the start-up ceo: clairvoyant or...

© 2016 Copyright ReproCELL, Inc. All Rights Reserved.

The start-up CEO: clairvoyant or entrepreneur?

Dr David Bunton CEO, Biopta

© 2016 Copyright ReproCELL, Inc. All Rights Reserved. 2

Beltsville,

Maryland

Glasgow, UK

• HQ and lab in Glasgow, Scotland, UK

• Lab facility in Maryland

• Founded 2002

• First, and currently only, GLP compliant functional human tissue CRO

• Experts in human tissue research and procurement

• Pharma and Biotech customers worldwide

ReproCELL Europe (Biopta) Leaders in Human Tissue Research


• 90% of drugs fail in clinical trials

• Preclinical tests do not identify which

drugs will succeed

• The two key reasons for failure are:

• Lack of efficacy in humans (poor

preclinical prediction of human

diseases)

• Safety or toxicology issues

• Predictive human data is needed

much earlier, during preclinical testing

% o

f d

rug

s f

ail

ing

in

cli

nic

al tr

ials

Causes of clinical failure 1,2

1 Kola and Landis (2004) Nature Reviews Drug Discovery. 3, 711-716.

2. Paul, S.M. et al. (2010) How to improve R&D productivity: the pharmaceutical

industry’s grand challenge. Nature Reviews Drug Discovery 9, 203-214.

The Unmet Need: Reducing Clinical Failures of Potential New Drugs


Constriction

↑ blood pressure

Relaxation

↓ blood pressure

0 min 10 min 15 min 20 min 25 min 5 min

Residual surgical tissue

(heart shown here but can be a range of tissue types)

Tissue transported immediately to

laboratory

Scientist isolates the tissues of interest

The “living” tissues are exposed to drugs

Small blood vessels isolated from tissue sample

A Biopta project: patient > lab > translational data

Fresh tissues = predictive data


Can you predict the future?

- Identify an ‘unmet need’

- Who is the customer? (B2B and B2C)

- Will they pay for the solution?

Bob Kearns

“Radical innovation never comes from the market

leader”.

James Utterback, Harvard University/MIT

Why do you have an advantage?


Can you identify the idea/company being discussed and the person/company making the statement?

1. “Hardware is a multi-billion dollar industry.

The market for PC software is only a fifty million dollar industry, so go off and

become successful and we’ll talk to you.”

2. “The only problem with x is they just have no taste,” y famously said in 1996.

“They have absolutely no taste. And I don’t mean that in a small way, I mean that in

a big way, in the sense that they don’t think of original ideas, and they don’t bring

much culture to their products.”

talking about

talking about


• We identified customer pain/unmet need in the market

• We identified possible technical and logistical solutions

• We had some of the skills to deliver such solutions

• But we didn’t fully understand our customers:

• how did they wish to access the solution? • what was the sales process we needed to develop? • what was the buying process within pharma?

Establishing the business

…accelerating discovery


Specialist contract

research

services for drug

discovery

Enabling technologies

for the pharmaceutical

and biotechnology

industries

THE OPPORTUNITY 2002:


CUSTOMER PAIN….

• Most new chemicals selected as potential new drugs simply don’t work

• Many new drugs even when registered may not be wholly safe

• ‘…more than half of the side effects from pharmaceuticals are avoidable.’ FDA

• ‘…failure to gain sufficient understanding almost certainly leads to problems.’ Quintiles

• ‘…it is only with intact tissue or whole animals that verifiable detailed

biological activity can be assessed’. NABR

• ‘Cerivastatin’ lost Bayer 20% ($6 billion) of

market capitalization

http://www.bayer.com/en/index.php


Unique Solution – The Ethical Use of Human Tissue

• In the US there are over 5M operations for cosmetic purposes per annum ASAPS

• In England over 6M operations were carried out in 2003 NHS

• 100,000 - 200,000 tonnes of clinical waste produced annually in the UK DETR/FOE

• 72,000 per year in UK (26% growth) MINTEL/BAAPS

Proof of Concept in Man

Proof of Concept in Man

From plan sent to investors July, 2004

“The products will be beta-tested and on the

assumption that the tests are successful, will be

available for sale 16-18 months after completion

(of the investment).

Margins on the instrument are predicted at

between 50-60% depending on the location of the

sale.”

First round investment 2004:

develop and sell high value lab instruments

• The solution was useful, but the market was simply not big enough

• Moreover, the market dynamics were moving rapidly towards

outsourced research


Economic Drivers for Human Tissue Data

• Regulators are seeking to increase the use of human tissue testing in safety assessment2

• Pharma is increasingly outsourcing its R&D1,3,6

• Demand for non-animal alternatives and human tissues is growing rapidly 2,5

• Personalised medicine/ stratified medicine: human tissue research is essential to the

identification of patients who respond to particular drugs4

"If you don't use as close to the total physiological system that you can, you're likely to run into trouble". 6 William Haseltine, founder of Human Genome Sciences, one of the first biotechnology companies, which was sold to GSK for $3.6bn in 2012.

1 Paul, S.M. et al. (2010) How to improve R&D productivity: the pharmaceutical industry’s grand challenge. Nature Reviews Drug Discovery 9, 203-214. 2 www.nc3rs.org.uk/human-tissue-safety-pharmacology 3 Applied Clinical Trials (2012) volume 21, number 9, 24-25 4 Drug Discovery World Summer 2011, 47-56 5. Biobanking for Medicine: Technology and Market, 2013-2023. Visiongain. 6 Reuters Business Insight. Pharmaceutical R&D Outsourcing Strategies: An analysis of market drivers and resistors to 2010.

