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Neovasculgen investment final 24.04.2014 (2)

Neovasculgen investment final 24.04.2014 (2)






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    Neovasculgen investment final 24.04.2014 (2) Neovasculgen investment final 24.04.2014 (2) Presentation Transcript

    • April 2014 HUMAN STEM CELLS INSTITUTE U.S. & Europe Markets Entry
    • 2 DISCLAIMER Certain statements in this presentation are forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby. Those forward-looking statements include, but are not limited to: • management’s assessment of the Company’s future results, including revenue, net profit(loss), profit(loss) per share, dividends, investments, capital structure, margins and other operating and financial results; • forecasts of the present value of future cash flows and related factors; • the Company’s plans, goals and tasks relating, among other things, to its products and services development; • the Company’s expectations with respect to improving its corporate governance practices; • the Company’s market position – as anticipated; • economic outlook and industry trends; • the Company’s expectations as to the sector regulation and assessment of impact of regulatory initiatives on the Company’s activity; • assumptions and prerequisites under the statements. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks include the risk of changes in political, economic and social conditions in Russia as well as changes in global economic environment, the risks relating to changes in industry regulation and the Russian legislation, the risk of changes in the Company’s operations and business prospects, the competition and other risks. For a more detailed discussion of these and other factors, see the Company’s Annual Report and other public filings. Many of these factors are beyond the Company’s ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.
    • 3 HSCI BUSINESS Human Stem Cells Institute (HSCI) is Russia’s public biotech company founded in 2003 •HSCI is engaged in drug discovery, R&D and marketing of innovative proprietary products and services. • Focus areas: − gene therapy − regenerative medicine (stem cell therapy & services) − genetic testing & clinics − reproductive genetics − drug development (biopharmaceuticals – within the international SynBio project) •Own R&D facilities in Moscow including laboratories of molecular genetics, cell cultures and cryo storage and biopharmaceutical production facilities
    • 4 HSCI HISTORY AT A GLANCE Launched Russia-wide network of advanced medical genetics centers under Genetico brand (genetic screening, PGD, NIPT, Reproductive tissue bank services). Launched the first in Russia Lab & Production Complex for the development of new products and services in the fields of regenerative medicine and medical genetics. Received marketing authorization for Neovasculgen® in Ukraine. Started sales of Neovasculgen® in Russia. Neovasculgen® is the first-in-class gene-therapy drug for treatment of Peripheral Arterial Disease (PAD), including Critical Limb Ischemia (CLI). Launched a project for genetic diagnostics and consulting aimed at early identification, prediction and prophylactic treatment of genetic disorders. Launched SPRS-therapy – an innovative cell technology which entails the use of autologous dermal fibroblasts to repair skin damage due to aging and other structural changes. HSCI became a co-investor in SynBio – multilateral international project supported by RUSNANO to develop new unique medicines (first-in-class and BioBetters) for the Russian and global markets. Acquired a 50% stake in Hemafund, the largest family сord blood bank in Ukraine. IPO on the MICEX, becoming the first Russian biotech to go public; raised RUB 142.5M (US$ 5M) for 20% of equity. Acquired a blocking stake in SymbioTec GmbH, a holder of international patents for development of new drugs for the treatment of cancer and infectious diseases. Foundation of HSCI. Launch of a family cord blood stem cell bank Gemabank. 2013 09.2012 01.2012 2011 2010 2009 2008 2003
    • HSCI CAGR = 35% • HSCI business demonstrates high growth rates, far surpassing the growth of Russian economy (35% CAGR for HSCI vs 1% CAGR for Russian GDP) • Business has become more diversified in terms of revenue drivers due to R&D efforts • New products and services drive the growth Note: (1) New products and services include Neovasculgen PAD drug, SPRS-therapy, genetic diagnostics and consulting (2) Revenue split is provided under IFRS BUSINESS ON A FAST GROWTH TRACK 5
    • 6 • In Russia: HSCI owns Gemabank - number 1 Russian private cord blood bank among the 10 banks in Russia; Bio-insuarance for families catering to their future medical needs. Russian market of cord blood stem cell banking is grossly underpenetrated (>0.28% in Russia) • In Ukraine: HSCI owns 50% stake in Hemafund, a leader in the Ukrainian market of cord blood stem cell banking • In Germany: HSCI owns over 15% share in VITA34 AG, a number 1 cord blood stem cell bank in Germany • Cord blood stem cell banking accounted for 50% of HSCI revenue for the full year 2013 under RAS • HSCI is a leading player in this market in Russia with a market share of approx. 50%
    • 7 Reprobank provides the services of personal reproductive cell and tissue storage as a form of bio-insurance as well as a sperm/oocyte donation. •Preservation of reproductive tissues (sperm, oocytes) is offered primarily to cancer patients who have reached reproductive maturity and are facing high doses of chemo or radiation therapy or the removal of organs involved in reproduction. •Reprobank also offers oocyte and sperm cryostorage services for healthy women and men. This service provides the opportunity to make use of assisted reproductive technologies in the future and give birth at a later age and thus avoid the risk of infertility. •Reprobank organizes selection, cryopreservation and storage of donor sperm and oocytes for couples suffering from infertility. An important advantage of Reprobank is the thorough testing of the donors – from psychological tests to genetic screening. •HSCI also provides clients with access to the collection of reproductive tissues of California Cryobank (USA) - one of the world's largest sperm banks.
