Three technical/scientific/biomedical questions of a potential investor in a joint venture with WPI
The first question that hast to be posed is: How the biotech startup is going to overcome regulatory roadblocks in the process of commercialization of the technology? The question is extremely important because all human cells, tissues and cellular and tissue-based products (HCT/P’s) are regulated by the Food and Drug Administration (FDA) under section 361 of the Public Health Service Act (PHS Act) (FDA, “Guidance for Industry” 2).
Successful decellularization of plant leaves is only the first stage in the process of creation of a bioartificial heart (Gershlak et al. 13). In order to produce a viable organ with a fully-developed vascular network, it is necessary to recellularized an acellular scaffold with a patient’s cells. Since the creation of an autologous graft necessary for the development of an artificial heart involves the use of human cells, the startup should be able to meet the requirements for HCT/P’s.
There are four criteria that have to be met by the startup: HCT/P’s have to be minimally manipulated, “be intended for homologous use only, not be combined with a drug or device, not have a systemic effect” (FDA, “Guidance for Industry” 2). The most important requirement under Title 21 of the Code of Federal Regulations (CFR) Part 1271 is that HCT/P’s have to be minimally manipulated (FDA, “Minimal Manipulation”).
However, the criterion of minimal manipulation is especially complicated; therefore, it is necessary to ensure that materials used for decellularization of scaffolds are not considered adipose-derived tissues, which is prohibited under Title 21 CFR Part 1271 (FDA, “Minimal Manipulation”). Before investing in the startup, it is important to realize that all decellularized materials undergo an extremely harsh FDA approval process. Even though cell-derived matrices were produced since the 1990s, only five companies were granted FDA approval for the use of decellularized tissues in humans in 2014 (Cheng et al. 462).
The second question that has to be asked is: How the use of decellularized plants for tissue engineering differs from other tissue engineering techniques that rely on the use of bioengineered scaffolds derived from mammalian decellularized materials in terms of cost-efficiency? The commercial viability of plant-derived scaffolds is another important question that has to be considered by the investor entering the joint venture with Worcester Polytechnic Institute (WPI).
When making investment decisions, the manager of a VC fund should understand market requirements associated with the future product and return on investment they will receive. In order to forecast the outcomes of the investment, the manager has to conduct provisional market research, which will help them to understand the market needs and expectations. There are nine major companies that work in the field of decellularization: Miromatrix Medical, Videregen, AxoGen, Humacyte, Tissue Regenix, LifeNet Health, Midwest Research Swine, Harvard Apparatus Regenerative Technologies, and IVIVA Medical Inc. (Bersenev).
All of this companies produce “transplantable ‘ready to use’ organs” (Bersenev) and tissues produced with the help of mammalian decellularized materials. Therefore, it is necessary to consider, whether it is commercially viable to produce similar organs and tissues using decellularized plants. If the creation of artificial organs is not feasible from the commercial point of view, the investor has to investigate avenues of tissue engineering by using WPI-developed approach.
The third question that has to be asked is: Does WPI have a provisional patent or another form of appropriate IP protection? The medical industry is intellectual property (IP)-intensive industry; therefore, the manager of the VC fund has to take care of intangible assets of the startup from the very beginning. If the enterprise gets sued by other company for copyright infringement, there is a substantial risk that the company will lose up to 80 percent of its business value (Juetten).
The plan of preparing for the meeting of investors with WPI
In order to properly prepare for the meeting with the technical staff of WPI, the manager has to familiarize himself of herself with the extant literature on tissue engineering. Taking into consideration the fact that WPI has developed the new approach to organ decellularization, it is important to study the most recent peer-reviewed articles on decellularization strategies for tissue engineering in order to understand commercial viability of the technology.
Furthermore, the manager should be familiar with the current FDA requirements and regulation routes for HCT/P’s. They should also have a general understanding of the regulatory framework of the industry. Also, the manager should conduct provisional market research that will help them to gain valuable insights into the market needs and expectations. Another important step in the preparation for the meeting is to conduct research on the most common “hurdles in tissue engineering/regenerative medicine product commercialization” (Bertram et al. 2187).
Arguing about the reverse engineering and intellectual property statement
Statement
“Avoid reverse engineering competitive solutions so as not to anchor on their approaches and/or create potential intellectual property issues”
Arguments
I disagree with the second part of the statement because reverse engineering is a valuable tool that drives innovation, thereby benefiting the society. Reverse engineering can be defined as “a method of recreating existing engineering concepts by analyzing the design and components of a final product to ascertain how the product operates” (Lee 34). It is important to understand that reverse engineering is not the same as copying someone’s work and claiming ownership, which is both unethical and illegal. Quite the contrary, the process of extracting knowledge with the help of manufactured products or technologies is an accepted practice.
