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Hip Replacement Stem Cell Coating Business Plan-Hipsters R Us

A business plan for a startup focused on developing a stem cell coating to be used on hip replacement prosthetics. We outlined the technology to be used, regulations to be followed, and financials for the early development of the company. We also detailed the necessary quality requirements for a quality product.

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Hip Replacement Stem Cell Coating Business Plan-Hipsters R Us

  1. 1. Hipsters R Us510 Sansome St. Suite 310 San Francisco, CA 94111 Phone: 415-398-4123 Email: contact@hru.com Web: hipstersrus.com
  2. 2. Mission: Our stem cell therapies give patients a new level of comfort, improve outcomes, and reduce costs. No pain, just gain. Hipsters R Us
  3. 3. Ronita Mukherjee CEO and President Wendy Chen CFO Carlos Damas VP, Operations John Hyun Min VP, R&D Jessica Lee Director, Global Marketing Hipsters R Us
  4. 4. Jay Malmo PM, Regulatory & Quality Sagar Desai PM, Engineering Neelam Patel Director, ClinicalAffairs Mingju Cao PM, Manufacturing Hipsters R Us
  5. 5. Clinical Needs Hipsters R Us 1st Surgery After age of 60+, OA affects over 4.3 million adults and is one of the most costliest diseases to the US healthcare system. 2nd Surgery After 10-12 years, currently a 2nd surgery is required 3rd Surgery Sometimes even a 3rd after 5 years depending on the patients motility
  6. 6. Business Plan Hipsters R Us Ronita Mukherjee, CEO
  7. 7. Executive Summary and Goals • Hipsters R Us is a medical device company that focuses on intelligent artificial hip prostheses that will increase patient comfort, longevity of the device inside the body, and minimize the risk of complications associated with artificial joint daily wear as well as surgical insertion. We intend to implement the use of stem cells as a novel biocompatible material such that it lasts longer than 10 years, allows for bone/device hybridization and is bio-degradable. Goals: -Enter the artificial hip joint market with a unique technology that provides a novel patient benefit - After launch, acquire a significant portion of the global market shares within a span of 10 years Hipsters R Us
  8. 8. Competitor Systems • Stryker Accolade II Hipsters R Us PureFix HA Coating – Accolade II features Stryker’s PureFix HA coating applied proximally which has more than 15 years of clinical results in a different stem. Corail® Total Hip System now has the most extensive experience with a hydroxyapatite (HA) coated stem. J&J Corail® Total Hip System
  9. 9. Market Competitors • Stryker • Trident Acetabular Cup System • Tritanium Primary Acetabular Shell Hipsters R Us Trident Ceramic Acetabular Tritanium Primary Acetabular Shell https://stryker.com/en- us/products/Orthopaedics/HipReplacement/Acetabular/TritaniumAcetabularShe ll/index.htm#
  10. 10. Market Competitors • Depuy Synthes • Porocoat Porous Coating • Consensus • CS2 Acetabular Cup System Hipsters R Us http://www.depuy.com/healthcare-professionals/product-details/porocoat-porous-coating http://www.consensusortho.com/index.php/consensus-hip-systems/cs2-cup-system/
  11. 11. The Superior KGI Stem System® Hipsters R Us -Advanced artificial hip prosthesis design -HA and mesHSC coating -Porous surface ensures bone stability - Made of titanium alloy, increased durability - Due to stem cell differentiation, less chance of rejection from the body -Cost-effective and equivalent rehabilitation time
  12. 12. Prototype Drawings Superior KGI Stem Hipsters R Us 1 2 3 4
  13. 13. Hip Joint Physical Specifications • Head Options: Hipsters R Us Wall thickness at rim (mm) Surface roughness (μm) Mean deviation of roundness (μm) Head Cup 3.83 0.028 4.1 2.6 Profile Length(mm) Neck Angle Specifics 7-21 varied 132°, 127° Lateralized/or not Coating Size Calcium Phosphate 1 micron Stem Cells >1 micron HA Coating 1 micron Femoral Head Dimensions Femoral Stem Requirements Coating Requirements Acetabular Cup Requirements
