Figure 1 (left) Left ridge treatment - TCP loaded and lyophilized with 100 µg/ml of rhBMP-2. Right ridge treatment – B-247 treatment of TCP loaded and lyophilized with 100 µg/ml rhBMP-2 plus 100 µg/ml of pln.247 plasmid
Figure 2 (middle) 6 wk healing; Left - B-247 treatment of TCP loaded and lyophilized with 50 µg/ml rhBMP-2 plus 100 µg/ml of pln.247 plasmid. Right - TCP loaded and lyophilized with 50 µg/ml BMP-2. No new bone was generated by the TCP particles activated with only the low-dose BMP-2 (left). Hashed regions represent the original maxillary ridge.
Figure 3 (right) 12 wk healing; Left - TCP loaded and lyophilized with 50 µg/ml BMP-2. Right - B-247 treatment of TCP loaded and lyophilized with 50 µg/ml rhBMP-2 plus 100 µg/ml of pln.247 plasmid.
Value, Expected Outcomes, and Impact.
With partnership, we intend to drive the development and commercialization of a greatly needed cranial bone graft implant, one that has the correct design and characteristics for the skull while inducing better bone regeneration than any alternative synthetic graft material. One of the top two most widely used treatments for repair of open fractures of the skull is to place a plastic plug in the defect, and the other is to use bone obtained from another part of the body, which is of limited supply, can undergo unpredictable resorption, and may result in donor site pain and problems (morbidity). The plastic, methyl methacrylate, can cause a marked inflammatory response and fibrous encapsulation of the implant, resulting in the possibility of infection, loosening, and exposure of the implant. Further, the plastic cannot integrate to provide a naturally remodeling bone, nor can it grow with the patient, making it a poor synthetic bone graft substitute, yet it is commonly used. There is a terrible unmet need in regenerative medicine to repair the skull with regenerated bone. This project meets that need with a sophisticated but easy-to-use synthetic bone graft that is the B-247 Cranial Bone Graft Implant.
The B-247 Implant directly impacts our active and retired military by addressing the leading burden of injury and loss of fitness for military duty which is bone fractures and orthopedic injury. In battle-field sustained injuries during the two ongoing US conflicts, 29% involved the head with 3/4 of these represented by open fractures (1).
The extension of the B-247 Cranial Bone Graft Implant to larger bone defects, spine fusions, and orthopedics down the road enhances the overall value and impact of the technology. Therefore, we expect a significant impact on medicine and the biotechnology industry through the success of this product candidate. We believe that the technology, which brings together a bone healing growth factor with its co-activator in a novel bioactive implant specifically designed for regenerating bone in large defects, will become the gold standard.
Moving the technology through an initial clinical trial (which this project proposes) is expected to enable partnership with industry or private financing for a high probability of commercializing the B-247 Implant. A somewhate uniquely viable road to financing and commercialization for this technology is an early IPO, unique because of the high visibility that head wounds are receiving, and the negative visibility that InFuse™ bone graft is receiving due to the adverse events that are emerging in the literature and the press (adverse events due to product flaws that this B-247 Implant overcomes).
Considering return on investment (ROI) of invested dollars, Agenta Biotechnologies, Inc. has organized an excellent medical, scientific, and business team in an outstanding environment. With further consideration of ROI, Agenta Biotechnologies, Inc. has an approved budget for the proposed human Phase I/IIa Clinical Trial that is very cost-effective. The depth of preliminary development undertaken, the available team, and the cost-effectiveness of this proposed project would be of great value to the the public, our biomedial industry, and our wounded veterans.
Industry Sector: Musculoskeletal Devices
We are advancing our lead product, a biological drug-eluting synthetic bone graft for cranial defect repair. This technology has been named the B-247 Cranial Bone Graft Implant, and an official Designation has been obtained from the Office of Combination Products at the FDA (RFD110081). The B-247 Implant will be regulated through the Center for Biologics Evaluation and Research (CBER) (FDA letter available).
Company Overview: Agenta’s mission is to enhance wound healing through biotechnology.
