Periodic Reporting for period 1 - NEOFIBRIN (Advanced material for the regeneration of oral mucosa injuries)
Reporting period: 2017-02-01 to 2017-07-31
Summary of the context and overall objectives of the project
The project NEOFIBRIN was submitted to the Horizon 2020 program call SME Instrument Phase 1 with the aim of evaluating technical, industrial scale-up and market feasibility of the novel tridimensional scaffold for restoring masticatory oral mucosa functional activity.
Patented and produced by Histocell S.L HR018-NEOFIBRIN is an innovative absorbable matrix for application in lesions of the oral mucosa with the ability to promote the regeneration of soft tissues as well as to treat localized mucosal damage. The product is composed of fibrin, obtained from coagulation of the fibrinogen present in the plasma, and agarose. Briefly, fibrin creates a highly compatible three-dimensional matrix which promotes regeneration of the lesion and agarose confers consistency. This unique combination of natural components brings up a new exclusive matrix design which provides mechanical support to cells to migrate and restore functional activity of mucogingival tissue.
Considering only the 5% of the identified severe recession cases, it is estimated a market size of almost 8 Million cases for HR018–NEOFIBRIN per year in seven of the major markets (Germany, France, UK, Spain, Italy, Japan and USA). This market is anticipated to increase if severe periodontitis cases are also included.
Industrialization barriers have been properly identified in terms of tentative prices of the main raw materials per HR018–NEOFIBRIN unit, and establishing a manufacturing capacity of the new demonstration plant. In addition, the necessary approach to guarantee viral safety of plasma source has been developed.
Although commercial barrier analysis identified various competing products, none of them has still demonstrated to be effective enough, and periodontists confirmed the need of innovative matrices with higher resistance capable of being left exposed in the oral cavity such as HR018–NEOFIBRIN.
All the above mentioned tasks have resulted in an improved business plan for industrial-scale advanced manufacturing, clinical trial development, financing, and commercialization of HR018-NEOFIBRIN for oral mucosa injuries.
Patented and produced by Histocell S.L HR018-NEOFIBRIN is an innovative absorbable matrix for application in lesions of the oral mucosa with the ability to promote the regeneration of soft tissues as well as to treat localized mucosal damage. The product is composed of fibrin, obtained from coagulation of the fibrinogen present in the plasma, and agarose. Briefly, fibrin creates a highly compatible three-dimensional matrix which promotes regeneration of the lesion and agarose confers consistency. This unique combination of natural components brings up a new exclusive matrix design which provides mechanical support to cells to migrate and restore functional activity of mucogingival tissue.
Considering only the 5% of the identified severe recession cases, it is estimated a market size of almost 8 Million cases for HR018–NEOFIBRIN per year in seven of the major markets (Germany, France, UK, Spain, Italy, Japan and USA). This market is anticipated to increase if severe periodontitis cases are also included.
Industrialization barriers have been properly identified in terms of tentative prices of the main raw materials per HR018–NEOFIBRIN unit, and establishing a manufacturing capacity of the new demonstration plant. In addition, the necessary approach to guarantee viral safety of plasma source has been developed.
Although commercial barrier analysis identified various competing products, none of them has still demonstrated to be effective enough, and periodontists confirmed the need of innovative matrices with higher resistance capable of being left exposed in the oral cavity such as HR018–NEOFIBRIN.
All the above mentioned tasks have resulted in an improved business plan for industrial-scale advanced manufacturing, clinical trial development, financing, and commercialization of HR018-NEOFIBRIN for oral mucosa injuries.
Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far
The work performed during the reporting period of NEOFIBRIN is as follows:
1 Confirmation of market size of HR018-NEOFIBRIN
To estimate HR018-NEOFIBRIN market size, first, the geographical market was limited to a few countries; second, access to dental care was investigated in the selected countries; and third, prevalence data on the main periodontal diseases leading to mucogingival surgery was evaluated. Finally, hypothetical market share estimation was applied to obtain a better approach to the potential market of HR018-NEOFIBRIN.
HR018-NEOFIBRIN’s potential market comprises residents of high-income countries with oral pathologies that are likely undergo periodontal surgery thanks to their higher disposable income. Thus, those countries identified as the Seven Major Markets were chosen for the estimation of the HR018-NEOFIBRIN’s market. Selected markets include Germany, France, United Kingdom, Spain and Italy within Europe, and Japan and United States of America.
Regarding the access to the dentist at targeted countries, it is known to be high, overcoming 90% in all the territories according to data from the Eurobarometer Report on oral health, supported by the European Commission, and the information revealed by the American Dental Association (ADA) and Japan Dental Association.
