FRANK MASSINO - SENETEK PLC (SNTK)
CEO Interview - published 6/24/02

DOCUMENT # PAV603

FRANK MASSINO has been Chairman and CEO of Senetek PLC since November 1998. Drawing on his professional management experience at major corporations such as Glaxo, Ortho Pharmaceutical Corporation, Johnson & Johnson, Pfizer, and IBM, Mr. Massino has reshaped the corporate structure of Senetek, defined its strategic direction, and focused the company soundly on its core competencies. During his career, Mr. Massino has successfully negotiated more than 40 licensing agreements with major pharmaceutical companies. For nine years he held executive management positions at Ortho Pharmaceutical, including Director of Business Development and New Products, and in 1982, was named “Division Manager of the Year.” While at Ortho, he was Product Manager for Retin-A, a leading prescription product for the treatment of acne. In addition, Mr. Massino was involved in the development of Renova®, which in 1995, was also approved for anti-aging applications under the Renova trademark, and directed major product launches for the company. As Product Director of Marketing and Division Sales Manager at Glaxo Inc., he re-positioned a mature line of corticosteroids into a $50 million psoriasis business, successfully launched two new ethical pharmaceutical products, and championed the internal development of two critically important product line extensions. Mr. Massino holds a degree in Finance and Chemistry from the University of Illinois and is a graduate of the Marketing Management Program of the Columbia Executive Program at Columbia University and the Management of Managers Program of the Graduate School of Business Administration at the University of Michigan. Mr. Massino is highly experienced in drug delivery technology and holds a patent on a drug delivery device. He is an active member of the Licensing Executive Society.

Sector: Biotechnology/ Pharmaceuticals

TWST: Can we start out with a history and overview of the company?
Mr. Massino: Senetek Plc is a British-based company. SENETEK trades as an ADR on NASDAQ. It was founded in 1983 by Nobel Prize laureates and it is and has always been a technology driven company. Unfortunately, previous management was unsuccessful in bringing this rich technology to market. Over the past two years, the current management has been highly successful in commercializing this technology and after 18 years, SENETEK realized its first full profitable year in 2001.

TWST: What is the technology that has come to the market finally?

Mr. Massino: The lead technology is a plant growth factor, Kinetin, a cytokinin known to be very effective in alleviating the signs of the aging process. Kinetin eliminates fine line wrinkles, coarse wrinkles, rough skin, mottled hyperpigmentation and has the unique property of improving moisture retention which is essential for maintaining healthy skin and unlike its competitors has virtually no side effects. Kinetin is endogenous to the human body and part of the DNA tissue repair process. This technology has also demonstrated potential in the treatment of psoriasis. There are additional applications for which we are testing, and we may look to expand our patent position on our cytokinin technology. Kinetin is the lead compound in SENETEK’s rich portfolio of skincare technology.

TWST: Is that on the market now?

Mr. Massino: Yes, Kinetin is on the market now through licensees with leading positions in their trade channels. Kinetin was first introduced in the medical community by ICN Pharmaceuticals. They have done a terrific job. ICN’s Kinetin product, Kinerase®, rivals J & J’s Renova®, which is the only FDA approved antiaging product on the market. In fact, sales for Kinetin in the US continue to outpace Renova. Following the successful commercial partnership with ICN, we licensed Kinetin to Revlon for the mass market channel of distribution worldwide. In July of last year Revlon launched a full line of Kinetin-based products under the Almay® brand, with initial distribution into over 26,000 locations in the US alone. Response has been excellent and earlier this year they launched several new Kinetin-based products. Worldwide sales are supported by television and print advertising. About the same time we licensed Kinetin to The Body Shop for the alternative market in North America. The Body Shop has been quite successful and recently added additional products with Kinetin to their portfolio. They now plan to expand from North America to Europe and Asia. Without exception, all Kinetin products launched through our commercial partnerships have been very well received and have won numerous awards in the industry and accolades among dermatologists. Additional commercial partnerships we have established for Kinetin include Osmotics, Allure, and Med Beauty AG — all in distinct market channels and territories.

TWST: Is this an over-the-counter product?