Agenta Biotechnologies, Inc. was incorporated in 2000. We have grown to a group of 5 full-time team and 2 part-time Ph.Ds or MDs. Agenta has intellectual property that may be applicable to several therapeutic indications, especially in the musculoskeletal industry. The SBIR program has supported the advancement of Agenta’s IP for augmentation of a growth factor co-activator in bone regeneration resulting in strong supportive pre-clinical data for a lead product candidate.
Target Market: The initial target market for the proposed device is the surgical specialist practicing neurosurgery, orthopedics, and oral surgery, as each of these will repair large bone defects, specifically in the head, that occur from disease or trauma. Buyers are hospitals, neurosurgeons, oral surgeons and orthopedic surgeons who treat disease or trauma of the craniofacial complex including the skull. Early adopters are likely to be those already extending their practice with the InFuse™ as an emerging market combination product delivering the growth factor bone morphogentic protein (BMP). However, the target market includes those currently using more conventional autografts, allografts, xenografts, and non-biological synthetic bone graft substitutes.
Key Value Drivers
Technology: The technology is protected with 4 US patents, and international patents pending. The technology results in the making of a specialized sugar polymer at the wound, in and around the B-247 Cranial Bone Graft Implant. This specialized sugar polymer ties together, or bundles, growth factors and their cell receptors, leading to growth factor activity. When combined with the FDA approved biologic BMP-2 (a growth factor), the result is a 4-9 fold improvement of BMP-2 effectiveness. Because our technology can produce several times more bone using many times less BMP-2, we expect this to be the most effective synthetic bone graft in the world at the time of market entry (2017) with an excellent safety margin. The biological technology was developed with funding from NIH NIDCR (DE016771).
According to a 2010 Millennium Research Group analysis of the bone graft substitute market, key value drivers for the combination product B-247 Cranial Bone Graft Implant include: a) a declining use of autografts because of second surgery requirement and risk of complications, b) improved handling, which the B-247 Implant provides, especially adapted to the skull, and c) a growing adoption of bone graft substitutes.
Competitive Advantage: At this point, our competitive advantage lies solely in the technology. The B-247 Cranial Bone Graft Implant has a primary competitive advantage because, unlike other available synthetic grafting products, it is specifically designed to meet a great unmet need for an effective, osteogenic bone graft substitute for use in the skull. Other competitive advantages of the B-247 Implant are 1) it is a single unit device so it is simple to place, 2) it remains in place as a unit during the early stage of wound healing, 3) it can be cut and shaped, 4) it is highly osteogenic, moreso than any exisiting synthetic competitor and moreso than allograft bone, and 5) it slowly elutes the biologics limiting their effective concentration to the device area providing a good safety margin. While not necessarily a competitive advantage, since other bone graft substitutes are reimbursible, a health care reimbursement mechanism already exists for this class of biological bone grafts, established by the Medtronic InFuse™ product.
Agenta will be competitive because a) we are leading the way in growth factor co-activation for wound healing, b) we understand and have unique expertise in the technology, c) we have exclusive patent protection of the technology limiting the options for competition by alternative means, and d) we will move the technology forward in a focused manner.
Plan & Strategy
During the 3 year course of the proposed project, we will pursue in parallel, financing strategies for strategic industry partnership, private sector equity financing, and an initial public offering. Each of these strategies are being discussed at this time. Successful completion of the proposed project, with associated published manuscripts, meeting presentations, and press-releases, will provide the progression of the technology and the momentum to close on either of these financing options down the road to commercialization of the B-247 Cranial Bone Graft Implant
Highly effective lead product
Synthetic product not harvested
Addressing an unmet need
Simple storage and user interface
Reimbursement mechanism exists
Designed from platform technology allowing product development
Patented technology for protection from similars
NIH credibility ($)
Favorable medical and business environment for development
Solid clinical and scientific leadership
Strong advisory, patent, and legal support
Key component is a DNA biological
Cash intensive biotech model
Long development period
Complex regulatory pathway
Two biologics increase cost of manufacturing
Therapeutic products can involve potential liability
Can expand product approval to spine and orthopedics for market growth
Appeal to several industry players for partnering
Technology to dominate synthetic bone graft market
Multi-billion dollar existing market
Attract top management
Provide solution to current publicized BMP risks
Benefit from expiring competitor patents
Provide better bone regenerative product to those in need
Risks and negative press for InFuse™
DNA-based therapeutics is a volatile space
Difficult period to obtain early-stage private funding
Failures of industry-similars like OP-1
Patent infringers and need to challenge
Regulatory changes happening
New unknown competitor products
Agenta wholly owns all of its IP.