We have based our market size estimation on severe gingival recession rate. Therefore, almost 8 Million possible cases have been estimated with potential to be treated with HR018–NEOFIBRIN in seven of the main countries. This estimation has been made considering only the 5% of identified severe recession cases, under “real market” concept assumption.
2 Detection of large-scale industrialization and commercial barriers
When Histocell started the design of HR018–NEOFIBRIN medical device, industrial manufacturing scale-up was taken into account from the early stages of product development with the aim of obtaining a new biomaterial that could be produced consistently using capable process. This way, industrialization barriers related with the transition from the development phase into industrialization and large-scale production have been minimized.
Main aspect relevant for HR018–NEOFIBRIN marketing is the cost of raw materials, specially the cost of plasma and agarose. Reliable well priced sources of both types of plasma as well as agarose have been detected to estimate the cost of goods for the manufacturing of this advanced material.
Considering the versatility needed to manage oral mucosa lesions, HR018–NEOFIBRIN could be manufactured at different sizes. In order to calculate an estimated cost of raw materials per HR018–NEOFIBRIN unit, a dressing of 20x30 mm (similar to Mucograft® from Geistlich Pharma) has been selected. For these final dimensions, manufacturing of one unit of HR018–NEOFIBRIN requires 10 mL of solution.
A demonstration plant built as part of the Histocell Medical Device factory has been designed with 150,000 HR018–NEOFIBRIN units/year production capacity. Viral safety analysis will be improved to ensure the elimination and inactivation of viruses in the manufacturing process.
On the other hand, competing products have to be considered when analyzing the potential market for HR018–NEOFIBRIN. Fortunately, the market of products for oral mucosa tissue lesions is not saturated, and there is a need for new and effective products, which gives HR018–NEOFIBRIN the chance to get a good market share.
With all information and data collected in Task 1 and 2, the first deliverable of the project was prepared:
“D1. Report on market size and commercial barriers for the new product”
3 Intellectual property protection plan
The IPR strategy has been defined. The product HR018–NEOFIBRIN will be protected by two different patents, patent WO2011_023843 (PRODUCTION OF ARTIFICIAL TISSUES BY MEANS OF TISSUE ENGINEERING USING AGAROSE-FIBRIN BIOMATERIALS) from the University of Granada, Spain, which has been licensed by Histocell for the application in mucosa, and patent WO2016_062862 (A BIOMATERIAL SCAFFOLD FOR REGENERATING ORAL MUCOSA), which was submitted by Histocell. The base patent, WO2011_023843, has already been granted in Japan and Europe while it is still pending the decision of the US Patent Office, to confirm protection of the product in the US. From the correspondence with the USPTO, we do not foresee problems in obtaining patent protection for HR018-NEOFIBRIN in the US.
Once we obtain patent protection in the three main regions of interest, we will proceed to order a Freedom To Operate Analysis (FTO) to confirm that the new product can be commercialized in these regions without intellectual property restrictions. The second patent, WO2016_062862, has been extended to 10 main territories and it is still under examination. Both patents gives a long IPR protection till 2035 to HR018-NEOFIBRIN.
4 Regulatory consultations with Notified Body
Before addressing the regulatory requirements, an analysis of HR018–NEOFIBRIN classification as medical device class III was performed considering product definition, intended use and mode of action.
Initial phases of HR018-NEOFIBRIN development were performed using human plasma from authorized Spanish Biobanks. As entering in the industrialization stage, raw material availability/price becomes relevant and animal plasma, in particular porcine, was considered. These two possibilities regarding the use of human or porcine plasma, entail different scenarios regarding regulatory requirements in Europe.
Cost and regulatory analysis indicate that frozen porcine plasma will be likely the most favorable raw material for HR018-NEOFIBRIN. Additional laboratory studies will be performed to evaluate less expensive alternative plasma sources.
In order to elaborate a realistic roadmap to obtain the CE marketing authorization of HR018–NEOFIBRIN, an overview of the actual authorization regulation and consultation with the Notified Body in main regulatory aspects has been performed. Finally, a preliminary analysis of regulatory aspects for commercialization in other countries out of Europe has been analyzed. During the talks conducted with Ireland Notified Body, no significant problems have been identified for obtaining the CE authorization of HR018-NEOFIBRIN.
With all information and data collected in Task 3 and 4, the second deliverable of the project was prepared:
“D2. Road map for registration and commercialization authorization of the product”
5 Updated Business Plan
An updated business plan of the new product HR018-NEOFIBRIN for oral mucosa injuries has been elaborated using the data obtained from the previously described tasks of the Phase 1 of the SME Instrument project. This plan includes the estimated cost of goods at this stage of the development, the required investment in the first manufacturing plant, the estimated transfer price and final price of the future product HR018-NEOFIBRIN.