    • 8 GENETICO – a brand for a Russia-wide chain of medical genetics clinics & testing lab •Target custmers - adults and children, including newborns; couples in pregnancy planning; people from families with a history of inherited disorders or having a child suffering from genetic disease; pregnant women, etc. •Services aimed at early identification, prediction and prophylactic treatment of genetic disorders. •Key services include Ethnogene, PGD, Prenetix: Ethnogene - medical genetics consultations based on genetic screening using HSCI’s proprietary DNA array to simultaneously test for the presence or carrier status of more than 60 monogenic inherited diseases and also predisposition to the development of several prevalent multifactorial disorders. PGD (Preimplantation Genetic Diagnosis) entails testing of developing embryos for monogenic inherited diseases and chromosome abnormalities during an in vitro fertilization (IVF) cycle. Prenetix is a non-invasive prenatal diagnosis (NGS) of fetal chromosome abnormalities followed by a genetic consultation. The global DNA sequencing market is forecast to grow to US$6.6 billion over the year 2016 at the compounded annual growth rate of 17.5%
    • SPSR-therapy is a Service for Personal Regeneration of Skin based on innovative technology of applying autologous dermal fibroblasts to correct skin damage due to aging and other structural changes •Аuthorized by the Russian healthcare regulator in Dec 2009, launched in Russian in January 2011; provided through clinics of aesthetic medicine; clients are primarily in Moscow but there are some in the regions as well. •Represents a a set of personalized diagnostics and treatment procedureshelps to improve skin appearance (to increase its thickness and elasticity, to reduce the number and depth of wrinkles). 9 • Average price for SPRS set of services in Moscow clinics: ~US$ 10,000 • As of Dec 2013, total number of patients: 356 In future the Company plans to launch this innovative service internationally. The PCT application was published in April 2013. 2014 – US Patent obtained (“A method of determining tissue regenerative ability of the skin”). − Diagnostics of the condition of the patient’s skin (analyzing the regenerative and proliferative potential of the patient’s dermal fibroblasts) − A therapy course using a cell product containing the patient’s own dermal fibroblasts − Long-term storage of the patient’s skin fibroblast culture in cryogenic bank Accounts for 5% of HSCI’s total revenue (FY 2013 RAS results)
    • HSCI 10 CAPITAL MARKET ACTIVITIES - IPO In December 2009 Human Stem Cells Institute conducted an IPO on the MICEX (ticker: ISKJ) HSCI’s IPO opened trading on the iIM (Innovation & Investment Market) – a new exchange sector created as a platform for innovative and growing companies. Today MICEX is part of the Moscow Exchange. •HSCI placed 15 million ordinary shares (20% of increased share capital): − Offering price – RUB 9.5 per share − Amount raised – RUB 142.5 million ($ 4.8 million) − Over 300 new shareholders at the IPO •HSCI went public having only one product in its portfolio (Gemabank) and reached IPO Mcap of US$ 23 million. After 5 years (in Dec. 2013) HSCI’s market cap increased up to US$ 45 million with a wide range of products and services in the portfolio. •As of Feb 2014, there were 1,091 shareholders registered, free float was 20% of the total share capital. ISKJ vs MICEX : Jan 2012 – March 2014 ISKJ vs MICEX INNOV : Jan 2012 – March 2014
    • 12 STRATEGY DISCUSSION Evolve into domestic and international markets by capitalizing on key competencies, logistics and marketing experience • Development of cell-based services in Europe and the United States: − Cord blood banks − Reprobank − SPRS-therapy • Development of Neovasculgen®, a gene-therapy drug for treatment of PAD (peripheral arterial disease), in the the markets of: −The United States: кеy strategy in the USA in the course of 5-6 years - to conduct pre- clinical and clinical trials and obtain FDA approval for Neovasculgen® −China • Introduction of other Neovasculgen® uses for treatments of different diseases to the Russian market (to implement new pre-clinical studies and clinical trial protocols in order to expand the range of indications for applying Neovasculgen® (other nosologies in addition to PAD, including cardiovascular diseases, i.e. IHD). Strategy of introducing Neovasculgen into other geographical markets may carry only regulatory risks as risks of clinical trials failure are virtually zero due to the proven efficacy of the drug in Russia