Human tissue research and

biobanks were named

as one of the 10 ideas changing

the world today


CEO and co-founder, Dr David Bunton

Chairman, Dr Kevin Moore OBE

Finance Director, Elaine Ferguson, CA.

Non-executive Directors, Gerry McGettigan, Gillian Lees, Ron James (also first Chairman)

Chief Operating Officer, Dr Karen Bingham Board observers: Judy Mackie, Derek Shaw (SE), Carolyn Smith, Geoffrey Thomson (Braveheart),

Kathy Kinder, Walter Riddell-Carre (TriCap), Federico Forcolini (private investor)

Importance of management team and advisors


Surgical residual tissues

Nontransplantable organs

• Biopta receives ethically donated fresh tissues via two main routes:

- Surgical residual tissues (mainly UK)

- Non-transplantable organs (mainly USA)

• Biopta’s facilities are open 24/7 to receive the tissues, dissect and conduct experiments – laboratories ( ) placed strategically to minimise transport time

• Difficult to replicate, even in big Pharma

Unique 24/7 Tissue Access Network: An Effective Competitive Barrier


• Focussed now as a contract research organisation; instrument sales stopped

• UK and USA networks affording ethical access to human fresh tissue specimens

• Master Service Agreements with Big Pharma • Proprietary techniques, including patented PM-1 instrument

• Good Laboratory Practice accreditation (one of only 125 companies in the UK and the only human fresh tissue lab worldwide)

• Unique assets: industry’s only database of human pharmacology in living tissues

Building a Competitive Advantage

Next step: further investment to broaden our service offering


Regarding the synergy effect of making Biopta Limited a wholly-owned subsidiary

(Supplemental information)

ReproCELL Inc.

November 18, 2015

Tokyo Stock Exchange JASDAQ 4978


About Biopta Limited

As of December 8, 2015, Biopta Limited will become a member of the Reprocell Group (wholly-owned subsidiary).

Company: Biopta Limited

Founded: 2002

Location: Glasgow, Scotland

Employees: 18 (group)

Biopta Inc. (United States) Subsidiary:

CEO: David Bunton

Biopta Limited receives human fresh tissues and organs from the UK and the entire US and utilizes them to provide a drug development support service（outsourcing) to major pharma manufacturers.

<1>


Biopta’s competitive superiority

Biopta has developed a pioneering drug development support service that encompasses the processes from human tissue procurement through to preclinical laboratory operations. The company has a strong competitive advantage and track record backed by its advanced technology.

Boipta’s main business: Drug development support service (CRO service) A CRO (Contract Research Organization) is defined as an organization that accepts contracts to undertake research (drug discovery experiments) on behalf of pharmaceutical companies in support of drug development.

Acquire human fresh tissues・organs

Prediction of drug efficacy and safety using GLP-compliant facilities and strong technological capabilities

Provider network to major pharma mfrs

Links with 14 medical

institutions in the UK

Delivery network from

entire U.S.

• With UK/US as key locations, has an established network that can timely acquire fresh tissues ・ organs.

• Has prepared equipment and systems compliant with GLP (Good Laboratory Practice), and has accumulated advanced technical capabilities and expertise in their operation.

※GLP: Guidelines that should be complied with to ensure reliability in preclinical investigations.

• Boasts a track record of transactions (in sales) with 8 of the top 10 Big-pharma companies that are expanding globally. Has formed a strong customer base.

<3>


Business Synergy between the ReproCELL Group and Biopta

Taking synergistic advantage of the business superiority of both companies, we will build a strong business portfolio as we move to enter regenerative medicine.

<4>

Business synergy

Provide pre-clinical testing

services utilizing iPS cells ahead of competitors

■ Cell products ■ Research reagent products

■ Drug mfg. support services

Human iPS cells

Human cells

• Reprogramming kits • iPS cell culture reagents • Antibodies • Additives

• iPS cells • iPS cell production service

• Frozen biological samples

• Human cell culture Reagents -For hematopoietic stem cells -For liver cells

World-class state-of-the-art IPS cell culture

technology

GLP level facilities and a high level of

CRO service know-how

• CRO Service • Fresh human tissues ・ organs

Promoted the building of the world’s

first regenerative

medicine platform

For Universities/ Research Institutes

For Pharmaceutical Manufacturers向け

Market expansion


Research reagents・Drug development support business

Expansion in Japan

Global expansion

Step１ Step２ Step３

Bu

sin

ess s

cale

2020 2015 2030

ReproCELL Group’s Growth Strategy

１ 2 3

<5>

Regenerative medicine business

Business synergy with Biopta

• Business expansion through entry to drug development support services

The Reprocell Group welcomes Biopta as we aim to further expand existing business while also aiming to become a leader in the high business potential field of regenerative medicine.

• Accumulation of clear / operational know-how of equipment and product standards required to make advances in regenerative medicine

• Promotion of R&D geared to regenerative medicine that makes use of the Group’s overall strengths


Biopta timeline

2002: Pharmacist Andrew Taylor invests via Linc

2004 and 2006: Braveheart and SE investment

Founders invest Directors invest Directors invest Directors invest

2008: Braveheart, SE,

TriCapital investment

2010: Braveheart, SE, TriCapital and

Individual Investors

2011: Biopta Inc. USA established

Formation

Sep 2002

SMART award Proof of Concept funding

EXIT Dec 2015


Summary

• Most companies can convincingly describe the unmet need

• Many have a suitable technical solution to the problem • Fewer understand how their customers wish to buy the solution

• The most successful figure out their business model rapidly and are willing to

adapt as conditions change (entrepreneurs not clairvoyants!)

Email: [email protected]


Thank You

the start-up ceo: clairvoyant or...

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