The estimated investment in the required equipment for the manufacturing of this product is about 350.000 Euros for the demonstration plant with a capacity of producing 150.000 units per year. The main impact in the cost of goods will be the frozen porcine plasma as part of the raw materials. The other main costs are personnel costs, depreciation of the production equipment, and quality controls. Histocell has made a first estimation of the cost of goods of HR018-NEOFIBRIN that is reasonable, about 25% of the final estimated transfer price to the distributors.
The distribution channel will mainly be private dental clinics: dentists and periodontists. Large distributors of dental products and medium size pharmaceutical companies specialized in dental products will be the target for selecting the distributors. The final price of HR018-NEOFIBRIN in the market that our distributors will offer to their customers (dentists, periodontists…) will be about 110-120 Euros per unit.
The estimated figures in the business model show a very good market potential and high profitability of this product for Histocell. Estimated peak sales per year of Histocell after full commercialization of the product in all the main markets could be about 40-50 Mill Euro. The estimated peak sales of the product for our distributors could be about 150 Mill Euros per year.
If new indications are developed and new niches could be identified for HR018-NEOFIBRIN, then the sales of the product could grow much more than these initial and conservative figures, calculated only for a market of 8 Million patients population and 5% of market potential in one indication.
Completion of this business plan, will finalize the third deliverable from the project NEOFIBRIN.
“D3. Updated complete business plan for the innovative HR018-Neofibrin product”
1 Confirmation of market size of HR018-NEOFIBRIN
To estimate HR018-NEOFIBRIN market size, first, the geographical market was limited to a few countries; second, access to dental care was investigated in the selected countries; and third, prevalence data on the main periodontal diseases leading to mucogingival surgery was evaluated. Finally, hypothetical market share estimation was applied to obtain a better approach to the potential market of HR018-NEOFIBRIN.
HR018-NEOFIBRIN’s potential market comprises residents of high-income countries with oral pathologies that are likely undergo periodontal surgery thanks to their higher disposable income. Thus, those countries identified as the Seven Major Markets were chosen for the estimation of the HR018-NEOFIBRIN’s market. Selected markets include Germany, France, United Kingdom, Spain and Italy within Europe, and Japan and United States of America.
Regarding the access to the dentist at targeted countries, it is known to be high, overcoming 90% in all the territories according to data from the Eurobarometer Report on oral health, supported by the European Commission, and the information revealed by the American Dental Association (ADA) and Japan Dental Association.
We have based our market size estimation on severe gingival recession rate. Therefore, almost 8 Million possible cases have been estimated with potential to be treated with HR018–NEOFIBRIN in seven of the main countries. This estimation has been made considering only the 5% of identified severe recession cases, under “real market” concept assumption.
2 Detection of large-scale industrialization and commercial barriers
When Histocell started the design of HR018–NEOFIBRIN medical device, industrial manufacturing scale-up was taken into account from the early stages of product development with the aim of obtaining a new biomaterial that could be produced consistently using capable process. This way, industrialization barriers related with the transition from the development phase into industrialization and large-scale production have been minimized.
Main aspect relevant for HR018–NEOFIBRIN marketing is the cost of raw materials, specially the cost of plasma and agarose. Reliable well priced sources of both types of plasma as well as agarose have been detected to estimate the cost of goods for the manufacturing of this advanced material.
Considering the versatility needed to manage oral mucosa lesions, HR018–NEOFIBRIN could be manufactured at different sizes. In order to calculate an estimated cost of raw materials per HR018–NEOFIBRIN unit, a dressing of 20x30 mm (similar to Mucograft® from Geistlich Pharma) has been selected. For these final dimensions, manufacturing of one unit of HR018–NEOFIBRIN requires 10 mL of solution.
A demonstration plant built as part of the Histocell Medical Device factory has been designed with 150,000 HR018–NEOFIBRIN units/year production capacity. Viral safety analysis will be improved to ensure the elimination and inactivation of viruses in the manufacturing process.
On the other hand, competing products have to be considered when analyzing the potential market for HR018–NEOFIBRIN. Fortunately, the market of products for oral mucosa tissue lesions is not saturated, and there is a need for new and effective products, which gives HR018–NEOFIBRIN the chance to get a good market share.