    • HSCI 13 Neovasculgen® is the first-in-class gene-therapy drug for treatment of Peripheral Arterial Disease (PAD), including Critical Limb Ischemia (CLI) •Gene therapy represents a potential shift in the paradigm of medical care – hence, market potential is enormous •Pre-clinical studies and clinical trials were conducted in Russia in 2009-2011, the drug was included in the State Registry of Medications as of September 28, 2011, marketing authorization obtained in Dec 2011; sales started in Sep 2012 •Product sold in the lyophilized form; the course comprises 2 sequential intramuscular injections with an interval of 14 days •Has a long-term therapeutic effect (at least, over 2 years) with no adverse effects or complications observed •HSCI manufactures Neovasculgen® on contract basis in Russia • In 2013 (under RAS), Neovasculgen® accounted for 41.5% of total revenue • HSCI forecasts sales of Neovasculgen® in Russia may reach RUR 1.5 billion by 2017 (after activated reinbersment)
    • HOW DOES IT WORK? 14 Therapeutic angiogenesis • Neovasculgen® is a drug whose action mechanism – therapeutic angiogenesis – introduces a new approach to treating ischemia • The drug contains the gene of the Vascular Endothelial Growth Factor (VEGF) embedded in a plasmid vector (carrier) • VEGF acts through receptors on endothelial cells and promotes endothelial cell proliferation and migration, which ultimately stimulates the growth and development of new capillaries and possibly, blood vessels • Clinical efficacy of the drug has been demonstrated on 144 patients in clinical trials. Another 250 patients were included in a post-marketing study – the results will come out in 6 months • The drug has much potential for use in treating other conditions where the development of collateral blood flow is beneficial (other nosologies beyond PAD/CLI, including cardiovascular diseases)
    • PERIPHERAL ARTERIAL DISEASE (PAD) PROBLEM 15 • PAD is characterized by a reduction of blood flow to the lower limbs due to atherosclerosis • Complications of PAD include: − Tissue loss (ulcers, gangrene) − Sepsis − Acute limb ischemia − Myocardial infarction (MI) − Stroke − Death • Mortality rate over 5 years is 32%. Cost of treatment - as high as cancer treatment • Annual cost to the U.S. economy - between $164 and $290 billion (www.thesagegroup.us) PAD Incidence Depending On People’s Age Note: red columns — women in developed countries, blue – men in developed countries, light red – women in developing countries, light blue – men in developing countries • Increasing age correlates with increased PAD risk • Aging population in developed countries are afflicted more than in developing countries
    • TARGET CONSUMERS AND POTENTIAL MARKET SIZE HSCI 16 • Target consumer group for Neovasculgen® - people aged over 40 suffering from atherosclerotic blockages in the lower extremities (Fontaine II-III) • According to Cvrg Market Strategies, over 10 million people in the U.S. are now suffering from PAD (over 17 million according to The Sage Group) • Diagnosed incidence is only 3.6 million people in 2013, less than 40% of total number of patients as more than 50% of PAD patients are asymptomatic PAD Incidence in the U.S. in million people RED – Intermittent Claudication; GREEN –l Asymptomatic CVrg Market Strategies,Peripheral Arterial Disease, 2013 PAD Incidence (In Million People) • Huge upside potential to the diagnosed incidence if efforts to screen for PAD are successful
    • TARGET CONSUMERS AND POTENTIAL MARKET SIZE — Cont. HSCI 17 Neovasculgen has a huge sales potential in the U.S. market • Diagnosed PAD Incidence in the U.S. – 3.6 million people • Of them, 3.4 million are suffering from atherosclerosis (95%) • Of them, 1.03 million (30%) have intermittent claudication of moderate or severe stage • Of them, 667 000 people (67%) are suffering from combined aorto-iliac and femoropopliteal disease – potential customers who may be prescribed Neovasculgen