Agenta Biotechnologies, Inc. is a privately held Alabama C-corporation in a position to build on its team of scientists, hasten its rate of discovery, improve its patent portfolio, and increase in value to its partners.
Agenta Biotechnologies, Inc. is a tenant in the Innovation Depot in downtown Birmingham, Alabama.
Dr. Arthur DeCarlo, Agenta's founder, President, and current CEO, received his Ph.D. training and medical specialty training at the University of Alabama in Birmingham under world-class mentorship. He has spent 23 years acquiring expertise in surgical clinical medicine, biochemistry, genetics, microbiology, and immunological research and has a proven experience in conveying the scientific knowledge and information necessary to garner peer-reviewed research approvals, funding awards and publications. Dr. DeCarlo has also spent several years on committees that oversee research in human subjects (IRB and Clinical Trial Safety Review Board), has directed pre-clinical and human clinical research, and chaired university health professions research activities. International experience has provided a broader scientific perspective to an already award-winning research career. Dr. DeCarlo participated in the NIH Commercialization Accelerator Program (CAP) program in 2008-09.
Dr. John Whitelock, a world leader in proteoglycan research, will remain as a chief advisor to Agenta's Scientific Advisory Board. While spending a career in the proteoglycan field, Dr. Whitelock is also experienced with industry, having spent the bulk of his career at the CSIRO industry-government consortium in Australia. Dr. Whitelock is currently appointed as a Professor in the School of Bioengineering at the Univ. of New South Wales and the Associate Dean of Research. Dr. Whitelock was the convener of the 7th International Conference on Proteolgycans, held October 16-20, 2011. Dr. Whitelock and Dr. DeCarlo discuss data monthly and meet annually.
Dr. Ling Li has been one of Agenta's Scientific Advisory Board members for 6 years and brings a world-class research pedigree to Agenta. Dr. Li acquired post-doctoral training in gene-therapy at the Sauk Institute in La Jolla, California, spent several years as a project director in a mid-sized California biotechnology firm (Aurora), was an investigator at the Scripps Research Institute in Florida for 3 years, and has recently been acquired by the new Torrey Pines Research Center in Florida working in peptide library therapeutics.
Dr. Melissa Renee Chambers is a neurosurgeon at the University of Alabama at Birmingham, and a veterinarian, with decades of experience in orthopedics, currently practicing spine reconstruction and is a valuable Medical Advisor to Agenta. Dr. Chambers and Dr. DeCarlo have also worked well together in the past, exchanging ideas freely.
Mr. Sandy White is a key member of our Board of Advisors. Mr. White has over 25 years of broad pharmaceutical industry and technology commercialization experience. This experience has resulted in a strong core competency in general management, global corporate development/licensing, and technology commercialization. Additional significant experience encompasses a variety of functions, including research and development, investment banking, venture capital, regulatory affairs, sales and marketing. Primary therapeutic/technical areas of knowledge include biotechnology, oncology, ophthalmology, cardiology and virology. Prior positions include CEO, President of BioCache Pharmaceuticals, Inc., Vice President of R&D/Commercial Development & Planning of Storz Ophthalmics, a division of American Home Products; President/Business Leader of Integrated Protein Technologies, a unit of Monsanto and CEO of the University of Alabama at Birmingham Research Foundation. Experience at the Board of Director level includes BioCache Pharmaceuticals and CropTech Corporation (Chairman). Sandy is a current member of the management team and Board of Directors of Icon Bioscience, Inc. He also serves as an advisor to Ramscor, Inc. He received a degree in Biology from the University of Virginia where he was the recipient of the Folkes Scholarship, a degree in Pharmacy from the Medical College of Virginia and a Master of Business Administration degree from Virginia Commonwealth University.