  14. 14. Marketing Plan Hipsters R Us Jessica Lee, Director of Global Marketing
  15. 15. MARKET TREND Hipsters R Us • Osteoarthritis: – leading cause of hip replacement surgery –Currently, 43 million patients –67 million adults by 2030 –2/3 of patients are women http://www.cdc.gov/arthritis/data_statistics/national_nhis.htm There is a need for developing a cost-effective implant technology and improving patient outcomes •Treatment Options: –Pharmacological agents –Hip replacement surgery
  16. 16. HIP IMPLANTS Hipsters R Us • 6% annual growth •$8.6B by 2016 •2/3 patients over 65 •Biggest growth in age 45-54 http://www.prlog.org/10868056-globaldata-hip-and-knee-implants-market-forecast- Global Implants Market ($m), 2009-2016 Market Share (%) by Company, 2009-2016
  17. 17. TIMLELINE TO MARKET Hipsters R Us ~1 year 3-6 year 9-36 months1-2 year Phase I & II •Opportunity & Risk analysis •Concept & Feasibility development Phase III •Verification & Validation phase Phase IV •Final Validation Phase V •Post-launch assessment We expect to reach the market in 7-11 years ★ Current position
  18. 18. LAUNCH STRATEGIES Hipsters R Us • Post-market surveillance from Y1 •Marketing effort from Y1 –Y1-3: Orthopedic surgeons and payors •Fully trained sales representatives •Emphasis on product quality, reduced healthcare expenditure, patient benefit –Y2-4: Direct-to-Consumer Marketing •Target specific groups of patients, patient families •Employ celebrities •End of Y4 –Possible acquisition of smaller brands –Gain market share –Product branding –Expand product portfolio 1 2 3 4 5 5 year Projection post-launch Post-market surveillance Focus: surgeons & payors Focus: DTC marketing Marketing effort Possible Acquisition
  19. 19. Hipsters R Us Assumptions: • FDA approval by 2021 • 10% Market share by 2026 • Revenues of ~$184,000,000 in 2021 • Device cost: $11,600 • Patients: ~15,800 in 2021 • Total surgeries in 2021: ~527,000 0 10 20 30 40 50 60 70 80 2021 2022 2023 2024 2025 2026 UnitsSold(Thousands) Year Units Sold per Year 0 100 200 300 400 500 600 700 800 2021 2022 2023 2024 2025 2026 TotalSurgeries(Thousands) Year Total Surgeries Expected by Year 0 400 800 2021 2022 2023 2024 2025 2026 Revenues ($ Millions) Year Revenues by Year
  20. 20. Product Development Hipsters R Us Carlos Damas, VP of Operations
  21. 21. INPUT OUTPUT INPUT=OUTPU T DESIGN INPUT DOCUMENT DESIGN OUTPUT DOCUMENT Tightly fitting joint system. Acetabular Cup – 3 screws ( 25-33mm(L), 3-4.5 mm (d) Ball (28-58mm(d)) Femur component (4 4.5 mm (d) cortex screws) Yes DI100 DO100 Coating should consist of materials that will allow bone ingrowth. Coating by layer by layer technique coats the acetabular component with hydroxyapatite tri-calcium phosphate, (coat depth 100nm – 1 micron), then Mesenchymal stem cells, which allow the ingrowth of bone Yes DI300 DO300 Should be comprised of metal alloys to increase durability in the body Forged Cobalt Chrome, Cobalt Chrome, Forged Titanium, and Cast Titanium that increases the products durability in the body. Yes DI600 DO600 Hipsters R Us
  22. 22. DI 100 & DO 100 Hipsters R Us http://mail.cmu.edu.tw/~jthsu/researches/research%20acetabular.htm http://www.radiologyassistant.nl/en/p431c8258e7ac3/hip-arthroplasty.html
  23. 23. Product Production Hipsters R Us http://gardenrain.wordpress.com/2009/12/22/ hip-joint-replacement/
  24. 24. HA Coating • Layer by Layer technique coating • Hydroxyapatite • Slow process, cheap. • IR spectroscopy • Verify the interaction • Scanning Electron • Measure the Depth Hipsters R Us http://newsoffice.mit.edu/2012/hip- implants-nanoscale-coating-0419
  25. 25. Stem Cell Coating • Adult Mesenchymal Stem Cells • Cultured and coat Require a surface for adherence • Differentiation and proliferation is halted • Packaged protective foam • Cells are frozen Hipsters R Us http://www.abdserotec.com/mesencyhmal-stem-cell-antibodies.html
