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Team:Munich/Entrepreneurship

Phactory

Entrepreneurship

Proposition of Value

The antibiotics crisis is a significant medical issue that entails a massive financial burden to our society.

Among the most dangerous multidrug resistant bacteria are Methicillin-resistant Staphylococcus aureus (MRSA) and Vancomycin-resistant Enterobacteriaceae (VRE). More critical even, the number of bacteria resistant against reserve antibiotics increases dramatically. According to our public survey, this problem is well known and recognized by the public. We explored the necessity for bacteriophage therapy by interviewing Dr. Gebhardt from the University hospital “Rechts der Isar”. He already has patients who are basically untreatable because of infections caused by drug resistant bacteria. Recent authorization of bacteriophage therapy in Belgium, the Netherlands and France underscores the significance of alternative treatment options.

Our goal is to accelerate the process from diagnosis over phage-production to application.
We propose the complementation of the therapeutic market with bacteriophage therapy employing Phactory as a manufacturing platform. We are able to assemble clinically relevant bacteriophages at orally applicable purity in a cell-free chassis.

The first step before writing the patent and seeking out for consulting was evaluating our project by the “SWOT” analysis, which is used by many companies. SWOT stands for "Strengths Weaknesses Opportunities and Threats" and is necessary for realizing an objective by taking risks into consideration. Based on the internal analysis (strength/weakness) you optimize your market position. The external analysis (opportunities/threats) gives a cost benefit ratio of the project.

Internal Analysis:

Strength

  • We have proven that our system works (applicability)
  • Until now pathogen bacteria were necessary to produce phages, not anymore (safety)
  • The production pipeline is profitable (economy)

Weakness

  • Availability and Quality of Phage-DNA
  • Dependence on the quality of our cell-free system

External Analysis:

Opportunities

  • high demand on alternatives to antibiotics

Threats

  • Phactory is open source due to the character of iGEM and therefore easy to copy
  • If enough new antibiotics will be developed, this treatment will be favored

Market Analysis

Top-Down Analysis

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The largest market for antibiotics is the food industry, where 2013 more than 131.000 tons of antibiotics were used to prevent bacterial infections in cattle. [1]

We are focused on the application in humans. 2015 more than 34.8 billion defined daily doses (DDDs) – eg a single antibiotic capsule or injection – of antibiotics were used worldwide. [2] The money spent on antibiotic in 2009 was $10.7 billion in the United States. [3]

Multidrug resistant bacteria cause at least 4 million infections in the Western world per year. On average, the costs of additional therapeutics are $3000 per treatment. The duration of hospital stays for patients with antibiotic-resistant infections was found to be prolonged by 6.4 to 12.7 days, collectively adding an extra eight million hospital days. [4] Estimates regarding the medical cost per patient with an antibiotic-resistant infection range from $18,588 to $29,069. The total economic burden placed on the U.S. economy by antibiotic-resistant infections has been estimated to be as high as $20 billion in health care costs and $35 billion a year in lost productivity. [5]

Our target market are infections with multi-resistant bacteria which cannot be treated with antibiotics. Bacterial infections account for 23,000 deaths in the U.S and approximately 25,000 fatalities in Europe per year. No exact numbers are known for developing countries with lower economic standards. [6][7] Taking into account the cost for a hospital stay of a patient with drug-resistant infections, we estimate the possible penetrable market to be $12 million. The Market Value of Phactory may be as much as $3.000 per patient.

$1,200,000,000
Penetrable market
$25,000
Value per Patient

This shows that we have with Phactory a cost-effective alternative for therapeutic purposes.

Economic Evaluation

Economic feasibility can be evaluated by calculating the cost for one treatment with bacteriophage therapy manufactured in Phactory. For that reason, we calculate the material cost of a single cell-free reaction and the cost of our current DNA purification protocol using phenol-chloroform extraction. In this calculation we neglect the cost of the lab equipment, like centrifuges and incubators. For the work we assumed the average hourly salary for manufacturing jobs in the USA ($27 per hour).

Materials Price for a single reaction (15µl) Price per patient
Buffer + Media $0.19 $0.13
Energy Solution $2.99 $1.99
Phage DNA $0.07 $0.05
Work $0.76 $0.50
Total $4.01 $2.67

This shows that we have an economical way to produce the bacteriophages for therapeutic purposes, which is cost effective.

Market Disruption

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In every market, theres always a trade-off between flexibility and efficiency. Products can either be really customer oriented or allow efficient production. Disruption is possible through 3 approaches:

#1 Expansion improves flexibility
#2 Automation improves efficiency
#3 Inventions improve both flexibility and efficiency

Phactory combines the flexibility of traditional bacteriophage production with economic advantages of antibiotics.

