what stage is the company in today? I mean I can't go buy your product today and use it?

Danguole: No. No, you can't. We've been through a longer _____ already. Our drug - the idea for the drugs came out of M.D. Anderson Cancer Center, where our scientific founders have been faculty members, one of them is the chair of the Department of Pain Manager at M.D. Anderson. And they were really struck with a need for these types of products. And so we've gone from sort of invention to really figuring out what is the formulation, what are the real ingredients that we need to mix with these active ingredients to have them work in the way that we hope that they work. We're hoping to submit by the end of this year, probably third quarter of this year in I&D application, which is basically the first set of completed tests to the FDA that have been on animals, that would then allow us the beginning part of next year, begin testing on people for our first product.

Russ: Okay, now pain management, I mean I've sort of watched it over the years evolve, and I know that it seemed like for a while we were making huge strides to really control pain. But I think it was through these whole body approaches, and now you even read about, you know, the use of opiates and how that's becoming a huge sort of addiction problem as well, is that right?

Danguole: It is. It is. And these drugs are incredibly effective. And opioids, I think it would be difficult for any drug to really just replace opioids entirely. But at the same time, because they're going through your whole body there are a lot of negative side effects that come with those types of drugs. So besides kind of addiction, and also just risk of misuse, of kids getting into their parents' prescription drug cabinet, people loaning drugs to their friends, you also have a lot of - you have nausea, you have a lot of disorientation, especially among the elderly. But many patients, they have other types of side effects that if you take these drugs for too long and get addicted, can really be problematic.

So I think that our goal with our drug is not so much to replace the other drugs, but to give other alternatives to physicians that would be much safer, that could be used to in part replace some of the use of these other drugs or even supplement those uses so you wouldn't have to rely on the more systemic drugs for quite as much. And even with things like Tylenols and Ibuprofens, they still come along with side effects where people will have bleeding, internal bleeding, some risk of strokes if they take that for too long. So our hope with developing this category of drugs are to have alternatives that just work on the localized area much safer than the other drugs that are out there now.

Russ: Okay. And when you talk about localized area, you mean applying it outside the body?

Danguole: I mean applying it - yeah, applying it outside the body. So we're really just focused on localized pain and applying it in some way that doesn't mean that you don't take it as a pill or you don't take it through an IV or some other mechanism that's putting it through your whole body. We're talking about putting it on in a lotion or even a patch for longer-term use, that would really just work on the nerves in that particular area where the pain is being felt.

Russ: Okay, that's so cool. So that's what Vapogenix is all about.

Danguole: That is what Vapogenix is all about, because there are not that many drugs now that can do that, because most drugs don't work on those particular nerves very well. And secondly, they don't go through skin very quickly. So there are some options, but they all take a couple of hours to start working. So ours has the advantage of working quickly.

Russ: That's real cool. I love the way innovation and entrepreneurship gets applied in helping us be healthy and in helping us, obviously in your case, deal with pain. But man, it's a serious business. Now you've already mentioned you're a co-founder, and your other co-founders were actually the inventor of some of the drugs that you're actually using.

Danguole: Yes, they're not so much the inventors, but they are the ones that had the idea to take these drugs that are used in a different way right now. So they didn't invent the base drugs, 'cause frankly these drugs have been around for decades and they've been used, but they've not been used in the way that we want to use them. So someone can't just go off the shelf and buy it and use it in the way that we want to use them, and that's what makes them patentable and in a way a new drug. The nice thing is from an FDA standpoint, because there is a history of safety already, that there are some pathways within the FDA that make the regulatory burden at least a little bit less, where you can rely on the data that's out there already to show the safety. But their idea was really let's use some things that we know about already that are safe, and what if we added some things to it, what if we formulated them a little different way? Can we get them to work as painkillers? 'Cause right now they're not being used as painkillers. So that was the innovation.

Russ: Okay, and these cofounders were and are with M.D. Anderson today?

Danguole: One of them is still with M.D. Anderson and he's the chair of the Department of Pain Medicine. The other one, Dr. Phan is currently - had left M.D. Anderson, is at Baylor, and also private practice.

Russ: Okay, talking with Danguole Altman, cofounder and CEO of Vapogenix. And we'll be back with more with Danguole after this. You're listening to the BusinessMakers Show, heard here and seen online at thebusinessmakers.com.

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Russ: This is the BusinessMakers Show, heard here and seen online at thebusinessmakers.com. And continuing on with Danguole Altman, cofounder and CEO of Vapogenix. Now, Danguole, this sounds real cool; it's easy to relate to, even for me, that you could have sort of a topical solution to pain. And you mentioned that along with your cofounders that these were drugs that have already been being used kind of differently. Are you totally confident that it's going to work the way that you and your cofounders think?