  26. 26. Product Development Receive Joint Unit Coat with Hydroxyapatite & Tri-calcium Coat with with Stem Cells Freeze the cells Package Hipsters R Us
  27. 27. Clinical Plan Hipsters R Us Neelam Patel, Director of Clinical Affairs
  28. 28. Pre-Clinical Studies • Primary Goals • Stem Cell: Conduct multiple tests with SC’s both in vitro and animal to assess safety and efficacy of the specific cell line used • Implant: Evaluate implant, HA coating, stem cell coating, finished product for biocompatibility, short term + long term durability and biosafety • Tests: • Stem Cell: Structural/Histological parameters with Cell Imaging, tox kits for screening, MRI’s with tumor identification, biopsy • Implant: Chemical/Material analysis of metal alloys- Cobalt, Titanium, HA coating, polyetheline, packaging, stability, shelf life • Subjects for in vivo: Mice for SC animal assessments, Chimpanzees for both SC’s and Implants Hipsters R Us
  29. 29. Pre-Clinical Trial Principles • Outcome measurements for Stem Cells • SC characteristics, ID, differentiation and biocompatibility • Toxicology • address administration, concentration (justify based on the intended clinical use), migration, survival, engraftment, differentiation, and proliferation • Determine tox endpoints and NOAEL • Tumorgenicity • Tumor potential in immunodeficient mice to identify inappropriate cell proliferation and differentiation • Outcome Measurements for Implant • biocompatibility, durability, performance, risk assessment • Post-treatment follow up surveys and health assessments Hipsters R Us
  30. 30. Clinical Trial Summary Hipsters R Us Purpose Evaluate safety of Ocean hip implant system for treatment of end stage Osteoarthritis patients Study Design Randomized, Single Group Assignment, Controlled Control group: Healthy non-diseased individuals Primary Outcome Measures Swelling of hip joint, deterioration of joint function, skin allergic reaction Secondary Outcome Measures Quantitative changes in pain intensity, physical function improvement, subchondral bone edema, cartilage thickness Number of Patients Feasibility Trial: 10, Pivotal Trial: 50 Half with Inclusion Criteria End stage OA diagnosed by MRI Follow up Clinical: 14 days, 2 months, 6 months, 1 year, 18 months
  31. 31. Clinical Trials: Outcomes and Assessments Measurements of Outcomes • Pharmacodynamics studies to understand SC effects • SC Structural and histological assays with Imaging, microscopy, histological • Pharmacokinetic studies for SC behavior • SC parameters: Proliferation, Viability, Differentiation, Migration • Implant measure biocompatibility, degradation and performance with parameters modeled from preclinical studies Assessments of Data • Clinical efficacy • Use meaningful endpoints, identify concentrations for optimal therapeutic effect, evaluate duration, longevity, biocompatibility, compare to placebo • Clinical Safety • Risk of procedure for both SC and implant, long-term follow ups, risk analysis Hipsters R Us
  32. 32. Regulatory Plan Hipsters R Us John Hyun Min, VP of R&D
  33. 33. FDA Class III device Pre Market Approval (PMA) • FDA has very set standards for what is to be included in the PMA: 1) General Information – Device name, trade name, date of recommendation. 2) Indications of use 3) Precautions – Patients on medications or complications related to Device 4) Device Description – Materials and Sizing 5) Safety related issues – Adverse Effects on Health 6) Pre-clinical data on effectiveness - Worst Case Scenario Testing Hipsters R Us
  34. 34. Pre Market Approval Hipsters R Us
  35. 35. Timeline of Approval :FDA Clearance to Market the Device Letter to file->Pre-market Notification [510(k)]- Investigational Device Exemption (IDE)-> Pre-market Approval (PMA) • The Acetabular Cup can take anywhere from 5.5 years to 10 years from Concept and Design to Patient Access. Hipsters R Us