With all information and data collected in Task 1 and 2, the first deliverable of the project was prepared:
“D1. Report on market size and commercial barriers for the new product”
3 Intellectual property protection plan
The IPR strategy has been defined. The product HR018–NEOFIBRIN will be protected by two different patents, patent WO2011_023843 (PRODUCTION OF ARTIFICIAL TISSUES BY MEANS OF TISSUE ENGINEERING USING AGAROSE-FIBRIN BIOMATERIALS) from the University of Granada, Spain, which has been licensed by Histocell for the application in mucosa, and patent WO2016_062862 (A BIOMATERIAL SCAFFOLD FOR REGENERATING ORAL MUCOSA), which was submitted by Histocell. The base patent, WO2011_023843, has already been granted in Japan and Europe while it is still pending the decision of the US Patent Office, to confirm protection of the product in the US. From the correspondence with the USPTO, we do not foresee problems in obtaining patent protection for HR018-NEOFIBRIN in the US.
Once we obtain patent protection in the three main regions of interest, we will proceed to order a Freedom To Operate Analysis (FTO) to confirm that the new product can be commercialized in these regions without intellectual property restrictions. The second patent, WO2016_062862, has been extended to 10 main territories and it is still under examination. Both patents gives a long IPR protection till 2035 to HR018-NEOFIBRIN.
4 Regulatory consultations with Notified Body
Before addressing the regulatory requirements, an analysis of HR018–NEOFIBRIN classification as medical device class III was performed considering product definition, intended use and mode of action.
Initial phases of HR018-NEOFIBRIN development were performed using human plasma from authorized Spanish Biobanks. As entering in the industrialization stage, raw material availability/price becomes relevant and animal plasma, in particular porcine, was considered. These two possibilities regarding the use of human or porcine plasma, entail different scenarios regarding regulatory requirements in Europe.
Cost and regulatory analysis indicate that frozen porcine plasma will be likely the most favorable raw material for HR018-NEOFIBRIN. Additional laboratory studies will be performed to evaluate less expensive alternative plasma sources.
In order to elaborate a realistic roadmap to obtain the CE marketing authorization of HR018–NEOFIBRIN, an overview of the actual authorization regulation and consultation with the Notified Body in main regulatory aspects has been performed. Finally, a preliminary analysis of regulatory aspects for commercialization in other countries out of Europe has been analyzed. During the talks conducted with Ireland Notified Body, no significant problems have been identified for obtaining the CE authorization of HR018-NEOFIBRIN.
With all information and data collected in Task 3 and 4, the second deliverable of the project was prepared:
“D2. Road map for registration and commercialization authorization of the product”
5 Updated Business Plan
An updated business plan of the new product HR018-NEOFIBRIN for oral mucosa injuries has been elaborated using the data obtained from the previously described tasks of the Phase 1 of the SME Instrument project. This plan includes the estimated cost of goods at this stage of the development, the required investment in the first manufacturing plant, the estimated transfer price and final price of the future product HR018-NEOFIBRIN.
The estimated investment in the required equipment for the manufacturing of this product is about 350.000 Euros for the demonstration plant with a capacity of producing 150.000 units per year. The main impact in the cost of goods will be the frozen porcine plasma as part of the raw materials. The other main costs are personnel costs, depreciation of the production equipment, and quality controls. Histocell has made a first estimation of the cost of goods of HR018-NEOFIBRIN that is reasonable, about 25% of the final estimated transfer price to the distributors.
The distribution channel will mainly be private dental clinics: dentists and periodontists. Large distributors of dental products and medium size pharmaceutical companies specialized in dental products will be the target for selecting the distributors. The final price of HR018-NEOFIBRIN in the market that our distributors will offer to their customers (dentists, periodontists…) will be about 110-120 Euros per unit.
The estimated figures in the business model show a very good market potential and high profitability of this product for Histocell. Estimated peak sales per year of Histocell after full commercialization of the product in all the main markets could be about 40-50 Mill Euro. The estimated peak sales of the product for our distributors could be about 150 Mill Euros per year.
If new indications are developed and new niches could be identified for HR018-NEOFIBRIN, then the sales of the product could grow much more than these initial and conservative figures, calculated only for a market of 8 Million patients population and 5% of market potential in one indication.
Completion of this business plan, will finalize the third deliverable from the project NEOFIBRIN.
“D3. Updated complete business plan for the innovative HR018-Neofibrin product”
Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)
The feasibility study performed under Phase 1 of the SME Instrument project, has successfully evaluated technical, industrial scale-up, regulatory and commercial barriers for HR018-NEOFIBRIN. As a result of the work undertaken, a positive outcome of the Phase 1 is confirmed and hence, the opportunity to continue with HR018-NEOFIBRIN business idea is highlighted.
