Regenerated Organs for Transplant NASDAQ: HART
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of such words as “will,” “guidance,” “objectives,” “optimistic, “ “future,” “expects,” “plans,” “estimates,” “continue,” “dri ve, ” “strategy,” “potential,” “potentially,” “growth,” “long - term,” “projects,” “projected,” “intends,” “believes,” “goals,” “sees,” “seek,” “develop,” “possible,” “new,” “emerging,” “opportunity,” “pursue” and similar expressions that do not relate to historical matters. Forward -looking statements in this presentation may include, but are not limited to, statements or inferences about the Company’s or management’s beliefs or expectations, the outlook for the life sciences industry and the field of regenerative medicine, the Company’s current products or products in development, the Company’s business str ate gy, the Company’s anticipated regulatory approvals, future revenues and earnings, the strength of the Company’s market position, business model and intellectual property rights, opportunities or potential opportunities in the field of regenerative medicine and related markets, the success of existing treatments utilizing the Company’s products, the market demand and opportunity for the Company’s current products, or the products it is developing or intends to develop and the Company’s plans, objectives and intentions that are not historical facts. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results , performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause the Company’s actual results to differ materially from those in the forward -looking statements include th e Company’s ability to obtain regulatory approvals, including in the U.S. and the EU , for the Company’s products, including its HART -Trachea; the succ ess of the Company’s clinical trials and product development programs and the number of patients who can be treated with its products; the amount and timing of costs associated with the Company’s development of its products; the Company’s failure to comply with regulations and any changes i n regulations; the Company’s ability to access debt and equity markets to raise or obtain needed funding; the Company’s failure to effectively commercialize or market our products on a timely basis or at all; lack of demand or decreased demand for the Company’s products; the current size or anticipated size of the regenerative medicine market; the existence and size of opportunities in the regenerative medicine market; the Company’s fina ncial position and ability generate revenues and profits; unpredictable difficulties or delays in the development of new technology; the Company’s coll aborators not devoting sufficient time and resources to successfully carry out their duties or meet expected deadlines; the Company’s ability to att ract and retain qualified personnel and key employees and retain senior management; the Company’s inability to operate effectively as a stand -alone, publicly traded company; the actual costs of the Company’s separation from Harvard Bioscience may be higher than expected; the availability a nd price of acceptable raw materials and components from third-party suppliers; difficulties in obtaining or retaining the management and other human resource competencies that the Company needs to achieve its business objectives; increased competition in the field of regenerative medicine and the financial resources of the Company’s competitors; the Company’s ability to obtain and maintain intellectual property protection for its device and product candidates; the Company’s inability to implement its growth strategy ; the performance of the Company’s collaborators; public perception and ethical issues surrounding the use of cell technologies; the Company’s liability exposure relating to our products; the Company’s abi lity to operate without infringing on others’ intellectual property; potential costs of any lawsuits to protect or enforce its intellectual property; economic, political and other risks associated with international revenues and operations and additional costs of complying with changes in regulatory rules applicable to public companies; the Company’s ability to achieve the benefits of its planned separation from Harvard Bioscience, Inc., plus factor s described under the heading “Item 1A. Risk Factors”, in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2014 or described in the Company’s other public filings. The Company’s results may also be affected by factors of which the Company is not currently aware. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Except as otherwise noted herein, any forward looking statements represent our estimates as of August 14, 2014 and should not be relied upon as representing our estimates as of any other date. 2
Investment Highlights • Regenerated organs for transplant • initially for trachea cancer / trauma • Six successful human transplants using our scaffolds • $770m per year market in developed world • Deep pipeline: collaborating with MGH, Mayo, Texas Heart and Karolinska on lung, esophagus, heart valves and heart • Defensible: patents, orphan exclusivity, first-mover • Capital efficient: small trials, rapid approvals • Committed to shareholders and patients – CEO owns 5% 3
Financial Snapshot • Full NASDAQ listed: HART ticker symbol • Market cap. approx. $62m, $8.02 price (Aug.14, 2014) • $10.1m cash on-hand (June 30, 2014) • 100% spun off from Harvard Bioscience November 1, 2013 • Approx. 2 years of capital (from spinoff) at current burn • Approximately 8m shares outstanding, no debt, no warrants, no preferred stock • Top institutional holders (June 30): Granahan, DFA, Blackrock, Vanguard, Punch, Hussman, Royce • Two analysts: Maxim ($19 PT) and Summer Street ($24 PT) 4
HARVARD APPARATUS 5 REGENERATIVE TECHNOLOGY
Clinical Success With Regenerated Tracheas • Six patients to date, using our scaffolds and bioreactors • Three previous patients, using our bioreactors • Four of six alive at August 15 • The two that did not survive died of unrelated causes (car accident, unrelated surgery) • Three surviving patients recently passed 1 year anniversary post-surgery. The fourth was 2+ months post-surgery at August 15. • The first US transplant (FDA approved IND) 6
The HART-Trachea • Synthetic porous polymer scaffold • No wait for a donor • Same polymer as Dacron vascular grafts • Rotating bioreactor seeds patients bone marrow cells onto the scaffold for 2 days • No rejection • Patents issued and pending 7
HART-Trachea: Science Bronchoscopy of Microscope image of Cross-section of rat patient 6 weeks after cells on a scaffold trachea explant transplant * Blue = cell nuclei (DAPI), = regenerated trachea Green = cell body (phalloidin) + = natural trachea (Courtesy Dr. Mark Red = scaffold fibers (false color) = tracheal epithelium (lining) Holterman) From: Jungebluth P, et al., Verification of cell viability in bioengineered tissue and organs before clinical transplantation Biomaterials ; 2013 May; 34(16):4057-67
Trachea Transplant Market • Over 7,700 new patients annually (USA and EU) • $770m annual market potential at $100k price • Tracheal Trauma : 7,200 patients at extreme likelihood of dying from trachea stenosis or complications from tracheostomy • ICD9 codes: 519.02, 519.09, 519.19 • Average hospital stay is 22 days and average cost is $248k • From National Inpatient Sample database analyzed by independent third party • Tracheal (only) Cancer : 500 patients per year • Excludes main bronchus cancer: 18,000 per year • From NCI SEER database analyzed by independent third party (see 10k for more details) 9
Strategy • Target life-threatening medical conditions • Trachea cancer, organ transplant; not skin, bone etc. • FIH under compassionate use reduces late-stage failure risk • Fast path to market – small trials, rapid follow up • Favorable reimbursement profile • Orphan status likely – 7/10 years exclusivity • Grant funding, e.g., Russia $6.7m, EU $5m • Use trachea as platform to other organs • Esophagus • Lungs • Collaborate with leading surgeons and institutions • Prof. Macchiarini at The Karolinska Institutet • Dr. Ott at Massachusetts General Hospital 10
Clinical Trial Design Proposal • 30 patients • 8 sites: US x 4, EU x 4 • Single arm, open label • Lung function as primary endpoint • Compare FEV1 before surgery and at 90 days • Submit FDA IND in 2015 • End trial mid 2017, possibly shorter in EU • Assumes Fast Track, Accelerated Review, Priority Review and Breakthrough Status • Note: no trial design is final until approved by the relevant regulatory authority 11
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