Our Patenting Process

Patents are typically filed for exceptional ideas. One important criteria for any patent is the evaluation of the state of art. As Phactory combines great scientific achievements by multiple groups with our ideas, we evaluated the possibilities to file patents for some ideas. The entire process was accompanied by our supervisor Kilian Vogele and patent officers from the Technical University of Munich. All students involved in the project were included in the patent. Upon the approval of patent attorneys of the TUM, the patent was forwarded to external attorneys. At this stage we are patent-pending.

Interest from industry

We engaged in regular exchange with to two local start-up incubators UnternehmerTUM and BioM.

UnternehmerTUM is an initiative of the Technical University of Munich that simplifies the communication of start-up’s with investors.

BioM is a local start-up cluster manager in Martinsried near Munich that openly invited us into their small buisness community to be able to engage with investors and other visionairs looking to found their own company. Additionally, they contributed to found the European iGEM Meetup we hosted.

A consortium of experts in phage therapy around Jean-Paul Pirnay invited us to join them in a meeting in Belgium. In early stages of our project, we were given the chance to meet scientist of the Eliava Institute in Georgia (Europe) which harbors the largest library of bacteriophages worldwide. At this point, we are in active cooperation with several partners, including: The Pasteur Insitute in Paris, France and Queen Astrid Military Hospital in Belgium.

Time to Market

"Why now?" - is a central question we have to answer before founding a start-up company.

For this, we have to examine why bacteriophage therapy is still impeded in Western countries. One major reason is the lack of a suitable regulatory framework. In most countries, bacteriophages are classified similar to conventional drugs. Therefore, expensive medical trials are required for every individual bacteriophage. Because of their high specificity, cocktails of up to 15 different bacteriophages are required to form an effective bacteriophage-based drug, each requiring a separate clinical trial.

As bacteriophages are extracted from the environment, there is no possibility to patent them, making them unappealing for pharmaceutical companies. However, magistral preparation was recently introduced to bacteriophage therapy in Belgium. This preparation only requires bacteriophage cocktails to be produced in accordance with good manufacture practices (GMP) guidelines. This makes expensive clinical trials unnecessary. Following Belgium, already France and the Netherlands introduced the magistral preparation, too. These changes will prepare the ground for bacteriophage therapy. Therefore, now is the right time to found a start-up company and invest in this treatment option.

Crossing the Chasm

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Newly founded companies often face difficulties adapting their market to a larger user base. This lag-phase is called the chasm. Early Investors are relatively easy to find, however convincing the general public about a product can be exceptionally difficult. We are in contact with leading scientist in Belgium and France, where bacteriophage therapy was recently allowed. Aiming to adress a large user base we also presented our idea to local hospitals.

Although doubts about founding a start-up remain, we provide full disclosure. We carefully evaluated risks and formed alliances with experts to obviate public concerns and prepare to lead Phactory "across the Chasm".

Timeline after iGEM

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Funding

Finding venture capital

There are major differences in the investment culture between the United States and Europe, especially in the amount of available money. Therefore, it is very difficult to find investors at the early phase of a start-up company in Europe. Especially in the field of biotechnology large amounts of money are required and the failure rate is comparably high. This is the reason why governments provides some opportunity to fund such companies that transfer scientific results into commercial products. In Germany, the available programs among others are Exist - funded by the Federal Ministry for Economic Affairs, Go-Bio - funded by the Federal Ministry of Education and Research and the ERC Proof of Concept grant. The timeframe for these grants span from 18 months to 36 months. After this funding period it is easier to find investors as the failure risk decreases. The company can then better apply for open round of financing.

Who Time Money Requirements
ERK Proof Of Concept 18 months 180,000€ Support of a principal investigator
Exist (Stage I) 18-36 months 250,000€ - 600,000€ Scientists from Universities
Go-Bio 36-72 months ~2,000,000€ - 4,000,000€ Experienced scientists

Identifying stakeholders and competitors

A good network is a key resource for any start-up. To build our network, we are in contact a variety of scientists. Our collaborators at the Queen Astrid Hospital and the Eliava Institute are pioneers in using bacteriophages for therapy. We already started to orient our project towards their needs, in particular to fulfill the requirements of the magistral preparation.

As our team currently lacks pharmaceutical expertise, we would require partners for distribution of our bacteriophages. Hence, we contacted the company PhagoMed which is performing preclinical studies with bacteriophages.

There are companies, such as Jafral, that perform conventional bacteriophage production with a small library of bacteriophages and host bacteria. Other possible competitors, like C3J Therapeutics are working on synthetic bacteriophage platforms. However, these would not agree with GMP guidelines.

With our unique manufacturing approach we significantly advance the production of bacteriophage therapeutics. Our method is cleaner, safer and faster than conventional techniques. It can be performed on-site and is scalable.

Vision

Our goal is to accelerate and simplify the process from diagnosis to application by eliminating distributors and retailers through on-site production.

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Separating Design and Production
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Manufacturing at "Point of Sale"
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