Mr. Jonathan Nugent is a member of Agenta's Board of Advisors for marketing and investor relations. Mr. Nugent has significant experience in financial matters pertaining to biotechnology, most recently as Vice President, Corporate Communications and Investor Relations of the Birmingham-based public company BioCryst. Prior to joining BioCryst, Mr. Nugent served as Senior Vice President and Director of Investor Relations at Burns McClellan, Inc., the country's largest independent healthcare public and investor relations firm. Working primarily in the agency's New York office, Mr. Nugent provided senior counsel to companies specializing in pharmaceutical discovery and development, drug delivery, medical devices and diagnostics, as well as to advisory and investment firms focusing on the biotechnology industry. He has extensive experience in providing strategic guidance in the areas of financial, scientific and regulatory communications, product launches, meetings before the FDA, IPO and follow-on financings, U.S. and European investors and crisis and issues management. John understands corporate financing as it pertains to biotechnology and adds value to Agenta through his advice as well as his relationships with others in the biotechnology and financing industries.
Mr. James Childs brings experience to Agenta's out-licensing negotiations as a retained legal representative from the firm of Bradley, Arant, Boult, and Cummings, LLP.
c. Market, Customer, and Competition.
Several types of bone grafts are used in the treatment of bone loss or bone repair and compete for market share (see examples in Table c.1). While autologus bone grafts continue to be the gold standard for autogenous substitutes, they are not without their limitations. Synthetic ceramics and polymers represent a growing class of bone graft materials but have several major disadvantages. There are a few growth factor-containing materials now on the market. Of these, the 2 products containing rhPDGF and rhBMP-7 appear to have limited clinical efficacy. BMP-7 was only approved in the U.S. for humanitarian use, only after failed initial procedures and in a limited number of cases overall. InFuse™ which contains the same bone growth factor as the B-247 Cranial Bone Graft Implant but in a much higher dose, appears somewhat efficacious but is associated with a growing number of severe adverse events.
Table c.1: Examples of Approved Bone Graft Materials
Autologus bone used at site of graft
Harvested from patient
Limited supply, serious complications at donor site
Allograft bone, used alone or in combination with other materials
Allogro, OrthoINDst, Opteform, Grafton
Potential for infection, highly variable, limited availability, moderate efficacy
Includes calcium phosphate, calcium sulfate, and bioglass, used alone or in combination
Osteograf, Norian SRS, ProOsteon, Osteoset
Poor regenerative capacity
Both degradable and non-degradable polymers, used alone or in combination with other materials
Cortoss, OPLA, Immix
Poor regenerative capacity
Growth factor based
Natural and recombinant growth factors, used alone or in combination with other materials
BMP-2, BMP-7, PDGF
Moderate to poor efficacy, high doses of BMP-2 high risk
For skull repair, industry participants with recent clinical trials include only: a partnership of Univ. of Missouri Columbia and Biomet, Inc. for repair of defects under 25 cm2 in children with a commercial allograft cadaver bone as a test article (withdrawn prior to recruitment); a German comparison of CAD/CAM engineered titantium vs CAD/CAM engineered hydroxylapatite (ceramic); a Finnish study for repair of defects over 16 cm2 with a blend of polymethyl methacrylate, fiberglass, and bioactive glass. None of these alternatives would be adequate.