Mr. Massino: Yes, Kinetin is a non-prescription product. It was, however, tested just as if it were a prescription drug. Recognizing Kinetin’s extraordinary potential, we completed all the testing required for filing an Investigational New Drug Application. Therefore, it had to receive approval from the Investigational Review Board at the University of California. We conducted the Kinetin clinical studies using the protocols established by the FDA for the approval of antiaging compounds. The Kinetin studies were conducted by Dr. Gerald Weinstein and Dr. Jerry McCullough from University of California, Irvine, Department of Dermatology. Dr. Weinstein, a world-renowned researcher in dermatology, was also the lead investigator for the Renova clinical trials.

TWST: How big is the market that you are addressing with these products?

Mr. Massino: The market is enormous, estimated to be $56 billion worldwide. Just to give you an idea of how large the potential is, antiaging skincare products containing alpha-hydroxy acids, for example, account for $6 billion in product sales in North America alone. Clinical test results show that Kinetin is as effective if not more effective than Renova and alpha-hydroxy acids, without the side effects associated with the use of these products.

TWST: Are you just starting to market this product now?

Mr. Massino: Yes, when I took over as CEO approximately three years ago, my primary mandate was to place the company on sound financial footing and to simultaneously commercialize the company’s pipeline of proprietary technology. At that time, I determined that Kinetin was the closest to market and we focused our efforts on this technology. Last year our licensees’ retail sales of Kinetin-containing skincare products were approximately $85 million, including the Revlon launch that took place in July. Skincare is a very healthy and growing category, closely tied to an aging population, and this alone will fuel Kinetin growth. Beyond that, we anticipate significant growth with this product as we expand our revenue base globally. We are now expanding to Asia and look forward to expanding to South America and Europe as well. I should also point out that behind Kinetin we have additional patented compounds including Zeatin, a very powerful analogue of Kinetin, that shows outstanding promise. We are currently investigating additional therapeutic applications for this portfolio of compounds.

TWST: When might the second product come to market?

Mr. Massino: Zeatin is being Phase I tested and made ready for clinical trials as we speak.

TWST: Are there other similar products being worked on by anybody else?

Mr. Massino: There are other growth factors that are currently being investigated. We have passed on several different compounds, some of which we know are being evaluated by our competitors. SENETEK is very fortunate to have the advantage of a strong affiliation with the University of Aarhus, Denmark, Molecular Biogerontology Unit, which has tremendous capabilities for screening and evaluating compounds. We have sponsored a research professorship at the university which gives us full access to several laboratories. These labs are dedicated to SENETEK. As a result of this arrangement, SENETEK enjoys the right of first refusal on all new compounds identified through this research program.

TWST: What kind of growth can you see out of this product line over the next couple of years?

Mr. Massino: I would say that looking back in two years we expect that cumulative annual growth will have been in the 30% to 40% range, as we expand from our primarily North American licensing focus to other key markets and as we license currently undeveloped classes of trade. Moving forward, we will also continue to leverage marketing and distribution opportunities with existing licensees.

TWST: Is that the route you are going to go as licensing?

Mr. Massino: At this point in time, absolutely. Our licensing strategy, which is predicated on our business model implemented three years ago, has been enormously successful. For instance, in 1998 SENETEK reported a loss of over $22 million. We have now registered our first full year of profitability in 2001, followed by yet another profitable quarter in the first quarter of this year. By utilizing this model, we have steadily improved our cash position and gross margins, which currently exceed 85%. We have been very successful in dropping revenue dollars to the bottom line and expanding our revenue base utilizing this licensing and royalty arrangement. We do, however, recognize potential opportunities to bring certain of our patented products to market ourselves in selected channels.

TWST: Are you going to continue that positive trend?

Mr. Massino: Exactly, we have a lot of opportunity. Having been with J&J, Pfizer, Glaxo and IBM, I recognize the extraordinary market potential of SENETEK’s proprietary technology. Kinetin was our lead compound to market, yet we are most excited about the upcoming introduction of our erectile dysfunction (ED) product, Invicorp™. Invicorp possesses key differential advantages over the competition. The medical community eagerly awaits the introduction of Invicorp due to its superior efficacy for the treatment of patients with moderate to severe ED who are non-responsive to existing therapies such as Viagra®.

TWST: What is the differentiating factor there?