  36. 36. Package Insert • Device Description • Indications • Contraindications • Patient Selection Precautions • Possible Adverse Effects • Warnings and Precautions • Storage and Handling • Limited Warranty/Liability Hipsters R Us
  37. 37. Package Insert Cont. Hipsters R Us
  38. 38. Quality Plan Hipsters R Us Jay Malmo, PM of Regulatory and Quality Control
  39. 39. In-Vitro Stem Cell Engineering Collection Harvest Receive Cryogenesis Document Expansion T-Flask culture Build cell bank Modifications Measure parameters Document Identification Validate cell ID and type Quality testing Plan multiple lineage tests Differentiation Scaffold induced with specific components Validate differentiation Quality Biocompatibility with in-vitro models, molecule ID’s Biosafety with microarrays Hipsters R Us
  40. 40. Verification Tests for Design “We have an entire [Stem Cell] industry without a single quality- control standard,” Kevin Parker, Harvard Stem Cell Institute • In Vitro Quality Control Tests • Expansion: Growth/morphology/viability • Create master and working cell bank, ensure quality of SC’s • Assays: cell proliferation, differentiation, immune modulatory capacity, and gene and protein marker expression • Identity: Flow cytometry, qPCR, ELISA • Ensure cells are correct identity, perform multi-lineage differentiation assays • Differentiation: Osteogenic, adipogenic, chondrogenic • Measured through cytochemistry and gene induction associated with each cell type • Regenerative activity of SC: Biocompatability • Antiinflammmatory compounds, paracrine factors: (PCR/ELISA) • Ex factors: VEGF-α, IGF-1, EGF, keratinocyte growth factor, angiopoietin-1, stromal derived factor-1, macrophage inflammatory protein-1alpha and beta and erythropoietin • Biosafety: Copy Number Variation Assay with SNP • compare differentiated vs. non-expanded with SNP arrays, identify genomic insertions and deletions, identify potentially hazardous properties,, report variations per cell line. NGS can identify markers that could serve as identity/safety QC parameters for epigenetics Hipsters R Us
  41. 41. SC Upscale Manufacturing GMP • Cell Manufacturing (GTP) • Validate maximum production of MSC’s from donor, proper culture techniques and analytical methods identifying growth, concentrate on up-scaling to commercial • GMP-qualified serum with trays or t flasks to culture, but may be inefficient with commercial requirements • QC Assays and Instrumentation for Manufactured Scale SC’s • Cell Imaging (Cellavista from Synentec): Uses high-res images can handle large-scale • Cell status: cell number, confluence, size, morphology, fluorescence intensity, migration, toxicology • Phenotype analysis: Arrays, PCR, NGS • Identify genotypic characteristics of production-level SC’s, may be mandatory for FDA in future • General GMP guidelines • Hygine, controlled environmental conditions, defined and controlled manufacturing processes, clear instructions, operators trained, records made manual or automatically from instruments, distribution and manufacturing records of history, complaints with marketed products are examined • Manufacturing future directions • Explore Next-gen manufacturing with either serum-free workflow or through the use of bioreactors rather than traditional, possibly outsource with CMO Hipsters R Us
  42. 42. Manufacturing Facility + Validation Plan • All production will need to take place in clean room facility with designated wings that meet GMP/GTP requirements • Consideration of CMO to handle these requirements due to high start-up costs, faculty and operating costs • Materials for validation: Cell collection, seeding, harvesting, manipulation, passages, filing, packaging, transport and storage • Tests: acceptance criteria related to starting materials, SC design, SC manufacturing, additional coating components • Quality, robustness tests of materials, biocompatibility and biohazard Hipsters R Us
