Commercialization of Ossabaw Swine for

Biomedical Research

Yingkai Cheng Jessie LuJeff Fill Robbie SinghZiqing Liu Tom West February 23,

2011

Objective & Short-term Goal

•Project Objective: Demonstrate that Ossabaw Swine research is a viable model being based in the University and as a commercialized venture

•Short-term Goal: Demonstrate viability of the Ossabaw Swine Resource Center by:• Demonstrating the advantage of using

Ossabaws in research• Proposing implementation of a Tiered

Fee Schedule

Improving Revenues in Short-term

• Currently Revenues< Costs• Price increases on contract studies & swine sales• Internal Studies (Indiana’s universities): 11% price increase• External Studies (all others): 17.5% price increase

Additional Services

Long-term Goals

•Long-term Goal: Prepare a value proposition to commercialize / license sale of Ossabaw swines to a prospective vendor

•The path to commercialization will:• Maintain solvency of the Ossabaw Swine Resource • Optimize available funding options• Respect required University procedures• Suggest marketing & promotional avenues

•Establish milestones for funding and strategic initiatives

Market Segmentation

50%

39%

9%

2%

Source: PubMed keyword search: breed + miniature swine

Why use Ossabaw Swines?

* Metabolic syndrome model

* Exercise physiology

* Percutanous catheterization, stents

* Xenotransplantation

* Cutaneous wound healing

* Polycystic ovary syndrome

* Neonatology

*Lithotripsy treatment of kidney stones

* Endothelial progenitor cell biology

* Alzheimer’s disease

* Cardiovascular disease model

* Kidney function and disease

* Dietary probiotics

* Electrical stimulation of gastrointestinal tract

* Bladder function and disease

* Pancreatic beta cell function and isolation

* Non-alcoholic steatohepatitis

* Adrenal hormone regulation

* Diffuse idiopathic skeletal hyperostosis

* Vocal cord physiology

Uses of Ossabaw Swine for Translational Research

Path to Commercialization

Negotiation with Exemplar

Negotiation with Exemplar Revenues Revenues

2011-14 2015 2016-17

Address CTSI Member Concerns

IU / Purdue IRBs

IU / Purdue IRBs

ImplementationImplementation

2014

Joint OperationsJoint Operations

Ossabaw

Swine Resourc

e

Commercialization Plan

Inflection Points

• R&D Partnership with Exemplar Genetics

• Royalties and milestone payments

• Transgenic & gene knock-out capabilities

• Continued research at Ossabaw Resource

• Upfront licensing fee• Milestone payments• 1% royalty on sales• Profits split:• 55%: Ossabaw Resource• 45%: Exemplar Genetics

Commercialization Plan

Costs & Considerations

Ossabaw Swine Resource:

•Pays 50% to Purdue

•Milestones: $2.25 M

•Royalties: $8.1 M

•55% Revenue: $23.3M

• Total cost: $2.3 M

•NPV: $1.3 M (best)

•NPV: $0.385 M (worst)

•ROI: 28.7%

Ossabaw Swine Resource:

• Revenue Growth

•Increase Market Visibility• Conferences•Clients’ publications•Ossabaw website•LARC at IUSM

Exemplar Genetics Costs

•Milestone payments• Signing: $1 million (M)• Year 6: $0.5 M• Year 12:$0.75 M

• Royalties Paid: 1% • Total cost: $1.94 M •NPV: $655,933 (best)•NPV: $55,000 (worst)• ROI: 21.2%

2011-14 2015-30

NPV Summary for Exemplar

Assumptions:•Price growth rate is in accordance with hypothetical US inflation rate, plus annual price growth rate•Between current & new clients, achieve 10% market share •Annual price growth keeps pace with inflation plus price growth rate (7%); in 2020 when transgenics / knockout models developed, mark-up is 25%•Discount rate= 30%

NPV Summary for Ossabaw Swine Resource

Recommendations

• 2011-14: Increase Revenues by expanding client base• Market Ossabaws to Universities & Life Science companies in

Indiana

• Increase National visibility through conferences, journals, Website: http://physiology.medicine.iu.edu/people-in-physiology/michael-sturek-ph-d/#ossabaw-miniature-swine

• Adopt the proposed tiered pricing system for internal & external clients

Recommendations cont’d.

• 2015: Form R&D Partnership with Exemplar Genetics (Iowa)

• Exemplar Genetics provides desired expertise in transgenic & knock-out models

• An R&D partnership allows Ossabaw Swine Resource to continue their research work

Thank You!

Questions?