Danguole: I'm confident, and we do have good data, both on animals and some indications on humans that it will work the way that we want to work. But we will have to go through - and I think appropriately, the regulatory steps in all these phase I, phase II, phase III trials with the FDA that really show that they do work the way that we hope they work and that they work safely. So next year we should be in phase I trials, which is a preliminary safety trial, and then later in the year, phase II, we'll test it on a smaller group of patients in exactly the way we want to ultimately use our first product, and then that expands to phase III testing, which is where the costs really come in a little down the road.

So even though we're on a quicker path than many other drug companies, we're still looking at from the beginning of humans to the end of humans at least three or four years.

Russ: Okay, wow. So I mean obviously I've already mentioned that I love innovation in healthcare and pain management and stuff, but the regulation and the testing required really is difficult for a lot of us entrepreneurs to understand. It must be a long - feel like a long, drawn out and difficult process when you're in your position as CEO.

Danguole: Well, it is a long-term process. From a business standpoint it's a bit different than probably many of the folks you interview on this show that are looking at profitability and cash flow and growing your business. And this is one where you're really spending money and not getting money coming in, except for through the government, through different types of funds, and very much from angel investors, venture capital investors that believe in and understand the development process. Eventually then large pharma becomes fairly interested in it as well, because many of them are struggling with their own pipelines and R&D successes. But it's still a situation where the innovation is often coming from the small business, the doctors that are out there treating patients and that say, "Boy, I really wish there was an x, y, z" and they're the ones that are getting the ideas more than the big pharma companies.

Russ: Wow. So would a big pharma company already know about Vapogenix, or maybe not even know about it yet?

Danguole: Probably not particularly yet. Nor have we gone out and met with them yet to let them know about us very much, because from their standpoint there are so many companies that go into phase I human trials and then their drugs don't work the way that they're going to work that they typically become interested more when you're into phase II, when you've cleared the safety hurdles. And so that's really our intent. And more typically companies like ours really have a group of investors that are committed, and the NIH plays a big role, and in this case often the State of Texas through the Emerging Technology Fund also plays a big role in investing in companies earlier than the big pharma companies or even the big VCs would invest in companies.

Russ: Right. Right. Okay. Now I love this idea of sort of a topical solution to pain, but describe a little bit more specifically types of pain that you see this application being used on.

Danguole: Well our first product is going to be focused on sort of shorter-term solutions. And I typically describe it as Orajel for the skin, where if you think about putting Orajel on your finger and putting it on the gum of a baby and that tooth that's hurting doesn't hurt anymore, when you think about it, it's not numbing your finger. It doesn't work because it doesn't really penetrate your skin very well. And so the whole category of pain medications or local anesthetics that are out there do work locally, as our drugs do, but they don't go through skin very quickly. And so it can take an hour or two. And so for that type of pain you're looking at a lot of different procedures that are done, especially in a hospital environment, or even outside of hospital environments, pre-injection, pre-IV start, pre-various types of procedures where it would be so helpful, like in the dentist's office, where they're putting something on before Novocain, where you could freeze up the area before an injection, before other types of procedures. And that's very short-acting pain. And so from a regulatory standpoint it makes sense for us to try this product out in that.

But longer-term you think about many types of pain, whether it's arthritis for common use, where if you could put something on or put a patch on that would in a scientific prescription way and not in a promotional way that you don't know the real scientific benefits, could reduce the pain, that's very much a need. If you think about post-surgery, where people now are going home with prescriptions for narcotic-type drugs because they've had a hip replacement, they've had knee surgery and it really hurts, they may still need those really strong drugs the first day or two, but the idea that you could put a patch on that would then reduce the pain without having to make people confused and have the negative side effects go along with narcotics, those are all areas where pain is localized that we could really see our product working.

Russ: That's cool. And you mentioned arthritis. Aren't there patches today, but they just give heat or something to the area?

Danguole: Exactly, there are. There are heat patches. There are a lot of things that are sold in a non-prescription way that, the Ben-Gays of the world. And nothing against those solutions, and for some people they work, but we're looking at something that can really deliver a higher level of pain relief and would have to go through the FDA, where you would have scientific data that would back up that would compare to a placebo drug or just putting Vaseline on your fingers or something, that it would actually demonstrate that it was really able to reduce pain, as opposed to on the over-the-counter, where you're never quite sure on the data.

Russ: Right. Right. From what I understand, your role sort of as CEO and along with these two doctors, I assume they're both medical doctors.

Danguole: Yes, yes, they are. They're physicians.

Russ: You're more playing the business role in Vapogenix, right?

Danguole: I am, yes.

Russ: Okay, well now I'm going to want to talk about that after this.

Danguole: Okay.