  43. 43. Manufacturing Facility Requirements Cleanroom facility, with GMP • Changing = Operators change • Materials = Long-term storage at controlled conditions • Available supplies = readily accessible short-term storage of materials • Staging room = Preparation of materials • Process room = manufacturing location for process, bioreactor/hood • Manipulation area = Separated room from the rest, allows for SC modification to be contained • QA/QC = verify and validate all steps, separated but needs access to • Engineering space = controls layout of all supplies, materials, etc. • Documentation = Storage of all written SOPs and historical information • Other support space = workspace, security, network, storage, training Hipsters R Us Very expensive, up to $500k Doesn’t count operating costs Possibly explore CMO’s
  44. 44. Hip Implant Packaging- ISO 11607, ISO 2248 and ISO 831840 Stems Shells Hipsters R Us
  45. 45. Sterility Cycle & Storage • the sterilization method used in the sterilization cycle is gamma radiation. Gamma rays generated by Cobalt 60 or Caesium 137 radionuclides; or accelerated electrons from an electron generator. • Radiation Validation: • Dose mapping study: Dosimeters are placed in products at contract sterilizer. • Determination of product bioburden:First, do bioburden test method validation • Verification dose resistance experiment • Dose is determined based on product bioburden. • Irradiate products at "sublethal" verification dose level. • Test the verification dosed samples for sterility. • Before sterility test, do B-F testing to validate test method. • Radiation sensitive colour discs applied to packaging, procedures to distinguish irradiated and non- irradiated materials, Variation in density of packaging should be addressed during validation • the sterility assurance level specification (SAL) or the probability of 1 in a million of a container being contaminated (10-6) is 10^-6 • Prosthetic components are sterilized by exposure to a minimum dose of 25 kGy of gamma radiation. • ISO 11137 standards • Store at 4 °C within a freezer Hipsters R Us
  46. 46. Label Inspection  Device Description  Indications for Use  Contraindications  Warnings  Precautions  MR Environment  Overview of Clinical Studies  Adverse Events  Principal Safety and Effectiveness Table  Patient Selection and Treatment  Directions for Use  Patient Materials Hipsters R Us
  47. 47. Product Development Phases (Risk) Hipsters R Us Feasibility Design Pilot Base Business Concept Product Risk Management- On-going Prelim. Risk Assessment
  48. 48. ISO 14875: FMEA Design Design Step/Input Function Potential Failure Mode(s) Potential Failure Effect(s) of Failure Sev Potential Cause(s)/ Mechanism(s) of Failure Occ Current Controls Det RPN Actions Recommended Department Responsible NewSev NewOcc NewDet NewRPN Embryonic Stem Cell use Improve biocompatibility of device Tumor development Hospitalization, Surgery, Cancer, irreversibility from treatment 8 ESC's are pluripotent, encouraging rapid growth 5 Blood test, Urine Tests, Medical Imaging 4 160 Evaluation of ESC's vs. Others, biocompatibility improvement verification, continual process development Design Engineers, Operations, QA/QC, 8 2 4 64 Stem Cell Culture Improve biocompatibility of device Tumor development Hospitalization, Surgery, Cancer 8 Local stem cell environment may influence tumorigenic potential 4 Blood test, Urine Tests, Medical Imaging 4 128 Evaluation of in-vitro culturing of SC's, biocompatibility improvement verification, continual design development Design Engineers, Operations, QA/QC, 8 2 4 64 Patient Records Provides information with cell culture use/design wrong cell culture choice or diagnosis limited biocompatibility, hospitalization, surgery 8 Limited or misinformation, unnecessary choice 2 SOP's for Patient Records, Diagnosis, Cell