In The Boardroom With...
Dr. James A. Hayward
Applied DNA Sciences, Inc.
OTC Bulletin Board:APDN
Please give us an overview of your background and a brief company history.
James Hayward: I have over 20 years of experience in
the biotechnology, pharmaceutical, life sciences and consumer products
industries. I was one of the founding principals and research director
of Europe’s first liposome company, Biocompatibles Ltd. From 1984 to 1989, I was responsible for product development at the Estee Lauder Companies. Between 1990 and July
2004, I was the Chairman, President and CEO of the Collaborative Group,
Ltd., a provider of products and services to the biotechnology, pharmaceutical
and consumer product industries based in Stony Brook, New York. This business
was successfully sold in 2004. Since 2000, I have been a General Partner
of Double D Venture Fund, a venture capital firm based in New York, New
York. I received my doctorate in molecular biology and biophysics from
SUNY at Stony Brook in 1983 and I received an honorary Doctor of Science
from Stony Brook in 2000. I also serve on the boards of the Stony Brook
Foundation, the Research Foundation of the State of New York, Long Island
Life Science Initiative and the Ward Melville Heritage Foundation. I have
been CEO of Applied DNA Sciences, Inc. since March 2006, and prior to
that I was acting CEO since November 2005.
About Applied DNA Sciences, Inc.
Applied DNA Sciences (APDN) provides customized botanical DNA encryption,
embedment and authentication solutions that are designed to help protect
companies, governments and consumers from counterfeiting, fraud, piracy
and product diversion. Utilizing our proprietary overt-DNA and covert-DNA
embedded technologies, APDN provides the definitive forensic proof of
authentication and validation to help protect revenues, brands and consumer
confidence. Secure and cost-effective, APDN’s SigNature™ Program
provides ready-to-use DNA encryption and authentication solutions that
will complement barcodes, watermarks, holograms, RFIDs and many other
security applications. APDN also provides customized safeguards to meet
heightened security requirements for government programs and anti-counterfeit
measures worldwide. To date, APDN has successfully marked over 1 billion
DVD’s, artwork, alcoholic beverages, luxury and personal care goods,
through our Asian licensee.
SecurityStockWatch.com: Please give us an overview of
Applied DNA Sciences solutions in the authentication market.
James Hayward: With respect to anti-piracy technologies,
there has always been the belief that eventually someone somewhere will
be clever and devious enough to defeat any security system. Applied DNA
Sciences has introduced an innovative, anti-piracy solution that actually
defeats the thieves. This is because APDN’s SigNature platform implements
a technology that cannot be copied or violated.
It is based on DNA, the genetic “blueprint” that enables every
living thing in the biological universe to reproduce itself. The DNA,
in this case from plants, has been modified, not for its biological relevance,
but for its information content alone, and has been rendered biologically
non-functional. While it is inherently unique and dense with information,
it requires only minute quantities of DNA to be placed on any product
to mark and authenticate it. The DNA information is scrambled so that
only APDN and its reader devices can decipher it. This is best explained
by analogy. Imagine that the DNA Marker contains roughly a gigabyte of
information or the amount of information contained in the Sunday New York
Times. We can take the Sunday New York Times as the original plant genome
and cut up the newspaper into its individual words, or bits and reassemble
the words to represent essentially a nonsense story because we do not
need the DNA to code for anything biological. We need it to simply contain
information content. We rearrange the words and insure that it is not
biological by comparing it with an internet resource, which is the genome
bank. Once we verify that it is not biological, we will use that reassembled
plant DNA, which we now call a chimer as the marker, and will assign that
marker to an individual customer
The SigNature Program first involves the design and manufacture of a
highly customized and encrypted botanical DNA marker as described above.
This Signature DNA Marker is then encapsulated and stabilized so that
it is resistant to heat, organic solvents, chemicals and most importantly
ultraviolet or UV radiation. Once it has been encapsulated, the Signature
DNA Embedment system can be used to embed the SigNature DNA Marker directly
onto products or other items or into special inks, threads and other media
which in turn can be incorporated into products. Because the portion of
DNA in a SigNature DNA Marker used to identify the marker is so minute,
it cannot be detected unless it is replicated billions of times over,
or amplified. This amplification can only be achieved by applying matching
strands of DNA or a primer, and PCR techniques to the SigNature DNA Marker.
As a result, the effort required to find, amplify, select and clone the
relevant DNA in a SigNature DNA Marker would involve such enormous effort
and expense that SigNature DNA Markers are virtually impossible to copy
without our proprietary systems.
Our SigNature solution is as broadly applicable, convenient and inexpensive
as other existing authentication systems while highly resistant to reverse
engineering or replication. Our system can either be applied independently
or can supplement other systems in order to allow for a forensic level
of authentication of the sources of a broad range of items including financial
instruments, identity cards and official documents.
The beauty of our platform is that no equipment is required on the part
of our customers. These are methods that require no retooling; they are
seamlessly integrated with existing manufacturing protocols. Moreover,
our platform is one that can be easily integrated with the security platforms
that are existent already. For example, including DNA in a barcode is
as simple as printing the barcode and having DNA included in the ink.
Including DNA in a hologram is just as simple, or in an optical strip
or any of the various security devices. There is no serious investment.
In almost all instances, the per unit costs for marking products with
DNA are not only very competitive with other anti-counterfeiting modes
such as holograms, but much more effective and easier to use. We provide
customers with the ability to do DNA spot tests to quickly and easily
validate their product authenticity in the supply chain. We also provide
efficient laboratory forensic DNA identity services should customers decide
to prosecute counterfeiters.
SecurityStockWatch.com: What is your perspective on
the market drivers in these markets at this time?