Participant companies in the industry, and therefore feasible targets for sub-licensing, are manufacturers with an established presence in the commercial market. We seek feasible targets that appear to be in good financial health (cash positive), are established in the market with a relevant product line, can provide capabilities that are relevant for commercializing this technology, and possess good absorptive capacity. Specifically, this means companies with a bone graft product in distribution, preferably a synthetic bone graft product (shown below in bold). We have identified up to 45 companies that would be feasible targets for Agenta in the bone healing industry. These include Aastrom Biosciences Inc., Amgen Inc., AstraTech Corp., Biocoral Inc., BioHorizons, BioLok Intl., Biomet Inc., BioMimetic Therapeutics Inc., Brainstorm Cell Therapeutics Inc., Collagenex Pharmaceuticals Inc., Collagen Matrix Inc., Cryolife Inc., Curis Inc., Cytori Therapeutics Inc., Dentsply International Inc., Exactech Inc., Genzyme Corp., Integra Lifesciences Holdings Corp., Kensey Nash Corp., Kyphon Inc., Lifecell Corp., Lifecore Biomedical Inc., Medtronic Inc., MIV Therapeutics Inc., Nobel Biocare Holding AG, Novabone Products LLC, Nuvasive Inc., Ortho Biotech Products LP, Orthologic Inc., OrthoVita, Inc., Osteotech Inc., QLT Inc., RTI Biologics., Regeneron Pharmaceuticals Inc., Straumann USA LLC, Stryker Corp., Sybron Dental Specialties Inc., TissueGen Inc., Tutogen Medical Inc., Write Medical Group Inc., and Zimmer Holdings Inc. Those in bold possess the optimal combination of characteristics for partnering or out-licensing.
Few companies participate in Agenta’s sector of DNA-based therapeutics. Currently, Sanofi-Aventis is in Phase III for intra-muscular plasmid DNA therapy for ischemic lesions, Juventas is in Phase I with plasmid DNA for cardiac ischemia, and there are 34 other Phase II plasmid DNA trials ongoing, none of which are in bone regeneration. Further, to our knowledge, Agenta is the first to enter the sub-sector of DNA-based proteoglycan therapeutics which could be viewed as a weakness. Other companies leading the DNA therapeutics sector are the several using DNA delivery for immunological modulation, either to augment immune cytokines (Inovio; INO:AMEX), or for vaccine generation. These are examples of industry participants relevant to our technology’s device status and primary modes of action.
Strictly considering initial entry into the skull repair market, competition will primarily be from the inadequate but familiar repair products such as plastic, titatnium, and other inert devices. However, competition will likely soon involve bone graft products that biologically stimulate new bone, where Agenta’s greatest competition comes from the recombinant growth factor sector. Luitpold sells the graft matrix with recombinant PDGF for craniofacial bone healing, and BioMimetic Therapeutics is in clinical trials to obtain approval of the same product for use in orthopedics. At the same time, Medtronic sells a graft matrix with recombinant BMP-2 for orthopedics and for craniofacial bone healing. Stryker, who marketed the bone graft matrix with a recombinant BMP-7 has since sold the BMP-7 technology to Olympus of Japan, though because of their experience, they could be considered a main competitor. These are the current primary competitors.
In clinical trials are BMP-containing bone regeneration products from Wyeth and Nobel Biocare. These are also considered competitors. The current standard products made of inert bone graft materials without growth factors are also competitors, although, the standard will soon become growth factor enhanced bone graft products, probably containing BMP-2 when made safer, more effective and less expensive, as we intend.
We also know that Medtronic has recently licensed technology from Scil Technologies utilizing the growth/differentiation factor GDF-5 for bone regeneration. This technology completed Phase II Clinical Trials and further establishes Medtronic as a main competitor.
Manufacturing alliance has been established with Aldevron for cGMP plasmid DNA production.
For expertise in pre-clinical safety and toxicology testing, Agenta has established a partnership with the Charles River Laboratories, with Sinclair Research, with Southern Research Institute, and with MPI Research.
For expertise in FDA interactions, pre-clinical, and clinical trial execution, Agenta has established a strategic plan with two FDA consultancy firms; Biologics Consulting Group and Cantox. While Agenta has expertise to organize clinical trials in craniofacial bone regeneration, these strategic alliances with Cantox and BCG are useful in product design, manufacturing, clinical trial designs, and ensuring that the correct approach is taken in establishing regulatory approvals.