It must, however, be borne in mind that while the practice of reverse engineering is economically sound because it is less costly than traditional research and development (R&D), the companies engaging in it should be cognizant of legal boundaries associated with patent infringement. According to Lee, the Supreme Court and Congress recognize the importance and usefulness of the instrument; therefore, they have developed a legal framework that helps to distinguish copyright infringement from fair use (38).
Even though I agree with the first part of the statement and acknowledge that reverse engineering might restrict a developer’s approaches to the solution of a problem, the instrument still should be used in both scientific and industrial contexts in order to advance consumer welfare.
Arguing about the biodesign innovation process statement
Statement
“R&D planning is one of the few activities within the biodesign innovation process that can be driven within a single function (i.e., engineering) rather than managed with cross-functional involvement.”
Arguments
I disagree with the statement because cross-functional R&D cooperation is a powerful driver of innovation. According to Stock et al., such cooperation “increases both innovativeness and new product performance” (924). Taking into consideration the fact that the field of biodesign is associated with numerous barriers to commercialization that include, but are not limited to, marketing, patenting, and technology transfer it stands to reason that the involvement of other business functions such as marketing will help to overcome those hurdles (Bersenev).
Furthermore, it may be highly beneficial to hire legal experts that will help the company to prepare provisional patent applications. Yock et al. argue that “law firms recognize that inventors are cash-challenged in the early stages of biodesign innovation process and some will offer alternate payment strategies, including deferring payments or taking equity” (464).
It should be mentioned that in order for a cross-functional teem to function properly, the company hast to develop effective communication infrastructures that will help to produce desired outcomes.
The results of the provisional market research suggest that there are nine major companies that work in the field of decellularization: Miromatrix Medical, Videregen, AxoGen, Humacyte, Tissue Regenix, LifeNet Health, Midwest Research Swine, Harvard Apparatus Regenerative Technologies, and IVIVA Medical Inc. (Bersenev). Therefore, in order to positively position the new technology, the startup needs to convince its customers that it has the most valuable proposition on the market.
Three types of value propositions useful in positively positioning a new biomedical technology
The first type of value proposition that can be used for the new method of tissue regeneration falls into the category of personal value. By impacting clients on a personal level and showing them that the technology is capable of effectively solving their problems (i.e., regenerating blood vessels, organs, and valves), it is possible to positively position it on the market.
The second type of value proposition that can be used to convince customers that the new approach to regenerative medicine will add more value falls into the category of technical value. Customers should be informed that the company’s method of tissue engineering is superior to other approaches such as decellularization of mammalian materials.
The third type of value proposition that can help to positively position the technology falls into the category of business value. Individuals that are willing to use the company’s services should be informed that regenerative medicine is a much cheaper solution for their health problems than organ transplantation (Rana et al. 12). This type of value proposition is the most effective since it can be easily explained to potential customers.
Works Cited
Bersenev, Alexey. “Commercialization of Organ Decellularization.” Stemcellassays. 2014. Web.
Bertram, Thomas et al. “Hurdles in Tissue Engineering/Regenerative Medicine Product Commercialization: A Pilot Survey of Governmental Funding Agencies and the Financial Industry.” Tissue Engineering, vol. 18, no. 21, 2012, pp. 2187-2194.
Cheng et al. “Decellularized Tissue and Cell-Derived Extracellular Matrices as Scaffolds for Orthopaedic Tissue Engineering.” Biotechnology Advances, vol. 32, no. 2, 2014, pp. 462-484.
FDA. “Guidance for Industry and FDA Staff: Minimal Manipulation of Structural Tissue Jurisdiction Update.” Academy. Web.
—. “Minimal Manipulation of Human Cells, Tissues, and Cellular and Tissue-Based Products: Draft Guidance.” FDA. Web.
Gershlak, Josua et al. “Crossing Kingdoms: Using Decellularized Plants as Perfusable Tissue Engineering Scaffolds.” Biomaterials, vol. 125, no. 1, 2017, pp. 13-22.
Juetten, Mary. “Do Venture Capitalists Care About Intellectual Property?” Forbes, 2015. Web.
Lee, Daniel. “Reverse Engineering: Exploitation for Benefit of All.” Intellectual Property Brief, vol. 2, no. 2, 2012, pp. 34-38.
Rana et al. “Development of Decellularized Scaffolds for Stem Cell-Driven Tissue Engineering.” Journal of Tissue Engineering Regenerative Medicine, vol. 12, no. 1, 2015, pp. 1-26.
Stock et al. “A Closer Look at Cross-Functional R&D Cooperation for Innovativeness: Innovation-Oriented Leadership and Human Resource Practices as Driving Forces.” Journal of Productive Innovative Management, vol. 31, no. 5, 2014, pp. 924-938.
Yock et al. Biodesign: The Process of Innovating Medical Technologies. 2nd ed., Cambridge University Press, 2015.