Russ: You're listening to the BusinessMakers Show, heard here and seen online at thebusinessmakers.com. And we'll be back with more with Danguole Altman after this.

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Russ: This the BusinessMakers Show, heard here and seen online at thebusinessmakers.com. Continuing on with Danguole Altman, cofounder and CEO of Vapogenix. Now, Danguole, we were just touching on the topic that you're kind of playing as CEO, obviously the business role in this new venture. Describe how that sort of happened. I mean you had to have a technical background to begin with, but how did it come together?

Danguole: Well my background has very much been through my career with always in health care and also as a healthcare entrepreneur. So I've been involved in a number of different ventures, starting businesses, seeing opportunities, helping raise money, building the team. My husband introduced me to Dr. Burton and Dr. Phan, and I was so taken with the technology and the need for these types of drugs that I got very excited about it and we were able to come together and found Vapogenix.

But my background had been, prior to that I had been CEO of another company I'd helped form and start and also had - I have an MBA, so I'm the business person who doesn't have the scientific background, but can see the opportunity, can help shape the vision and figure out how we're going to get from here to there and can appreciate what I don't know, and really being able to build a fantastic team, which we've done, of people that have just so much experience on drug development, on the business of drug approvals and manufacturing. And so we've built a very strong team that brings those qualities that I didn't particularly have.

Russ: Okay. Well I might be biased about this too, but it seems to me that all scientists and healthcare and medical doctors need a business person, but that understands at least quite a bit about that world to sort of bring it to the forefront and make it a successful endeavor.

Danguole: Absolutely. I think that's a common mistake that some people make in starting these types of companies. There are a small number of, whether PhDs or MDs, but mostly PhDs, that are both the inventors of the technology, that can grow and continue to lead the company when it's quite big. Someone like Dr. Nancy Chang comes to mind and that grew Tanox here. And so there are some that have been able to really develop those skills and build those companies.

But that's not really true for the majority. And so I think that the skills that are needed both from the business standpoint, that are strategic, teambuilding, understanding finance, but also the kind of nuts and bolts of drug development and device development and the engineering, the regulatory hurdles are ones that often the inventors either don't have, and frankly they don't really have the time to drop what they're doing every day and learn all of that other stuff. And so it does end up being a partnership.

And I think right from the beginning our two scientific founders understood that and appreciated it; they really weren't trying to - they have very full academic careers and clinical practices that they right off the bat wanted to add a partner that had the business skills that they didn't have.

Russ: Right. Right. Meaning their day-to-day practice continues as it always has.

Danguole: Absolutely. They're still seeing patients and treating patients and are very busy with their academic responsibilities and their clinical responsibilities.

Russ: Right, okay. Now clearly before I let you got, I'm sure this is on the top of the mind of our audience too. When might we expect to be able to go in from either - I guess it would always be sort of a prescription or hospital or doctor-applied drug.

Danguole: It would be prescription. But it may be a prescription you take home for some of their products.

Russ: Okay. When might we actually be able to do that in your opinion?

Danguole: Our first product is, if all goes well and on schedule, we're probably looking at something around 2015 or 2016, from when all of the - because all of the regulatory work has to happen, and then it's typically another year while the FDA can ask for supplemental information, they're thinking about it before you can really launch and start selling the product. And that seems like a very long time.

Russ: It does.

Danguole: And for someone like myself, who is used to action quickly, it's a very long timeframe. But believe it or not, that's substantially quicker than many other drugs, because we do have the safety information in place. So for many drugs it's often - I think the famous quote on Dr. Mendelssohn's discovery, I think it took close to 20 years from the time he filed the patent and when it was available for humans to use.

Russ: Well I have to ask you this question. Do you think that our government and the regulation, this process kind of overdoes it?

Danguole: I personally do, 'cause I'm the business. But it's also always a pendulum swing. And on one hand people want to assure the safety. Personally I think that often we react to a small number of patients that can have severe side effects for any kind of drug, and that you don't really realize those until those drugs are being sold on the market. But we underappreciate as a society often the people that are really helped by that drug, that maybe don't have a lot of other options. So in our space a number of years ago Vioxx was pulled off the market because of data showing that certain types of patients developed blood clots. But what that didn't show was that there were so many people that suffered from pain that were really being helped by these drugs, that didn't have a lot of other therapeutic options. And so I think that balance sometimes towards safety and efficacy is weighted the wrong way. But I understand from the government's standpoint they will also have the media and patient groups that if they are hurt by a drug they really are clamoring to get that taken off market.

Russ: Right. Right. Okay. Danguole, I really appreciate you sharing your story with us.

Danguole: Absolutely. Thank you for having me.

Russ: You bet. That's Danguole Altman, cofounder and CEO of Vapogenix. You're listening to the BusinessMaker Show, heard here and seen online at thebusinessmakers.com.