Market Analysis Summary
Bone is the second most implanted material in the body (after blood transfusions). It is estimated that bone grafts are used in over 1 million procedures annually in the United States. Market segments include bone grafts for fractures, craniotomy, spine, and dental indications, and implants for the same. However, several companies within this industry manufacture and sell across these segments, which is suitable for the B-247 Implant technology. The market for dental implants and bone grafting represents over a 5 billion dollar market and is growing (Kalorama's Implant-Based Dental Reconstruction: The Worldwide Dental Implant and Bone Graft Market, 2nd Edition). The number of spine fusion procedures performed annually in the United States is estimated to exceed 300,000 (Bone-graft substitutes: Facts, fictions, & applications: American Academy of Orthopaedic Surgeons; 69th Annual Meeting). The number of craniofacial bone regeneration procedures performed annually we estimate to exceed 400,000 in the U.S.
The bone graft substitutes market is forecast to reach $3.3B globally and $2.2B in the US by 2017 (GlobalData’s 2011 Bone Graft Substitutes Market Forecast). Bone graft substitutes are divided into three major market segments: 1) synthetic bone graft substitutes, 2) demineralized bone matrices (DBMs), and 3) bone morphogenic proteins (BMPs) and biological adjuncts (Agenta). Synthetic bone graft substitutes are currently used in about 25% of the bone graft procedures performed annually in the United States and these bone graft substitutes are quickly replacing autograft bones as the accepted standard for the treatment of musculoskeletal defects. There are two BMP-containing synthetic bone graft substitutes approved for the US market. The patent on the use of recombinant BMP-2 (held by Wyeth and licensed to Medtronic) expires 2014. Nobel Biocare and Wyeth are also trying to enter this space with current early stage clinical trials. A Phase III trial for repair of tibial fractures with the BMP-2 test product was terminated early by Wyeth.
As an example of the revenue potential for our proposed product candidate, one of the two current BMP containing bone graft substitutes earned $140 million just one year after approval for use in the spine, its first indication (Frost and Sullivan) and currently generates annual revenue of at least $700MM. To complete the market profile of competition, there is another approved product (Gem 21S) with a different recombinant growth factor (PDGF-BB) for use in the periodontal space is that sells fairly well, but is arguably ineffective. BioMimetic Pharmaceuticals, of Franklin Tennessee, obtained FDA approval for craniofacial indications and has since sold the rights to a partner corporation Luitpold Pharmaceuticals. GEM 21S was approved despite argument by the FDA that it was not more effective than control treatment. BioMimetic is currently developing their PDGF-BB combination device for orthopedic bone graft indications.
Bone Healing Market Trends
The upward trend in market growth is fueled by higher preference for, and adoption of, bone graft substitutes for orthopedic procedures, aging population, increased numbers of procedures, and increased reimbursement trends (GlobalData’s 2011 Bone Graft Substitutes Market Forecast). While the market size for bone repair grows, especially in spine and periodontal, we anticipate that cost-effectiveness will continue to be a key driver at this level. We have direct evidence for this now, as interviewed surgeons report a disinclination to use the Medtronic InFuse™ product because of great cost to patients with questionable benefit. Reimbursement for bone graft substitutes is modest, with schedules having been established on inexpensive inert materials, but this is increasing. Nonetheless, current cost of BMP-containing graft devices are more than quadruple the reimbursement, and practitioners, as well as hospitals, are disinclined to purchase these devices given their unclear advantage in the current formulation. With newer more cost-effective methods for recombinant BMP production, cost of goods sold in the products will decrease for Agenta making the environment favorable for a more cost-effective and user-friendly bone graft substitute.
d. Intellectual Property (IP) Protection.
Agenta’s technology is protected by US Patents 7,141,551, 7488719, 7,666,852, and 7,772,204 which expire 2027 but for which 14 years exclusivity can be optioned after PMA through Patent Term Restoration.
Agenta Biotechnologies, Inc. owns sole rights to the patent technology.
The patents protect the use of nucleic acid encoding all known heparan sulfate proteoglyacans in the healing of wounds with applicability to all localized regeneration of bone. The patent portfolio specifically cites the inclusion of growth factors in the heparan sulfate nucleic acid or with the heparan sulfate nucleic acid.
Agenta also has been awarded an Australian patent and will be allowed a Singapore patent encompanssing the US patent family. Other territories are pending.
Freedom to Operate
No blocking patents have been found and we have freedom to operate. A current freedom to operate opinion can be provided as needed.
e. Finance Plan.