    • PAD: EXISTING COMPETITOR ANALOGS 17 •Only two drugs are approved for treatment of intermittent claudication – Pentoxyfylline and Cylostasol •Pentoxyfilline is hardly used as it is not considered to be effective •Cilostazol has been shown to be of benefit in improving pain-free walking distance (PFWD) in people with IC but not every patient responds to Cylostasol •Cylostazol has been shown to improve absolute claudication distances by 50–100% •The withdrawal of cilostazol treatment at 24 weeks resulted in a deterioration of walking distances CVrg Market Strategies,Peripheral Arterial Disease, 2013 Neovasculgen® has been shown to improve PFWD, a mean change in absolute claudication distance from baseline of 135.3 m up to a mean distance of 393.4 m (2.9 times improvement) at 24 months. Patients receiving Neovasculgen® reported Quality of Life improvements. It is suggested that the drug's mechanism of action can provide an even longer effect – patients follow up will continue over the course of five years from the initial treatment. Study publication is available. P F W D m et er s 0 6m 12m 24m Neovasculgen – long-term effect – over 2 years Cylostazol – short-term effect (no more that 6 months)
    • 18 COMPETITOR THERAPIES UNDER DEVELOPMENT • There are a number of competitor gene therapies currently under development • Companies developing such therapies include AnGes, Sanofi,VM Biopharma, Juventas Therapeutics, Multigene Vascular Systems, etc. • Stages of clinical development range from Phase I to Phase III • Comparison of efficacy of these therapies has been made with that of Neovasculgen® • Detailed information on various gene therapies under development is provided in the Appendix • None of PAD drugs currently in various phases of clinical trials has shown efficacy similar to that of Neovasculgen®
    • NEOVASCULGEN IP DEVELOPMENT 19 • Patent applications take a comprehensive approach • Encompasses multiple facets and uses of the invention • Freedom-to-Operate and ability to obstruct competitors Patent / Application number Date Title/License №2297848 / 2005113934 issued 05/11/2005 Genetic plasmid VEGF… (licensed from Laboratory of Cell Technology) 2012137126 Pending Strain of microorganism Esherichia coli, DNA-producer pCMV VEGF 165, Storage method for DNA, Pharmaceutical composition for stimulation of angiogenesis and its uses PCT/RU2013/000669 Pending Pharmaceutical composition for stimulation of angiogenesis
    • NEOVASCULGEN KEY PROJECT TEAM 20 Arthur Isaev, CEO Graduate of the Rostov Medical Academy, MBA from the Moscow International School of Business. Founder of the Human Stem Cells Institute (HSCI) and one of the first private cord blood banks in Russia - Gemabank. Co- investor in Yandex projects in Russia. In 2009 conducted HSCI's IPO on the MICEX (ticker: ISKJ) and turned HSCI into one of Russia's leading biotech companies with a wide range of products and services. Also made successful investments in cord blood banks in Europe. Winner of the Entrepreneur of the Year 2012 Award in Russia conducted by Ernst & Young. Irena Tsyrlova, Project Manager, MD,Ph.D Graduate of the Novosibirsk State University Medical School, Ph.D from Moscow Institue of Immunology. Conducted research in Christie Hospital and Paterson Institute for Cancer, Manchester, UK, worked at Terry Fox Lab,Vancouver, Canada, in cooperation with Dr. Connie Eaves, founder of StemCell Technology (www.stemcell.com). Irena worked at Wellstat Therapeutic Corporation (WTC) from 2001-2013, where she was in charge of pre-clinical development and participated in clinical trials. Has strong experience in bringing new drugs to the market in the U.S. - WTC sold license for novel diabetes drug candidate after successful phase II clinical trials to Sanofi-Aventis for US$350 million. Maxim Tvisher, Head of Production Vice President of Reproductive Genetics Institute (2825 N.Halsted Str. Chicago, IL60657).