Culture Information 6 96 Evaluation of HHS/HIPPA regulatory requirements, ensure privacy and security are followed IT, Design Engineers, Operations, QA/QC, 8 1 6 48 SC Selection for coating (allogeneic /autologous) Improve biocompatibility of device Rejection of SC's in user Hospitalization, Surgery, Cancer 4 Autoimmune response, improper patient diagnosis/records, wrong SC line used 4 Blood test, Urine Tests, Medical Imaging 5 80 Evaluation of allogeneic vs. autologous SC's, biocompatibility improvement verification, continual process development Design Engineers, Operations, QA/QC, 4 2 5 40 Stem Cell Selection Improve biocompatibility of device SC's no longer function limited biocompatibility 3 Expiration of SC's, no preservation, SOP's not performed 2 SOP's for Patient Records, Diagnosis, Cell Culture Information 5 30 Evaluation of SC's vs other methods, biocompatibility improvement verification continual process development IT, Design Engineers, Operations, QA/QC, 3 1 5 15 SC Selection for coating (diseased vs. healthy donor) Improve biocompatibility of device Rejection of SC's in user, infection from harmful donor hospitalization, Surgery, Cancer, limited biocompatibility 8 Ethical Issues, Agent Infection, Biocompatibility Limited 5 SOP's for Patient Records, Diagnosis, Cell Culture Information 5 200 Evaluation of donors based on records, biocompatibility improvement verification, continual process development IT, Design Engineers, Operations, QA/QC, 8 2 5 80 Scaffold for SC attachment Biodegradability improves biocompatibility of AJ Rejection of AJ from scaffold limited biocompatibility, repair, surgery, replacement 6 Scaffold with SC's cannot degrade properly 3 Scaffold Testing Records, Medical Imaging, Bench Testing 6 108 Evaluation of scaffolds via bench testing, biocompatibility improvement verification, continual process development Design Engineers, Operations, QA/QC, 6 1 6 36 Hipsters R Us
  49. 49. ISO 14875: FMEA Process Design Step/Input Function Potential Failure Mode(s) Potential Failure Effect(s) of Failure Sev Potential Cause(s)/ Mechanism(s) of Failure Occ Current Controls Det RPN Actions Recommended Department Responsible NewSev NewOcc NewDet Stem Cell Culturing To produce stem cells for the coating Contamination by agents (virus, bacteria, fungi) Health harm to user, hospitalization, infection 9 Bad user handling, no sterile environment 2 Patient health reports, process sample detection methods 4 72 Ensure Patient Record organization, Cell culture SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training IT, Process Engineers, Operations, QA/QC, 9 1 4 Preservation of Stem Cells cryopreservation Cells lose preservability SC's are inefficient, coating loses function, biocompatibility decreases 2 Bad cryopreservation protocol, process not enforced 2 SOP's, process flow diagrams 6 24 Cryopreservation SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Process Engineers, Operations, QA/QC, 2 1 6 Storage of production materials Preserve materials, optimize process materials lose functionality Coating no longer efficient, device loses functionality 2 Neglect of SOP's, facility loses storage resources, lack of company enforcement 3 SOP's, process flow diagrams 6 36 Storage SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Process Engineers, Operations, QA/QC, 2 2 6 Cell Handling Procedures To ensure protection of cells from harm foreign agent enters cells, cells are exposed to humans SC's are inefficient, coating loses function, biocompatibility decreases, harm to user 5 Neglect of SOP's, lack of company enforcement, improper training 3 SOP's, process flow diagrams 5 75 Handling SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Process Engineers, Operations, QA/QC, 5 1 5 Patient Record Information For individual, improvement of biocompatibility for autologous SC use Patient receives wrong cell line Patient receives wrong SC