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Aliyah Mikulski
Ben Noren
Archainnova Biotechnologies Inc.
Background
Osteoarthritis:
- Affects 630 million worldwide
- Degeneration of joint cartilage
- Age related disease
- Causes excruciating pain and lack of mobility
- Existing therapies include: microfracture & pain
management
Existing Therapies
Pain Medication
Microfracture
Current Stem Cell Research Companies:
-Advanced Regenerative Technologies (ART)
-Osiris Inc.
There are no long term treatment options currently
available.
Overall Product Goal
- Better treatment option for torn
cartilage
- Decreased cost
- Increased repair rate
New Research
- Hydrogel viability chemistry
- Process scale up
- Economic model update
Product Pro’s
- Minimally invasive/painful
-Large scale storage/ distribution
-Economical
-Safe, sustainable stem cell technology
Basis of Work
- “Mesenchymal stem cells have been shown
to elicit differentiation of resident and nonresident cells to functional tissue, catalyzing
restoration of degenerative tissue” Sampson at al.
- Bone marrow derived mesenchymal stem
cells can express same factors as cells found in
synovial joint fluid Koyama et al.
Mesenchymal Stem Cell
Advantage
Mesenchymal Stem Cells:
- Easily cultured from bone
marrow
- Straight forward purification
process
- Capable of long term storage
- Immuno-privileged
- Induces permanent regrowth
of damaged tissue
Product Flow Diagram
Harvest
Bone
Marrow
To
Manufacturing
Center
Purify
&
Culture
Store
www.labrepco.com
PEG
Encapsulate
Cells
www.medgadget.com
www.pocdscientific.com.au
To Distribution Centers
Inject Into
Joint
Cartilage
www.arthritisselfmanagement.com
Bone Marrow Purification Step
-Bone marrow is spun down in a centrifuge to
purify the stem cells
Unit Operations
OUTLET

SERPENTINE
CHANNEL
DIRECTION OF
TRAVEL
NITROGEN
INLET
CELL INLET
OIL INLET
OIL INLET
PEG Encapsulation
-Polymerized microgel beads
Product Beads
-Collected product
Scale Up
- Scale up based on
Micromeritics
technology
- Multiple device in
parallel design
- Fully automated
continuous production
process
Mass Transport Material
-PEG is available in a wide range of molecular weights
Low molecular wt. PEG
Short Monomer
Strands
Form Tight Mesh
High molecular wt. PEG
Long Monomer
Strands
Form Loose Mesh
- Capable of achieving precise diffusion rate by tuning
chain mesh size via PEG monomer molecular weight
Mass Transport
- Mass transport of TGF-β1 integrin through PEG
hydrogel presents design challenge
J=Dab*(C*-C)
Optimal cell count
(Non-encapsulated)
= 10-20 million/mL
Insufficient rate of
diffusion
Excessive rate of
diffusion
Chemistry
- Experimentation showed
marked decrease in MSC viability
after 24 hours of PEGDA
encapsulation
- Research in literature indicated
poor cell adhesion to hydrogel
leads to apoptosis
- Solution: PEG Norbornene
hydrogel
- Addition of Cysteine-ArginineGuanine-Aspargene-Serine
(CRGDS) peptide
- Provides binding sites for
Patient Diagram
Injection- Uptake of
encapsulated cells
Diffusion
Diffusion of
of therapeutic
therapeutic
through
through hydrogel
hydrogel membrane
membrane
Therapeutic repair of
torn cartilage
Diffusion of therapeutic in to
cartilage
R&D Timeline
START:
2015
2)Pre-Clinical
Testing
2021
2023
4) FDA
Approval
2028
2030
10+ years
1) Drug Therapeutic
Discovery/Research
3) Clinical
Trials in
Humans (Phase
I,II,III)
5)
Product
available for
patient use
Pricing Basis per Patient
$4,000 per injection
- $1,000- $3,000 cheaper
than microfracture
Based on:
-material and production costs
-market/patient demand
- current microfracture cost
Sources of Funding
 Venture Capitalists
$500,000
 Angel Investors
$500,000
 Crowd Funding
$500,000
 National Institute of Health Grants
$9,500,000
 Loans
$33,000,000
TOTAL
$44,000,000
Economic Information
 Capital Expenses
$45,533,803
R&D, Pre-Clinical Trial, Clinical Trial Costs
Rent, Building
 Working Capital
$908,105
Accounts Payable and Receivable
 Recurring Costs
Average Operating Expenses
 Income
Average Business Revenue
$2,775,922
After Tax Net Profits (Assuming funding)
$234,600,000
$340,000,000
Economic Information
Without Funding:
NPV30= $454,886,087
IRR= 41%
PBP=1.55 years
With Start-Up Funding:
NPV30= $466,048,082
IRR= 41%
PBP= 1.45 years
Start-up funding recommended
Cash Flow Timeline
Cash Flow Timeline
Start Up- Product Sales
Begin
FDA Approval
Clinical Trials
Pre-Clinical Trials
R&D
$300MM
$200MM
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
$100MM
$466,048,082
PBP=1.45 Years
$0
Cash Flow
$100MM
$200MM
$300MM
$400MM
$500MM
Business Model
Funded Cash Flow Model
Market Forecast
- 1.1% annual population increase
- lengthening average human lifespan
- Joint replacement alternative = $10,000 or more
Conclusion: Continually expanding market & competitive
product price will cause sales to increase and therefore overall
earnings to increase
Global Impacts
Direct Impacts
-Provides an improved, long-lasting solution to current options
-Creates a more economical treatment option for patients
Indirect Impacts
-Raises societal awareness to the difference between embryonic
and mesenchymal stem cells
-Raises awareness to the advantages of stem cell therapeutic
potential

QUESTIONS???
References
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[2]
Arthritis Foundation. Osteoarthritis. 2014. 3 October 2014
http://www.arthritis.org/arthritis-facts/disease-center/osteoarthritis.php
[3]
Bizminer US Industry Financial Report 2014: 541711 Research and development in
Biotechnology
[4]
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http://www.ehow.com/about_5561626_average-cost-arthroscopic-knee-surgery.html
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[7]
Frisibie, David. et al. “Stem Cells As Treatment For Osteoarthritis.” Journal of Orthopedic Research (2008): 39-42
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[9]
Hospital for Special Surgery. Osteoarthritis Research. 2013. 3 October 2014
http://www.hss.edu/osteoarthritis-research.asp#.VDL5svldWSp
[10]
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[13] McClure, Ben. “Using DCF In Biotech Valuation.” Investopedia (2014): 5
[14] McCormick, Frank. Et al. “Trends in the Surgical Treatment of Articular Cartilage Lesions in the United States: An Analysis of a Large PrivatePayer Database Over a Period of 8 Years.” Osteoarthritis Cartilage (2010): 224
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Mullholand, Bob. “Crowdfunding Policies-Risk or Reward?” FundRazr. (2014): 3
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National Institutes of Health. “NIH Stem Cell Research Funding.” Stem Cell Information (2014):
1http://stemcells.nih.gov/research/funding/pages/Funding.aspx
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