We will pursue, in parallel, financing strategies for strategic industry partnership, private sector equity financing, and an initial public offering. Successful completion of the proposed project, with associated published manuscripts, meeting presentations, and press-releases, will provide the progression of the technology and the momentum to close on either of these financing options down the road to product commercialization. A technology that has entered the clinical stage of testing is more likely to attract industry partnership or private investment because, not only has the regulatory risk been minimized, but also has the time to return-on-investment become more acceptable. Furthermore, evidence that the product is safe and effective in humans reduces the skepticism of potential partners. Accordingly, it is far more likely for the private sector to invest in medical technologies that are in clinical stage testing. The same can be said for public offering as several public companies have raised capital through IPO while in the clinical stage of development. While even a successful human Phase I/IIa clinical trial proposed herein would still be considered relatively early stage, the clinical indication and the unmet market need for the proposed bone graft implant are palpable and comprehendable within the general public with the ongoing nature of military conflict, coverage of gunshot head injury in a prominent member of Congress, and news reports of adverse events associated with InFuse™ bone graft having been suppressed by physicians with conflict of interest issues to Medtronic.
The most significant hurdle to overcome in obtaining human clinical data is the safety data that we anticipate will be needed to fulfill requirements for allowance of an IND from FDA allowing human testing. The regulatory path will be through the Center for Biologics Evaluation and Research (CBER) with significan input from the Office of Combination Products, as per an official designation RFD11081.
Financing for pre-clinical safety will require a $3.0 MM investment for the tasks to be completed prior to the pilot clinical trial. Risks associated with this portion of the regulatory pathway are that either the implant will not obtain a good safety profile, or that too many additional safety tests will end the progression of the project due to lack of capital.
In overcoming the first of these regulatory risks we have planned thoroughly using our in-house clinical and medical skill sets, but brining in Angela Blackwell of Biologics Consulting Group who was the FDA lead for reviewing and approving the first InFuse™ dental indication, and by bringing in Lindsay Donald, who has also worked with early BMP product development and as a toxicologist is a specialist in pre-clinical product development. Further, we have done extensive histopathological examination of hundreds of animals, and gross pathology analysis on several. We would not be advancing the B-247 Cranial Bone Graft Implant if there were already evidence of toxicity and we have no reason to believe that safety testing will reveal either the BMP-2, or the pln.247 plamid to be toxic at the relatively low doses proposed with localized delivery on a highly retentive scaffold.
A pre-IND meeting will be scheduled immediately following a financing event and will be attended by Dr. DeCarlo and Lindsay Donald. The meeting is expected to validate our proposed Toxicology and Safety plan in principle with the suggested addition or removal of a proposed test, which will further reduce downstream investor risk, but more critical analysis by the FDA will likely not be given until the IND submission during phase 2 of the proposed project. However, there are three approved “predicate” combination bone graft devices (discussed above) that we can model the IND against. Also, a new orthopedic indication for the PDGF augmented bone graft has IND allowance and is clinical trial, while a new BMP-2 injectable combination device from Wyeth is in human trials. While there remains risk regarding approval of the plasmid component of the B-247 Implant, there are other companies with 36 other plasmid-based products in human trials (unrelated to bone). Finally, our proposed dosing is an order of magnitude lower that what is currently being used for the rBMP-2 or plamid-based therapies.
Production and Marketing Plan.
Production will follow the sequence currently proposed to the FDA.
The test Implant to be used in early clinical trials will be manufactured at a Sponsor facility in accordance with the FDA Guidance for Industry document cGMP for Phase 1 Investigational Drugs.
As clinical trials progress and commercialization nears, a third-party cGMP manufacturer will be contracted to combine components and package the implant.
As clinical trials progress through Phase 2 and commercialization financing is secured, a biosimilar producer of rhBMP-2 will be contracted to provide a Phase III and commercial source of rhBMP-2. Alternative sources of other components will be evaluated at this time, as well.
Commercial Product Cost of Goods. We estimate an eventual manufacturing cost totalling $33/ml of the B-247 Implant.