line, biocompatibility decrease, user harm 8 Missing or incorrect patient record information 4 SOP's for Patient Records, Diagnosis, Cell Culture Information 6 192 Ensure Patient Record organization, SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training IT, Process Engineers, Operations, QA/QC, 8 2 6 Harvesting products from plasma To obtain stem cells from host/embryo contamination or transmission of foreign agent, inability to obtain product Health harm to user, infection, limited product yield 7 Limited technology for harvest, SOP neglect, Improper training for staff 2 Continuous yield measurements, tests for agents, acceptable CQA ranges 5 70 SC Harvesting SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Process Engineers, Operations, QA/QC, 7 1 5 Hipsters R Us
  50. 50. Biological Hazards Results of Risk Assessment According to ISO 14971 Hazard / Source of Risk Potential Failure Mode Potential Causes of Failure Harm for Patient, User When to Occur Sev Occ Det RPN Preventive Action Bio-burden / bio- contamination Stem Cells contaminate other tissue No GLP, SOP enforcement, SC’s cause innate immune response Tumor, products become unusable, cancer In use, Productio n 8 3 7 168 Evaluation of in-vitro culturing of SC's, biocompatibility improvement verification, continual design development Bio-incompatibility AJ Rejection Infection, bad donor, wrong cells, innate immune response Tumor, device breakdown, surgery, cancer In use 8 4 5 160 Evaluation of ESC's vs. Others, biocompatibility improvement verification, continual process development Incorrect output- substance/energy SC’s produce tumors SC’s not stable, regulated, location-specific (spreads outside cup) Tumor, device breakdown, surgery, cancer In use 8 4 6 192 Evaluation of allogeneic vs. autologous SC's, biocompatibility improvement verification, continual process development Incorrect chemical composition Cup faulty, Coating incorrect GLP not enforced, improper labeling Incompatible, Cup breaks down, replacement needed In use, Productio n 5 2 2 20 Cell culture SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Toxicity Toxic materials exposure to user No GLP, SOP enforcement, materials not properly stored/contained Chemical absorbed, hospitalization, tissue damage In use, Productio n 4 2 5 40 Storage SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Allergenicity Skin exposure to materials No GLP, SOP enforcement, materials not properly stored/contained Rash or other skin irritation for user In use, Productio n 2 2 3 12 Handling SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Mutagenicity SC’s cause tumorigenisis SC’s not stable, regulated, location-specific (spreads outside cup) Tumor, device breakdown, surgery, cancer In use 8 5 7 280 Evaluation of allogeneic vs. autologous SC's, biocompatibility improvement verification, continual process development Teratogenicity SC’s cause tissue malformations SC’s not stable, regulated, location-specific (spreads outside cup) Tumor, device breakdown, surgery, cancer In use 8 5 7 280 Evaluation of allogeneic vs. autologous SC's, biocompatibility improvement verification, continual process development Carcinogenicity SC’s cause uncontrollable growth SC’s not stable, regulated, location-specific (spreads outside cup) Tumor, device breakdown, surgery, cancer In use 8 5 7 280 Handling SOP evaluation, continual process improvement, QA/QC ranges are acceptable, Improve training Hipsters R Us
  51. 51. Financial Plan Hipsters R Us Wendy Chen, CFO
