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TWST: Can we begin with an introduction and historical sketch of Alltracel Pharmaceuticals (London: AP.L)?

Mr. Brandon: I have been involved with the company from the outset, back in 1996 with a group of scientists who presented the technology. Essentially, it is a platform technology that allows polysaccharides to be bound with certain salts. From the outset, it was obvious that from the criteria that I had originally intended as an investment vehicle to find a global proposition, and this being a technology that would stop people bleeding, it seemed quite logical, given the size of the market, i.e. 6 billion people, was pretty extensive to say the least. It took about six to nine months before we fully evaluated and realized that there were some other products out on the market but the cost of bringing those to the consumer was extremely high. Over the last four or five years since we set this up it has become increasingly evident that the consumer themselves wish to actually have an active ingredient within their dressings. However, the calcium alginate or seaweed derivative that was being used has four or five times the cost base of what we were bringing to the market. We operate as a management structure with flexible subcontract manufacturing based in the Czech Republic, Italy and the UK. Back in August of 2001, we listed the company on the London Stock Exchange Alternative Investment Market (AIM). Over those six years since we have been established as a medical company, we have obviously gone through the regulatory issues and we have obtained FDA approvals, European (EU) approvals, and approvals around the world on a number of products and ingredients that we provide to manufacturers. The current focus is on the wound care division and we do have a range of m.doc™ (Micro Dispersed Oxidised Cellulose) stops-bleeding products in cooperation with our existing manufacturing partners who are the primary distributors, retail brand owners, proprietary brand owners who take the products directly to the consumer. Just briefly touching on m.doc™, the view from consumer focus groups is that our m.doc™ brand specifically relates to the medical industry and we have developed an interesting brand concept for marketing over the last three years. We established the marketing process in 2000 and since then we have engaged with a number of different companies and distributors and have the m.doc™ logo in 40 countries with 50 partners. Thirteen of those we would term enterprise sales level where we would be seeking to have those partners buy in excess of €¼ million worth of product from us on an annual basis going forward. One of those companies has already achieved that target and we would expect them to continue to do so. So it has taken this length of time to get the company to the point commercially where we are seeing this trend of accelerated growth going in the right direction.

TWST: Can you tell us more about your strategy and approach to market?

Mr. Brandon: We have focused on the adhesive dressings in Europe over the last 18 months. USA and Japan are significantly bigger and their per capita spend is much greater than the average per capita in the European Union. So we sell to all levels of the value chain, i.e. the producers, the distributors, the brand owners, proprietary retailers, etc., but with the enterprise sale being a longer term partnership agreement rather than just a sale of a packaged product. Ours is a technology rather than a finished product. We do not have exclusive agreements with distributors or manufacturers. We provide this technology at an extremely low cost to them because we have a patented product and process that allows us to do that, and that provides a lock in strategy. Therefore, it takes longer for us to execute and get them to take the m.doc™ into their entire range, but when they do take it into their entire range there’s an element of investment on their part which is quite substantial. The accounts take on average about 12 months to open and a successful trial period would be finished within that 12 month period and then it’s purely a negotiation process. That would mean between 5% and 10% of their range taking m.doc™ and selling it as a stop-bleeding range of adhesive dressings for instance. And then post trial there would then be another 12 months before they would be up to a penetration in their portfolio of about 40% with the real maximum potential for us at around 50% to 60%. To put that in perspective, an average producer of 600 million plasters a year will purchase about 230,000 square meters and at 50% penetration is worth about €1¼ million to us. The largest and the first customer that we have had is Bouty, a subsidiary of Carter Wallace, and in 2002 they turned over just a little more than €200,000 with us, leading to sales of around about a million boxes of m.doc™ plasters in Italy. But again I stress the point that these boxes had our trademark logo on the outside so we were building a front end consumer recognizable quality logo that on a non-exclusive basis has been tipping other manufacturers into taking this in as a quality standard within the wound care side of stops bleeding. There are currently 13 companies of similar or larger sized than Bouty now in various stages of that trial process. Now, during those trial processes they are still buying from us. It is not a case of saying please take this and try it; they’re actually paying for this. The next phase of course is development through the US and the Far East. We’ve already presented this year to a number of major corporates in the US.