Mr. Massino: The differentiating factor between Invicorp and Viagra is Invicorp is far more effective in the treatment of moderate to severe ED and highly effective in ED resulting from organic etiologies such as diabetes, a leading cause of erectile dysfunction. Furthermore, Invicorp has a very favorable side effect profile, with no known contraindications, unlike Viagra and other PDE-5 inhibitors. A key differential advantage of Invicorp is that it offers a much shorter onset of action, two to three minutes compared to as long as 45 minutes to one hour onset for Viagra. The superior efficacy profile, favorable safety profile, and the ability to treat the large segment (estimated to be 40% to 50%) of the ED population for whom current therapies are ineffective or contraindicated, create enormous revenue potential for Invicorp.

TWST: Where does this product stand at the moment?

Mr. Massino: Currently Invicorp is approved in Denmark, the UK and New Zealand. For the remaining European states, we have commenced a Pan European filing with Denmark being our representative country. We are in negotiations with several potential licensees at this time. We anticipate Invicorp sales by the end of this year, with market approvals in other major European countries some time in 2003.

TWST: Is it being actively marketed in those countries at this time?

Mr. Massino: Invicorp is not yet being marketed in those countries. Invicorp is however available on a compassionate use basis through named patient supply sales in the United Kingdom. SENETEK’s management has decided that it is essential that Invicorp be properly positioned before beginning any product launch. While moving forward with the Pan European approval process, we are evaluating several potential licensees and at the same time developing a program that would enable us to take Invicorp to market ourselves. We will execute the plan that will provide SENETEK the best rate of return on investment. Invicorp represents a multi-million dollar potential, upward of $500 million. We anticipate having a product launch, ready for the first half of next year or late fourth quarter this year.

TWST: With that product line is there anything else similar to that being worked on?

Mr. Massino: There is work being done on several oral therapeutic agents, similar to Viagra. These are primarily PDE-5 (Phosphodiasterase) inhibitors and thus are very similar to Viagra. We are hearing that the new compounds are not any more effective than Viagra. In addition, there are topical compounds that have not demonstrated much success in the treatment of the moderate to severe ED patient. It is important to understand that Invicorp’s™ key advantage is that it works in the more severe cases of ED, unlike the currently available therapies where the failure rate approaches 50%. This fact, coupled with the demographics of the ED patient where the condition worsens as the patient gets older, gives Invicorp a significant key advantage over the competition. Keep in mind that the disease state is very visible, with the endpoint being very quick, either the drug works or it doesn’t. Unlike drugs such as anti-hypertensives, there is an immediate physiological response, you know right away if the product works — either you have an erection adequate for intercourse or you don’t. Efficacy in the ED patient is key.

TWST: What’s the time line for US approval?

Mr. Massino: I’m happy to report that we are currently reactivating the Invicorp IND in the US. The timeline for approval in the US is two to three years. We will meet with the Food and Drug Administration to facilitate a successful filing.

TWST: Why was the IND put on hold here?

Mr. Massino: In the US you will recall, a competitor’s compound showed the presence of brown fatty tissue in their preclinical data submitted to the FDA. This compound was Vasomax® by Zonagen and Schering-Plough and it contains high concentrations of phentolamine, 40 to 80 mg. Phentolamine is one of the active ingredients in Invicorp and the FDA ruled that all investigational drugs containing phentolamine be placed on clinical hold. Since then, Invicorp has gained approval from the Medicines Control Agency in the UK. The MCA concluded that Zonagen’s results were not an issue for our product, as Invicorp is a local therapy, not systemic and the concentration of phentolamine in Invicorp is only 1 to 2 mg versus 40 to 80 mg found in Vasomax. In addition, the pharmacokinetics of our phentolamine is different. We believe that we will not encounter any more delays in the future.

TWST: Anything else in that category?

Mr. Massino: Yes. We evaluated several different compounds for the treatment of ED and Female Sexual Dysfunction, having gone as far as taking options on several new chemicals, but with the advice of our Scientific Advisory Board and other thought leaders in this field, we passed on the in-licensing of these compounds, choosing instead to focus our resources on the tremendous market potential of Invicorp. We are now in the process of investigating new Invicorp analogues as well as new methods of delivery. Now that we have become profitable, we are accelerating our research and development program and expect to bring on board a Chief Scientific Officer to oversee this area.