James Hayward: Governments worldwide are increasingly
faced with the problem of counterfeit currency, official documents and
identity and security cards as well as terrorism and other security threats.
Governments must also enforce the various anti-counterfeiting and anti-piracy
regimes of their respective jurisdictions which becomes increasingly difficult
with the continued expansion of global trade. There are ever tightening
requirements for national security, as well as the proliferation of brand
and identity theft. Document fraud has surged in recent years and at the
same time fraud schemes have become more sophisticated thanks to advancing
technologies in digital duplication and scanning combined with increasingly
sophisticated design software. In the past, the tools of the counterfeit
document trade were typewriters and pieces of plastic. Today’s document
forgers use computer software and high resolution digital scanners to
ply their trade. Criminal organizations are also using the Internet to
market and distribute fake documents and immigration benefits to customers.
Because of the potential for high profits, investigators are increasingly
finding large scale criminal organizations involved in these schemes.
As we are all aware, document security has been heightened as a result
of the events of September 11, 2001 where vital documents such as drivers
licenses were forged for identity purposes and cross border travel. The
Department of Homeland Security has been charged with establishing standards
that will strengthen and guide the states definitions of anti-counterfeiting
measures for vital records. This will apply to documents such as drivers
licenses, birth certificates and identification cards.
SecurityStockWatch.com: Are there one or two success
stories you’d like to mention regarding the SigNature Program?
James Hayward: The Chinese Ministry of Culture asked
our Asian partner, Biowell in Taipei, Taiwan, to mark over 600 million
DVDs with DNA. And, there were 11 other security technologies included
in the DVDs—including fluorescent ink, holograms, microdots, interference
lines, micro printing, laser reflectants, and more—for a total of
12 security platforms all there to protect each DVD.
One year later, 11 of the 12 security modes had been defeated by counterfeiters,
and only one platform survived. Ours was the last measure standing because
the DNA is virtually impossible to beat. Hackers can’t break into
this. For them to do so would take an investment similar to the investment
required by the Human Genome project to detect and copy our DNA. As a
result, in 2005, the Chinese Government selected this technology as the
official standard for their anti-counterfeit program to protect multimedia
Recently, APDN’s technology was adopted by Rhodia, a multi national
specialty chemicals company who is concerned about counterfeiting in its
products. Through Biowell, Rhodia is utilizing our technology to overtly
mark its Jaguar products with DNA, which allows quick determination of
product authenticity. This program was implemented to insure protection
of cosmetic ingredients in the Jaguar brand, to protect both the consumer
and Rhodia from counterfeiting and piracy.
SecurityStockWatch.com: What resources such as “White
Papers’ are available for end-users on www.adnas.com.
James Hayward: On our website, there is an in depth
description of our SigNature Program, how it works and the different vertical
markets we are currently targeting. There are links to related websites
and groups we are affiliated with and also links to publications where
APDN has been cited. (We are working on developing white papers but none
are available at this time.)
SecurityStockWatch.com: We understand that you will
be speaking at the I-Pira Future of Secure Documents Conference. May we
have an overview of the key subjects you’ll be addressing?
James Hayward: I will be talking about the current
issues facing the secure documents industry and how DNA Markers, such
as those found in our SigNature program can help to protect documents
and provide an added layer of security. Counterfeiting of documents is
a significant and growing problem which affects both global security and
global finance. Each year, U.S. companies lose more than $660 billion
to fraud with counterfeiting and document fraud making up more than two-thirds
of that (Association of Certified Fraud Examiners). And fraud continues
to grow as advancements in technology make it easier to commit. Commercial
checks, birth certificates, identification cards, licenses , motor vehicle
titles, prescriptions, college transcripts, tickets and passes for events
– any document of value is at risk. With law enforcement focused
on violent crime and homeland security, there are few government resources
to address the problem. The challenge of reducing fraud and its associated
losses falls upon the organization that owns the item. All one has to
do is scan the headlines to see the effects of this everyday around the
world. Marking documents with SigNature DNA Markers offers a forensic
level of authentication which, combined with other security measures,
has the potential to significantly deter counterfeiting throughout the
SecurityStockWatch.com: Are there any other subjects
you’d like to discuss?
James Hayward: The pharmaceutical industry also faces
major problems relative to counterfeit, diluted or falsely labeled drugs
that make their way through healthcare systems worldwide. Pharmaceutical
counterfeiting and piracy impact the health and well being of consumers
globally. Incidents involving counterfeit drugs have spiked in recent
years with estimates of 10 percent of all prescription drugs believed
to be counterfeit. These figures are higher in other parts of the world
and for drugs ordered over the internet. The pharmaceutical industry loses
an estimated $32 billion per year to counterfeiting globally. The Center
for Medicine in the Public Interest estimates that counterfeit drug commerce
will grow 13% annually through 2010 nearly twice the rate of legitimate
pharmaceuticals. They further predict that counterfeit drug sales will
reach $75 billion globally in 2010. The World Health Organization estimates
that the prevalence of counterfeit pharmaceuticals ranges from less than
1% in developed countries to over 30% in developing countries and over
50% from illicit websites. Columbia University’s National Center
on Addiction and Substance Abuse reports that only 11% of internet pharmacies
are legitimate. Again, the headlines are full of horror stories as a result
of individuals taking counterfeit drugs. As with counterfeit documents,
the counterfeiters rely on sophisticated criminal networks to infiltrate
legitimate supply chains. These criminals have no regard for health, safety
or human life and will stop at nothing to make a quick buck at someone
else’s expense. APDN regards the protection of consumer health and
safety via authentication with SigNature DNA Markers as a top priority
of the company.