Intellicell Business Model
Presently, IntelliCell processes its SVFC's in a cGTP compliant cellular lab with strict standard operation procedures (SOP's). The initial IntelliCell cellular lab is located in its ambulatory surgical center at 460 Park Avenue, New York, NY;
doctors wishing to use cellular therapy to treat their patients may use the IntelliCell Cellular facilities, equipment and processes. IntelliCell either supplies its cellular products to doctors working for its affiliate Regen Medical PC for the
treatment of their patients or sells the processed SVFC's to outside physicians who treat their patients in the IntelliCell Cellular facility. Since the SVFC's are returned to a patient’s own body in a same-day outpatient procedure, with little or
no risk of disease transfer, rejection, or allergic reaction, IntelliCell believes it can operate under a FDA exempt CFR 1271.15 (b) or PHS 361 CFR 1271.10 (a).
The company's expansion plan is to acquire cash flow positive ambulatory surgery centers in major US markets beginning in 2013 with a target of operating 20 centers by 2016. Each center will generate between $10M to $30M of revenue per annum in traditional surgical procedures such as orthopedics, aesthetic plastic surgery, urology, etc.
IntelliCell will place a cGTP compliant cellular processing laboratory in each surgical facility and offer regenerative medical procedures in addition to the surgical procedures. The company believes an additional $10M to $15M can be generated per annum from the cellular therapies at an average gross profit of
70% from the cellular procedures.
The financial model target is to reach over $600m in combined revenues by 2018. By combining surgical revenues with cell therapy revenues, the company believes it has developed a risk mitigated market entry model and a business model poised for sustainable growth.
Beyond the operation of providing a fully equipped and staffed surgical center for the collection and use of SVFC's with patients, IntelliCell believes there are additional methods the IntelliCell business model can generate value:
• Licensing its technology for international partners and additional areas of clinical development. This could include wound care, cardiac, gastrointestinal (colitis/ileitis), multiple sclerosis and autism to other companies in the regenerative medicine field.
• Establishment of an SVF cellular tissue bank. IntelliCell will market this service to liposuction patients in addition to any patient who might want to store their SVFC's for future use3
• Fees from training and certifying physicians in the use of the IntelliCell process.
FDA
The company has been engaged in discussions with the FDA regarding operational compliance issues and its exemption status position. FDA issued IntelliCell a “Warning Letter” March 13, 2011, based upon a site audit of its previous beta laboratory. The cGTP issues were resolved upon the completion of ntelliCell's new flagship location and opening its cGTP cellular lab.
Biologics
Consulting Group performed an independent quality audit of the new facility The company and its legal and biologic advisors are currently involved with FDA in discussions related to the company's position that it qualifies as an exempt product from regulation as a drug. The primary reasons behind the company's
claim is that the non-structural lipoaspirate is minimally manipulated, no enzyme or chemical is added to the cell population, the cells are not expanded or grown in culture, and the relevant biological characteristics of the cells have not been altered. Discussions are expected to continue throughout 2013 and the company is hopeful that FDA will agree with its position as an exempt product based on the IntelliSonics™ process. Regardless of the final outcome, the company is
prepared to comply fully with any and all regulations.
Clinical Studies
To increase the value of its business model, IntelliCell is in the process of selectively making investments to launch clinical trials so that in the future it can make clinical claims for its cellular product. These clinical studies will be IND/IRB
FDA studies to achieve FDA approval for clinical claims. Areas under consideration include
• Treating osteoarthritis of the knee
• Gingival gum regeneration, both of which have demonstrated safety and
efficacy in published early pre-clinical work
• Wound healing to treat non-healing diabetic ulcers
• Future product candidates include:
o Multiple sclerosis
o Erectile dysfunction
o General dermal regeneration
One of the major advantages of conducting these clinical studies is that since the SVFC's are already used by Regen Medical PC to treat patients, the outcome of 4 the effectiveness of the treatment is already known. This is a significant
difference over traditional pharmaceutical trials where the outcome of the clinical trial is usually not well known.
Competition
There are other companies using lipoaspirate tissue to manufacture stromal vascular fraction. Companies, such as Cytori and Celltex, use an enzyme (collagenese) to separate the SVFC's from the blood vessels in the adipose tissue and they are being regulated by FDA as a drug, due to the fact that the use of enzymes causes significant biologic manipulation. Cytori, Celltex, Tissuegenesis, and others are utilizing a point of care device to produce the cellular product. When factoring in the cost of the capital equipment (as much as $70,000 each) and high disposal cost per case (as much as $1,500), IntelliCell believes it has a superior laboratory system and process in place.
Further, the point of care systems do not produce industry standard batch manufacturing records demonstrating compliance with Quality Assurance that is standard practice in any cGTP or cGMP facility. Specific cell counts, cell viability,
gram staining, endotoxin testing (all part of IntelliCell SOP's) are not included with the point of care systems. The Future
Once the FDA agrees with IntelliCell that it falls under either CFR 1271.15(b) or PHS 361: CFR 1271.10 (a), the business model can be supplemented with placing the IntelliCell Labs into other surgical centers and/or hospitals. This would be a modified franchise model where IntelliCell would operate the labs.
The revenue stream would flow from IntelliCell licensing and/or selling the “IntelliCell” process to the hospital or doctors for use with their patients.
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