TWST: Are you generating enough cash to cover your overhead at this point?

Mr. Massino: Absolutely. We have turned profitable and we expect this trend to continue.

TWST: So progress is being made.

Mr. Massino: Progress is definitely being made.

TWST: As we look out over the next 18 months, what are the benchmarks that investors should judge you on?

Mr. Massino: Over the next several months, we will have added two to three new licensees for Kinetin in various countries, addressing new channels of distribution. In addition, we will have expanded our existing relationships. For instance, The Body Shop will launch new Kinetin-based products and expand into additional territories. We anticipate success in gaining regulatory approval for Invicorp in several other major European countries and we expect to recognize revenues from Invicorp sales beginning late this year or in early 2003. Another milestone will be the launch of another therapeutic agent in our proprietary drug delivery system. Plans are in place for the enhancement of our management structure concordant with anticipated growth. Most important, however, is the continued trend in profitability.

TWST: What sets your proprietary drug delivery technology apart?

Mr. Massino: The drug delivery system is patented and automatically delivers an injection with the push of a button. A key differential advantage of this technology is that it utilizes a 29-gauge needle, a very fine needle, approximately the width of a strand of hair, that injects the medication very rapidly, ensuring dosing accuracy without the pain associated with other methods of injection. This technology has great potential as there are many new peptides that cannot be administered any way other than by injection.

TWST: When will that be available?

Mr. Massino: The device itself is available now. It has been successfully tested and is one of the drug delivery systems that will be used for Invicorp.

TWST: Potentially how big is the market for that?

Mr. Massino: The injectable market is large and growing mainly as a result of the introduction of new peptides. Our automatic injectors offer significant advantages for the patient, insuring dosing accuracy, pain free administration and the ability to overcome issues of manual dexterity often associated with diseases that afflict older patients.

TWST: Do you have the management team in place that you need?

Mr. Massino: The current management team is very solid, but we are seeking to enhance our managerial capabilities commensurate with our anticipated growth. We are in the process of finalizing the hiring of a Chief Scientific Officer and actively recruiting a Chief Financial Officer. My first charter as a new CEO was to put SENETEK on a fiscally sound track, and now that we are there, it is our strategy to add to and enhance both our management team and our Board of Directors. And, as you know, two new Board members with outstanding credentials were just elected by the shareholders.

TWST: Have you taken the bulk of the steps at this point or is there still some additional work to be done?

Mr. Massino: We have accomplished a great deal in a relatively short period of time. We have achieved the successful commercialization of our lead skincare product, Kinetin, and established profitability — going from a loss in excess of $22 million in fiscal 1998 to a profit in 2001. We have seen the improvement of our current ratio from .60 at year end 1998 to 2.26 in 2001, increased our gross margins from 35% in 1998 to over 80% in 2001, improved our cash position significantly and expanded the number of commercial partners from two in 1998 to nine in 2001. It has been a remarkable turnaround. The table is now set for dynamic growth and sustained profitability.

TWST: Given all those good things, why is the stock selling where it is?

Mr. Massino: We have not actively been telling the SENETEK story. Instead, we have focused on managing the company’s business, primarily executing a successful financial turnaround. SENETEK shares are clearly undervalued. We expect this to change as we continue our trend of profitability and believe now is the ideal time to tell our story. We will initially target institutional investors in Europe where SENETEK has a large and loyal shareholder base and where fewer barriers exist for institutional investing in companies trading under $5.

TWST: Anything else that we should have touched on?

Mr. Massino: No. In summary we are a technology rich company with proven commercialization and an established trend of profitability. We anticipate the coming months to be a period of dynamic growth for SENETEK.

TWST: Thank you. (TM)

FRANK J. MASSINO
 Chairman & CEO
 SENETEK PLC
 620 Airpark Road
 Napa, CA 94558
 (707) 226-3900
 (707) 259-6238 - FAX
 www.senetekplc.com
 e-mail: ir@senetek.net
Investor Relations Contact:
 PAUL KNOPICK
 (949) 707-5365
 e-mail: pknopick@eandecommunications.com

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