Humanetics Corporation

Sunday, October 16 2005
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HSC: What is the Humanetics value proposition?

Scott: What we want people to think of most when they hear the word“Humanetics” is rock-solid science or a world-class clinical trialpedigree behind the ingredients that we sell. That’s what we’re reallyall about in terms of making an investment in good published clinicalstudies. I think when you compare it to the average company out theresupplying ingredients, the clinical trials that we have published giveour manufacturing customers the capabilities to go out and make solidmarketing propositions to sell products.

HSC: On what basis was Humanetics founded?

Scott: Humanetics was founded as a private company in 1988. For thenext six years, we funded research at the University of Wisconsinfocused on derivatives of DHEA for various functionalities. Our initialfocus was the development of a product that would enhance people’simmune function. We wanted to develop a product that would help peoplewith AIDS enhance their immune system. We had more of a pharmaceuticalfocus versus a dietary supplement focus. Things changed dramatically in1994 when the DSHEA Act was implemented and signed. We had six years ofresearch and had identified a specific derivative of DHEA, which wasthe 7-oxo-DHEA (7-Keto®) molecule. It was very interesting because itgave a lot of the benefits of DHEA but it is not anabolic. Since 7-Ketois found naturally in humans we decided to file an NDI and launch theproduct as a dietary supplement. We partnered with GNC in the lastquarter of 1997 and launched 7-Keto as an immune support product in mid1998. This was the focus of our business for the next couple of years.We quickly realized, as a result of additional clinical work, that7-Keto also had solid potential as a weight loss ingredient. We thenpaved the road with successful clinical studies in 1999 and 2001specific to weight loss. That was really the genesis of the currentpositioning of 7-Keto, as one of the most efficacious weight lossingredients on the marketplace today. A significant portion of 7-Ketobusiness comes from weight loss use, with the remainder coming fromimmune support products. Our pedigree and science are much deeper inthe weight loss arena and certainly that field or category is muchlarger than the immune products market. So that’s what we’ve reallybeen focusing on from about 2001 to present.

HSC: Tell us about your brands?

Scott: We currently supply three ingredients to the nutraceuticalarena. 7-Keto is our leading brand and, as discussed earlier, is wellpositioned in the weight loss arena. MicroLactin® is a milk proteinconcentrate from New Zealand. It’s not just standard milk. We use ahyper-immunization process to get greater expression of antibodies andalso a low molecular weight molecule AIF (anti inflammatory factor)that is the key component that makes MicroLactin efficacious for jointcare. MicroLactin also possesses a solid clinical trial pedigree with30 studies backing efficacy and safety. More than 50 million dollarshas been invested in the development of this technology over the past30 years. This clinical work involved both MicroLactin as well as itspredecessor, which was a skim milk powder, made form the same milksource. Today, our customers are using MicroLactin in many differentproduct forms including pills, capsules, tablets, powders, and bars. Itis a pretty friendly material to work with in many different formatsand has GRAS (Generally Regarded as Safe) certification for use in foodand food supplements.

HSC: Your third brand?

Scott: The third brand is called Inzitol®, that’s our trademark namefor a naturally occurring compound called d-pinitol. Inzitol isbasically a product that mimics insulin. It’s kind of the baby of ourgroup. We’re investing in additional research and working on how tobest position this nutrient in the market.

HSC: How long has that product been on the market?

Scott: It’s been at least 3 years that we’ve been out thereand there are two applications that we’ve been pursuing. One is forblood glucose control. This application can be taken a lot ofdirections from helping pre-diabetics with insulin resistance tohelping in the weight loss process. The second use, which had very goodresults, was using (Inzitol) together with creatine. The sports guysuse creatine for upping their muscle volume and mass and many timeswith creatine have to use a carrier molecule to get it to the musclecell. The majority of creatine products on the marketplace today uselarge doses of dextrose, which is a carbohydrate. We explored thepossibility of using Inzitol to get creatine into the muscle cellswithout spiking insulin levels. We also felt that we may be able to doit better than dextrose. A pilot study was conducted based on thistheory and the results were very positive. Dextrose as a carrier wasable to get about 60% of the creatine into the muscles cells. Inzitolhowever, was able to get 83% into the muscle cell and did it withoutspiking insulin levels. This is good for overall health and betteruptake and retention should add to creatine’s positive effects on themuscle.

