February 14, 2001

The Federal Trade Commission has launched a probe into San Diego-based BioPulse International's advertising practices for its controversial, unproven cancer therapies.

The FTC notified BioPulse in a Feb. 2 letter that it seeks to determine whether the company engaged in "unfair or deceptive acts or practices," including whether it can substantiate claims made about its treatments for cancer and other diseases, BioPulse disclosed yesterday in a filing with the U.S. Securities and Exchange Commission.

On Feb. 8, The San Diego Union-Tribune reported on BioPulse and its Tijuana clinic, which offers cancer patients experimental therapies that some medical experts dismiss as useless and potentially risky. More than 300 cancer patients, most from the United States, have visited the clinic since 1999.

The Union-Tribune also reported that Baja California Health Department officials said the clinic is not authorized to provide alternative treatments, and could face possible closure or fines.

John Liviakis, a spokesman for BioPulse, termed the FTC inquiry "an amazing overblown thing that is virtually meaningless. It's not a formal inquiry ... it's a non-event."

Liviakis is chief executive of Liviakis Financial Communications, a San Francisco-based investor relations firm that received a 13 percent stake in BioPulse in return for the company's public relations and other services.

Through Liviakis, BioPulse issued a news release yesterday on its recent stock "volatility," though it made no mention of the FTC probe.

"BioPulse's belief is that recent chat room posts and stories, which contain 'fake' information or are mean-spirited and manipulative, are the primary cause," the news release stated.

Since Feb. 8, BioPulse's stock has fallen 35 percent. Shares of the company closed at $4.88 yesterday.

BioPulse also insisted in yesterday's news release that its Tijuana clinic is licensed to perform the experimental therapies, which include inducing insulin comas in patients and injecting them with a cancer "vaccine" derived from elements in the patients' own urine.

The company said it received "approved certification in general medicine and homeopathic/alternative treatments" for its "new laboratory" from the Baja California Health Department.

Baja officials yesterday disputed BioPulse's claim and said the BioPulse clinic will be inspected next week.

Dr. Alfredo Gruel Culebro, who oversees clinics and hospitals for the Baja California Health Department, said his office has not granted BioPulse permission to conduct any kind of alternative therapy in Tijuana.

The only way that a clinic can practice alternative medicine in Baja is through a research license granted by Mexico's federal health department in Mexico City, Gruel said. The clinics must submit a detailed protocol detailing their investigation.

But "insulin-induced hypoglycemic coma is not authorized in Mexico no matter what," said Gruel, referring to BioPulse's insulin-induced coma therapy, which is given to patients daily over several weeks.

BioPulse's current permit, dated November 2000, authorizes the company to operate a short-term clinic, allowing overnight stays at most.

"But this does not authorize them to practice any kind of alternative medicine, and it doesn't say anything about a lab," Gruel said.

Gruel said that if BioPulse has any other documentation to support its claim, it will have to be reviewed and verified by the department.

"Sometimes Mexico City authorizes these permits and we don't find out until after the fact, but it is not common at all," he said.

Meanwhile, Mitchell J. Katz, a spokesman for the FTC, said the federal agency cannot confirm or deny whether it is investigating BioPulse.

"While we can't confirm or deny, certainly the fact that they (BioPulse) are promoting a cancer vaccine and seem to be on the Internet could be problematic," Katz said.

Katz said the FTC has taken many actions against companies that claim to have cancer cures on Web sites, press releases or other promotional materials. FTC actions include referring companies to the U.S. Justice Department for criminal prosecution and civil suits that require companies to reimburse patients for treatments that can't be substantiated.

Katz said companies "need to have a scientific basis for making claims ... if there is no substantiation for a claim that is a big problem."

Though BioPulse has claimed on its Web site and in press releases that its therapies are "tested" and that the company enjoys "high success rates in treating cancer and other diseases," none of BioPulse's therapies have been tested in clinical trials.

In one press release, citing an article in an alternative health magazine, BioPulse claims 30 "success stories." BioPulse President Loran Swensen is also quoted, urging "the sooner people come to us, the better. Don't wait until you've exhausted your bone marrow and everything else and expect us to send you home cured."

Yet in yesterday's SEC filing, the company offered a more somber assessment: "None of our technologies or treatments have been proven effective."