    • NEOVASCULGEN PROJECT TIMELINE AND REQUIRED INVESTMENT Total investment needed to complete Phases I-III and start sales of Neovasculgen® in the U.S. market is estimated at US$ 62 million 21 2014-2015 2016-2017 2018-2019 2020-2021IND filed Phase I 20 patients Phase II 320 patients FDA approval $3M - preclinical $15M – Phase I-II $44M – Phase III Animal models Pharmacokinetics Safety assessment Pharmacology Phase I Phase II Phase III Phase IV Pre-Clinical 2014-2015 Clinical 2016-2017 2018-2019 Post-marketing 2020-2021 Phase III 200 patients
    • NEOVASCULGEN EXIT OPTIONS 23 • Exit through sale of license for production and distribution of Neovasculgen® to interested companies (e.g.Big Pharma) • Possible timing options: – After successful completion of clinical trials – After obtaining FDA approval • LOW risks of not obtaining FDA approval due to clinical results failure as efficacy of the drug therapy has been proven in Russia Traded Comparables Biotech and Gene Therapy Companies • Clearly, there is a strong interest among investors for gene therapy drug candidates, as potential market for such drugs is enormous • Companies in the gene therapy and biotech sector trade at exceptionally high multiples In US$, million Name of Company Ticker EV Revenue 2013 EBITDA 2013 EV/Sales EV/EBITDA Company description Biomarin BMRN US 9 390,0 548,0 NA 17,1 NA Developes gene therapy drugs BlueBird Bio BLUE US 333,2 20,2 NA 16,5 NA Developes gene therapy drugs UniQure QURE 158,5 3,8 NA 41,6 NA Developes gene therapy drugs Alexion PharmaceuticalsALXN US 28 190,0 1 550,0 598,6 18,2 47,1 Developes gene therapy drugs Intrexon Corporation XON US 2 150,0 23,6 NA 91,3 NA Biotech company Amgen Inc AMGN US 103 740,0 18 680,0 7 350,0 5,6 14,1 Biotech company Biogen Idec Inc BIIB US 68 900,0 6 930,0 3 020,0 9,9 22,8 Biotech company Gilead Sciences Inc GILD US 109 950,0 11 200,0 4 870,0 9,8 22,6 Biotech company MEDIAN 16,8 22,7 Source: Company websites, Bloomberg, YahooFinance, HSCI own estimates
    • 24 APPENDIX
    • 25 Drug candidate Gene Therapy Gene Company Stage of clinical development Comparison to Neovasculgen with verified on 400 patients efficacy CollategeneTM HGF plasmid AnGes Phase 2b Efficacy not shown VM202 HGF plasmid ViroMed Co., Ltd. VM Biopharma Phase 2b Efficacy not shown JVS100 SGF1 plasmid Juventas Therapeutics, Inc Phase 2a Efficacy not shown NV1FGF (XRP0038) FGF plasmid Sanofi Phase 3 finalized 2013 No efficacy demonstrated COMPARISON OF COMPETITOR THERAPIES WITH NEOVASCULGEN
    • COMPARISON OF COMPETITOR THERAPIES WITH NEOVASCULGEN 26 Drug candidate Cellular Therapy Cell Type Company Stage of clinical development Comparison to Neovasculgen with verified on 400 patients efficacy MarrowStim PAD Kit BMC + device autologous Biomet Inc. Phase 3 Pain of bone marrow extraction; Older patients have less BM cells; Efficacy not shown X-myelocell BMC expanded autologous Aastrom Biosciences Phase 2 High cost, 14 days culture. Older patients have less BM cells; Efficacy not shown PLX-PAD Placental expanded allogeneic Pluristem Ltd. Phase 1 Phase 2 1) No ownership for IP. 2) Immunosuppression needed 3) Efficacy not shown BMAC BMC concentrated autologous Harvest Technologies Phase 3 Older patients have less BM cells; Efficacy not shown MultiGeneAngio Endothelial autologous MultiGene Vascular Systems Phase 2 Older patients have less cells; Efficacy not shown
    • 27 Human Stem Cells Institute, OJSC Postal address: P.O. box 373, Bld. 2, 3 Gubkina Str., Moscow 119333, Russia Artur Isaev, Founder and CEO Tel: +7(495) 646-80-76 E-mail: art.isaev@gmail.com Svetlana Samoylova Director for Investor Relations Tel.: +7(495) 646-8076 (ext.180) Mob.: +7 (963) 679 35 08 E-mail: ssamoylova@hsci.ru Dmitry Krasotkin Analyst Mob.: +7 (916) 657 38 74 E-mail: krasotkin@nextgene.ru www.eng.hsci.ru CONTACTS