HSC: How are your brands positioned relative to other branded ingredients?

Scott: The slogan of our company that we just officially trademarked,sums it up best - “The Science of Supplements.” Specifically, regarding7-Keto and MicroLactin, we bring a solid clinical trial pedigree to ourcustomers, backing up both safety and efficacy. 7-Keto is one of thetop two weight loss ingredients on the market today. If you compare allthe published clinical trials of all ingredients for weight loss, theefficacy of 7-Keto is tough to beat. As for MicroLactin, again solidstudies support that the product works. The key attribute that ourstudies support is the fact that MicroLactin produces significantresult in 2 weeks. This makes it a great stand-alone product or it canbe used with other products such as glucosamine, which works well, butmuch slower. Since the two products work on different pathways, such acombination should have a synergistic benefit. In conclusion, ourbranded ingredients offer manufacturing companies efficacious productsthat are supported by solid clinical studies, which allows formarketing claims that set realistic consumer expectations and driveproduct sales.

HSC: You seem to have quite a patent portfolio. How are you putting that to use?

Scott: We have more than 40 worldwide patents with many more pending.The patent structure that we have around 7-Keto and MicroLactin isstrong. All of our customers for both MicroLactin as well 7-Keto musthave a patent and trademark license agreement signed before we ship outany commercial goods. This process really sets us apart in theindustry. Many suppliers will just sell you their product and theyreally don’t care how you use it. We do. For example, we’re veryspecific about the dosage of our ingredients in your product. We don’tallow companies to put “fairy dust” amounts of our ingredients intotheir product just to get label claim. If you came and said, “I’mputting together a new weight loss product, I would like to use 5milligrams of 7-Keto.” Our response is, “If it’s for weight loss wedon’t allow that. You have to use at least 100 milligrams.” And thatgoes right back to the clinical work that’s been done. If we don’t havea clinical study showing that something is going to be efficacious atdosage X, and it’s lower than our clinically studied dose, we turn awaybusiness. I’ve done that on repeated occasions. Although it is alwayshard to turn away business, we believe that it will lead to longevityin the marketplace. Also, we make recommendations on marketingstatements that are supported by our clinical studies. It is thecustomer’s option to use or not to use various claims, but we want tomake sure that no one is making claims that cannot be supported by ourclinical science.

HSC: Are you working on products in any other areas?

Scott: Obviously, weight loss is a huge market in the U.S. supplementbusiness where we have a nice foothold in that marketplace. As such, weare committed to adding new ingredients to our weight loss portfolio.It’s going to take time with our approach. We’re not going to introduceany new products until we have good solid human data. I think thatwe’re probably solid for about the next year with our currentlyportfolio and I hope that the molecules that we have in the pipelinewill ultimately yield positive human data. Additional categories ofinterest for us are joint care, glucose control and sports nutritionproducts.

HSC: What are you doing in the area of sports nutrition?

Scott: Within our current portfolio, beyond the creatine application wediscussed earlier, there’s definitely a MicroLactin play for sportsnutrition. We have a small study in athletes showing that MicroLactinand help with post exercise muscle recovery. It decreased creatinekinase levels post work out, which is one of the enzymes that causesmuscle soreness. The study involved long distance runners and they hadboth improved performance times and decreased recovery times when usingMicroLactin versus placebo. We also do very well with our 7-Keto in thesports nutrition arena, since many of the high end performance athletesare looking for successful strategies to keep body fat as low aspossible.

Scott Steil is Vice President of Sales and Marketing at Humanetics Corporation.