The new biomaterial proposed, HR018-NEOFIBRIN, would at first address this niche market and pursues to be an effective solution to repair the defect and restore bioactivity of the oral mucosa tissue. The new product will certainly reduce donor site morbidity, because no autologous graft will be needed, and it will overcome the limited availability of the tissue, since the new biomaterial will be commercially available from the usual channels. Moreover, related surgical complications or infection risks will be decreased, and surgery time will be shortened, resulting in less use of analgesics and higher patient satisfaction.
Eight million cases of severe recession is the first realistic estimated market size for HR018-NEOFIBRIN in Europe, Japan and USA. Despite the significant variety of competing products playing in oral mucosa regeneration in this market, not even the current leader Mucograft, has proved to be as clinically effective as autologous tissue grafts, the current “Gold Standard” at periodontal reconstruction. For this reason, consulted periodontal experts are favorable to HR018-NEOFIBRIN as it will offer proper mechanical properties that could be maintained in the patient tissue until an effective tissue remodeling.
The performed analysis regarding industrialization barriers has demonstrated that HR018–NEOFIBRIN can be manufactured in a demonstrative plant to support the demand for first years of commercialization.
The updated business plan has shown the profitability of this product when it will be launched to the market in 2022, considering estimated transfer price and COGs. Histocell has made a first estimation of the cost of goods of HR018-NEOFIBRIN that is reasonable, about 25% of the final estimated transfer price to the distributors.
The estimated figures in the business model show a very good market potential and high profitability of this product for Histocell. Estimated peak sales per year of Histocell after full commercialization of the product in all the main markets could be about 40-50 Mill Euro. The estimated peak sales of the product for our distributors could be about 150 Mill Euros per year.
If new indications are developed and new niches could be identified for HR018-NEOFIBRIN, then the sales of the product could grow much more than these initial and conservative figures, calculated only for a market of 8 Million patients population and 5% of market potential in one indication.
Different alliances will be necessary to continue HR018–NEOFIBRIN project. A Notified Body with expertise in similar products will be selected for CE pathway. For the execution of clinical trial, support will be needed in terms of CROs and clinical partners. Commercial partners will also be important as distributors and KOL to introduce the product into the market. Apart from these alliances, access to funding under Horizon 2020 SME Instrument Phase II program will be key for obtaining the required support for HR018–NEOFIBRIN project continuation.
The new biomaterial proposed, HR018-NEOFIBRIN, would at first address this niche market and pursues to be an effective solution to repair the defect and restore bioactivity of the oral mucosa tissue. The new product will certainly reduce donor site morbidity, because no autologous graft will be needed, and it will overcome the limited availability of the tissue, since the new biomaterial will be commercially available from the usual channels. Moreover, related surgical complications or infection risks will be decreased, and surgery time will be shortened, resulting in less use of analgesics and higher patient satisfaction.
Eight million cases of severe recession is the first realistic estimated market size for HR018-NEOFIBRIN in Europe, Japan and USA. Despite the significant variety of competing products playing in oral mucosa regeneration in this market, not even the current leader Mucograft, has proved to be as clinically effective as autologous tissue grafts, the current “Gold Standard” at periodontal reconstruction. For this reason, consulted periodontal experts are favorable to HR018-NEOFIBRIN as it will offer proper mechanical properties that could be maintained in the patient tissue until an effective tissue remodeling.
The performed analysis regarding industrialization barriers has demonstrated that HR018–NEOFIBRIN can be manufactured in a demonstrative plant to support the demand for first years of commercialization.
The updated business plan has shown the profitability of this product when it will be launched to the market in 2022, considering estimated transfer price and COGs. Histocell has made a first estimation of the cost of goods of HR018-NEOFIBRIN that is reasonable, about 25% of the final estimated transfer price to the distributors.
The estimated figures in the business model show a very good market potential and high profitability of this product for Histocell. Estimated peak sales per year of Histocell after full commercialization of the product in all the main markets could be about 40-50 Mill Euro. The estimated peak sales of the product for our distributors could be about 150 Mill Euros per year.
If new indications are developed and new niches could be identified for HR018-NEOFIBRIN, then the sales of the product could grow much more than these initial and conservative figures, calculated only for a market of 8 Million patients population and 5% of market potential in one indication.
Different alliances will be necessary to continue HR018–NEOFIBRIN project. A Notified Body with expertise in similar products will be selected for CE pathway. For the execution of clinical trial, support will be needed in terms of CROs and clinical partners. Commercial partners will also be important as distributors and KOL to introduce the product into the market. Apart from these alliances, access to funding under Horizon 2020 SME Instrument Phase II program will be key for obtaining the required support for HR018–NEOFIBRIN project continuation.