  52. 52. Opportunity & Risk Analysis • Business model • Financial review • Market analysis • Quality plan • Manufacturin g Plan Concept & Feasibility • Early concept prototype • Initial regulatory strategy • Initiate QMS • Preclinical test Design & Development • Design verification and validation • FMEA • Prototype • Regulatory strategy update • Biocompatibilit y testing Product Launch Preparation • Branding • Final design/docu mentation • Manufacturin g scale up • Process validation • Sales training Product Launch & Assessment • Continuous sales effort • Sustaining engineering • Quality audits • Process improvement • Market surveillance Gate 0 Product Definition Acceptance Gate 1 Initial Design Acceptance Gate 2 Final Design Acceptance Gate 3 Product Launch Acceptance Development Phase and Functional Activities $2.5 million $40 million Hipsters R Us
  53. 53. 5 Steps in hip implant manufacturing Item Price Manufacture of alloys and raw materials Forged Cobalt Chrome Cast Cobalt Chrome Forged Titanium Cast Titanium Polyethylene $41/pound $25/pound $16/pound $6/pound $9/foot Casting or forging intermediate forms Forged Cobalt Chrome Cast Cobalt Chrome Forged Titanium Cast Titanium $80/piece $60/piece $30/piece $100/piece Machining and finishing 20 Hours of direct labor Coating -Hydroxyapatite -Stem cell $125/piece $1830/dose Packaging, Sterilization -ϒ radiation is used for sterilization -Packaging $5/part $20/box Manufacturing Cost • BOM: $266.26/unit • Outsourcing: $532/unit • Final Cost: $2362/unit (with stem cell) Part Number Part Name Price/ each Amount needed Unit Cost Revision Unit of Measure Procurement Type 20-0001 Ti64 grade 5,Ti–6wt%, Al–4wt%V (10"-12") 115.94 0.01772 kg 2.9 A each OTS 20-0002 Titanium(IV) oxide (Coating) 100g 213 1 g 2.13 A each OTS 30-0001 Deionized Water-Type II -64 oz 29.99 5 oz 2.34 A each OTS 30-0002 Acetone -1 Liter 101.82 5 oz 15.06 A each OTS 30-0003 Methanol -4 Liter 98.32 5 oz 3.63 A each OTS 40-0001 99.999%Argon Gas 55 - - A each OTS 50-0001 StemPro®BM Mesenchymal Stem Cells-5 x 10^6 cells 2180 300,000 cells 109 A each CUM 50-0002 MesenCult™-SFCulture Kit-400 mL 524 100ml 131 A each OTS 60-0001 QuartzTube 0.1 1 0.1 A each OTS 60-0002 SiCSandpaper 0.1 1 0.1 A each OTS
  54. 54. Outsourcing Vendors Hipsters R Us
  55. 55. year 1 year 2 year 3 year 4 year 5 year 6 Product revenue 0 0 0 0 0 0 Licensing revenue 100,000 200,000 300,000 400,000 500,000 700,000 Gross Margin 100,000 200,000 300,000 400,000 500,000 700,000 Total Operating Expenses 496000 506000 551000 658000 748500 998500 Net Income -396000 -306000 -251000 -258000 -248500 -298500 -500,000 -300,000 -100,000 100,000 300,000 500,000 700,000 900,000 1,100,000 Projected Income Statement (Year 1-6) year 7 year 8 Product revenue 183,558,400 259,422,400 Licensing revenue 800,000 1,000,000 Gross Margin 146,982,112 207,598,632 Total Operating Expenses 1,179,000 1,199,500 Net Income 102,062,178 144,479,392 0 50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 Projected Income Statement (Year 7-8) Assumptions: • Licensing Revenue • Product Launch in year 7 • Positive income • Capture 3% Market in 2021, 4% in 2022 • Value added pricing strategy • $11,600/device Financial and Sales Projections
  56. 56. Funding Source and Fund Raising Funding Source Initial Investment • Founders, Friends, Family, and Fool • $355k Grants • Stem cell technology in tools and technology category • $500k to $1.1m Angel Investment • $1-2m Venture Capital • Multiple VC • Funds will be released based on milestones Market and product requirement Engineering prototype Validation/Clinical Unit Regulatory approval (transfer to production) Commercial product • $40m 1% 5% 2% 92% Initial Investment Angel Investment Government Grant Venture Capital Exit Consideration: 1. Acquisition 2. IPO 3. Acquisition after IPO Hipsters R Us
  57. 57. Conclusions • Only hip implant system on the market that utilizes stem cell coatings to help stabilize the femoral piece and the Acetabular cup into the bone • Antimicrobial properties limit risk of infection to patient • Will last longer, be more durable and provide a more comfortable wear for the patient • With only one required surgery, it is cost effective and will save the patient and healthcare system money Hipsters R Us

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