Margins. It is expected that a single unit, 1 ml (or cc3) of graft material for a single periodontal regenerative procedure or small open fracture, will be sold for $300, which is competitive with current biological bone graft products. Given that many procedures for craniofacial, spine or orthopedic indications will require multiple units, we estimate approximately 3 million units worldwide as a current market size, based on known procedural statistics. The profit margin for a single unit is expected to eventually be $200, with approximately $30/unit going to manufacturing when streamlined, and $70/unit towards distribution. Because of anticipated clinical superiority, share of the advanced bone graft substitute market is calculated to reach 25% in 4 years.
Marketing of an approved product for craniofacial indications will be performed in conjunction with the manufacturer and/or industry partner. The emphasis of marketing will be on both the efficacy and safety creating an awareness that will help the cranial bone graft implant gain approval for other bone regenerative indications. Marketing will be through journal publications and meeting presentations, which are relatively inexpensive. We expect that marketing will be self-sustaining since products that reach unmet needs gain trade news coverage and traction through forum discussions online and at meetings.
Distribution. If Agenta Biotechnologies, Inc. moves forward through private or public financing without an industry partner, the initial plan is for the implant to initially be distributed through existing third-party medical supply routes, where existing sales and distribution processes are in place. In this case it is unlikely that there would be an exclusive distributor. We are currently in discussion with some catalog aggregators in the medical/dental space and they are receptive to new products related to biologicals and implants. Customers for the proposed bone graft device are surgeons and hospitals.
g. Revenue Stream
As in developing any new drug or complex device, commercialization is expected to be delayed beyond the Phase I/IIa clinical trial for an additional 4 years. During the additional 4 years to commercial revenue, the company will need new financing to complete Phase IIb and Phase III clinical trials, and to finalize manufacturing processes. This significant revenue stream, expected to cost an additional $36MM, will be obtained by strategic partnership, by private financing, or by a combination of partnership and financing. Alternatively, revenue to bring the B-247 implant to commercialization could be sought through a IPO. This cost of development will be sought in traunches, beginning with each phase, taking on three additonal rounds of investment until going to market. Beyond the cost of getting to market, revenue from sales will ramp up to an expected peak of 25% market share in 4 years, providing a calculated $3MM in profit year 1, $15MM profit in year 2, and $30MM profit in year 2 post-sales based on a 50% profit margin on each unit beginning in year 1 and increasing gradually over time. The cost of goods calculations includes a multi-million marketing budget for the first 3 years to increase familiarity rapidly.
Commercial revenue will be generated by sales to surgical centers, such as hospitals, or out-patient clinics including oral surgery offices and maxillofacial centers. The US Dept. of Defense will also be considered a potential client for sales with a great need for cost-effective bone regeneration for the head and elsewhere. As described above, distribution and sales will primarily be through large catalog aggregators in the absence of a strategic partner with existing sales force.
Growth will occur by obtaining approval for new indications in orthopedics and spine. While these will require capital will slow early corporate growth, the additional indications will boost long-term revenues and growth.
Currently BMP-2 is sold in bone graft products by Medtronic with an upfront cost of approximately $5,000 for spine reconstructive procedures, while in craniofacial reconstruction, the unit cost is $800. The approved recombinant PDGF bone graft material for periodontal bone regeneration currently has a unit cost to the practitioner of $299. Value pricing against competition is expected as follows: the unit price of B-247 implant would be comparable in price to the PDGF bone graft currently available (though significantly more effective); the B-247 implant would be priced 50-100% less the the highly overpriced, but profitable, InFuse™ bone graft; and the B-247 implant, per unit volume, would cost twice as much as cadaver bone or an inert bone filler. Given the efficacy of the B-247 technology, we consider this pricing highly competitive, enabling a calculated 25% market share within 4 years launch. This would provide a revenue stream during years 1-4 of approximately $14MM, $34MM, $60MM, and $160MM respectively. For perspective, these projected revenue amounts are 20% of InFuse™ revenues at launch, which entered as a first-in-class product type.
These data were made possible by grants from NIH institutes but are solely the responsibility of Agenta Biotechnologies and do not necessarily represent the official views of the NIH.