Business Development: Team ostER Product Spotlight: Salubrinal Dr. Hiroki Yokota, Inventor & Lead Scientist Gjoko Baloski, Clinical Trials Officer Amy Sandusky, Finance Officer

Nolan Hoffman, Senior Scientist Mark Hoffman, Marketing Officer Albert Chan, Senior Scientist

Jesse Riley, Marketing Officer Premchand Devarakonda, Regulatory Officer Adrian Cole, Alliance Management Officer

Salubrinal Background

ATF4 Bone Development

Integrated Stress Response

Cell Death

P-eIF2α

eIF2α GADD34-PP1 phosphatase

SALUBRINAL Conclusions from Salubrinal Bone Study in rats (Yokota Group):  Local Administration of Salubrinal promotes bone healing  

Salubrinal stimulates bone growth during wound repair Salubrinal activates genes involved in anabolic responses

Salubrinal Competitive Advantages 

Indication 

The proposed indication is hip fracture healing in conjunction with standard therapy practices.

Indication selection rationale     



Easier to perform clinical trials High competitive forces in the osteoporosis market Lower number of competitive “bone growth” treatments Increased likelihood of formulary adoption High potential to extend clinical value to other indications

Administration / Delivery 

Injectable administration was selected for initial market introduction  No additional effort to formulate an oral delivery ( less preclinical work, increased speed to market, reduced clinical trial and drug development complexity)  No known benefits for oral delivery for the chosen indication  Predicate studies support Injection as a better localized treatment for the chosen indication

Current Hip Fracture Market 





Over 300K Hip Fractures annually 

25% of the 300K were previously living independently and require full time nursing care post fracture



50% of these never reach full functionality again



This incidence is expected to grow at 3% annually

Current Hip Fracture (Bone Healing) Drugs: 

Dibotermin Alfa (BMP 2 - Wyeth)



OP-1 (BMP 7 - Stryker)



Forteo (Osteoblast promoter- Eli Lilly)

Unmet need 

Drug with lower dosage and fewer side-effects?



High prevalence?

Market Potential 

What are the estimated annual savings from this indication use of Salubrinal? 



Based on $9,500 initial visit cost and an additional $13,500 in post discharge annual costs per incident with regard to 300K hip fractures per year, the total cost is estimated to be $6.9B. Assuming that savings between the value chain providers will be split 50%, Salubrinal is estimated to produce the following revenue for the respective efficacy in the following table:

Savings rates

Market Revenue Potential

Care Provider Savings Potential

10%

$345M

$345M

20%

$690M

$690M

30%

$1.035B

$1.035B

Estimated Earnings/Revenue 

Market: 

Provide an efficacious injectable drug to 60+ female U.S. population to aid in faster hip fracture healing time.

Market Share

10%

20%

30%

40%

50%

Total Revenue

$69M

$138M

$207M

$276M

$345M

Drug

Salubrinal

Forteo

Reclast

BMP

Price

$2,156 Annually

$11,000 Annually

$ 1,100 (excludes IV delivery costs)

$6,000 – 10,000 per treatment

Product Development Phase

Financing Requirements

Milestone

Compete/ Collaborate

Timeline

Pre-Clinical

$2.0 M

Verify Salubrinal injection exhibits safety and positive effects in animal studies. Additional study to be completed for delivery vehicle. File IND.

Contract with MDS Pharma

18.0 Months

Phase 1

$15.0 M

Verify safety of Salubrinal in healthy humans. Target patient population: 50 – 100

Contract with Covance

19.0 Months

Phase 2

$17.0 M

Show progress in clinical effectiveness, demonstrate repeated safety across a larger clinical population, establish dosing for Phase III trial. Target patient population: 300 – 500

39.0 Months

Phase 3

$40.0 M

Demonstrate safety and efficacy in large, diverse clinical population (ages 4-30 years). Establish package insert claims. Target patient population: 1,500 – 3,000

30.0 Months

Regulatory

$1.0 M

FDA Approval

15.8 Months

- standard fast track review (10 months)

Business Plan and Exit Strategy Stage

Recommendations

Financing Options

Corporation Creation

Create a Limited Liability Corporation and license the Intellectual Property from IUPUI.

Small bank loans to finance legal and administrative transactions.

Pre-clinical Trials and Testing

Conduct pre-clinical trials with MDS Pharma which has a division specializing in bone pre-clinical testing

The $2.0M in pre-clinical trials is likely to be financed through Angel investing and supplemented by various foundation grants and SBIR loans.

Corporation Transformation

Convert the original LLC to a C-Corps.

The creation of the C-Corps will permit investment by the Venture Capital community.

Phase I Clinical Trial

Conduct Phase I trials with Covance as a partner.

Venture Capital Series B funding would be used to generate the $15.0M required for Phase I Trials.

Phase II and III Clinical Trial

Seek acquisition of the molecule by a larger or niche pharmaceutical or orthopedic corporation.

Continue to receive license payments from the large corporation. A bidding process between corporations may increase the valuation of the molecule.

Net Present Value 





1.25 Million other fractures which could eventually be incorporated per the National Osteoporosis Foundation NPV at launch is considered to be the value to the acquiring company after FDA approval, marketing, etc (based on $900M typical drug launch). NPV at the end of phase I is the value before acquisition (held privately by investors and VC).

Assumptions:   

20% reduction in total cost of fracture 29% of drugs complete phase III, 54% complete phase II, and 70% complete phase I. VC Low expectation = 5x return; VC High expectation 10x return upon exit. Market Share

NPV @ Market Launch (t=8)

NPV @ end Phase I (t=3)*

Break Even

13%

0

0

Meet VC Low Expectation

30%

$1.4B

$154M

Meet VC High Expectation

45%

$2.6B

$300M

*Probabilities of completion of each phase taken into account.

Summary and Future Possibilities  

Target Hip Fractures Organization  



Financing   



 

Create Spin off LLC for Pre-clinical Testing with MDS Pharma partnership C-Corps for Phase I Clinical Trials with Covance partnership Administration with Small Business Loans or Angel Investment Pre-clincal trials with Angel Investment Phase I with Series B VC Funding

Expected Revenue (US only) of $200 – 350M/yr with 3% annual increase Expected project NPV between $150–300M at Phase I & $1.4–2.6B at launch Future Possibilities…  

1.25 Million other fractures which could eventually be incorporated per the NOF Salubrinal protects cells from Endoplasmic Reticulum (ER) stress and could be beneficial in other disease states such as…  Diabetes  Inflammation  Neurodegenerative Diseases (Alzheimer’s, Parkinson’s, Bipolar Disorder)  Viral Infections

Business Development: Team ostER

Thank you Questions?

References Boyce, M. et al. A selective inhibitor of eIF2alpha dephosphorylation protects cells from ER stress. Science 2005: 307. Ebara, S. and Nakayama, K. Mechanism for the action of bone morphogenetic proteins and regulation of their activity. Spine 2002: 27.

The Price of Innovation - New Estimates of Drug Development Costs – Journal of Health Economics 22, no. 2 (2003) The Journal of Bone and Joint Surgery 2001: 83 © 2001 The Journal of Bone and Joint Surgery, Inc. http://quickfacts.census.gov/qfd/states/00000.html

http://www.census.gov/population/www/projections/ppl47.html http://www.census.gov/population/www/projections/summarytables.html http://www.nof.org/osteoporosis/diseasefacts.htm http://www.nlm.nih.gov/medlineplus/ency/imagepages/18026.htm (picture of hip fracture)