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2021 LSI Presentation

By June 3, 2021June 16th, 2021No Comments

Video Transcript

Good morning, everyone. I’m excited to be here this morning and introduce you to HAPPE Spine. As mentioned, my name is Ryan Roeder. I’m the CTO and a founder of the company.

At HAPPE Spine, we are commercializing and enabling new biomaterials technology platform with applications across orthopedics. In fact, our technology is in our name, HydroxyApatite Porous PEEK. I can summarize our value proposition in this slide. We offer a material technology platform that will improve clinical outcomes in osteo integration. This platform has diverse applications, as I said across orthopedics, but we are focused to start on an enabling opportunity and innovative approach to deal with spinal fusion. And I’m gonna explain that in more detail.

This opportunity has fast growth potential to differentiate and create a lot of value early in our company’s history. We have an experienced team more than just me, obviously, with decades of experience in the technology and the commercial space behind what we’re doing.

So let me start with the problem that we address. In orthopedics, how do you get an implant to integrate with bone? Now, we have a lot of things on the market that work, all right? We have metals and plastics that are used for decades now. They’re cost-effective, low risk, but biologically they do not perform well.

On the other hand, we’ve got biologics that have become more prominent, more costly, more risk associated with them, but they perform very well biologically. So other than bone, there’s still a gap for something that can meet all the requirements for osteointegration. And we believe that our technology, by bridging the gap between metal and plastic and biologics, can do that.

Our solution again, with HydroxyApatite Porosity and PEEKs. HydroxyApatite is the mineral that’s in your bones, right? It’s bioactive. PEEK is a high-performance thermoplastic that has at least two decades of successful use in orthopedics. I show on the top there a cervical interbody spinal fusion cage to demonstrate the HAPPE solution. With this material platform, we were able to engineer implants like the one shown to have biomechanical properties that mimic those of the native bone tissue. We’re able to engineer a fully interconnected porous structure that allows bone in-growth throughout the entire implant. And we’re able to provide bioactivity through HydroxyApatite crystals, microscopic HydroxyApatite crystals, that are embedded in the material, as you can see in the right image there.

We foresee a $5 billion market opportunity across a range of applications in orthopedic spanning a suture anchors to osteotomy wedges. But again, our initial target is spinal fusion because it’s a very large market, and there’s a lot of opportunity for product differentiation in improving clinical outcomes. In spinal fusion, 90% of the market right now is dominated between PEEK and titanium implants.

In case you’re not familiar with spinal fusion, a spinal fusion is used to relieve pain and correct spinal deformities caused by disease and injury. An implant called a cage, as you can see in the image, is stuck between two vertebrae in the disc space, and it functions to restore vertebral height, which alleviates pain through alleviating a nerve impingement. And it fuses the two vertebrae together to re-stabilize the spine.

Again, this is a $2.5 billion market with a lot of opportunity for differentiation and creating value. I can tell you from conversations that our team has had with upwards of a hundred surgeons that there is a need and a perceived interest in what we’re bringing to the market. And I can explain why here with a brief history.

Up until about ten years ago, there were three options in interbody spinal fusion. There was allograft which is kind of the long-standing, right? It’s bone; it performs very well biologically. It still is the gold standard today in many ways in terms of the biological performance, but then titanium came over-borrowed from orthopedics, and then titanium became quickly displaced by PEEK. And the reason was because titanium inhibits post-op radiographic imaging, and it suffers from some cytins due to its rigidity. And so PEEKs solved these issues at least at that time and became the market leader up until the time of about a decade ago.

Now, fast forward to the present. Over the last several years, there’s been a number of new market entries, still looking for the answer here. And what’s interesting is that none of these market entries that have still found the answer, but they have shown the way to what we envisioned 15 years earlier. And I’ll explain that with each one.

Porous or 3D printed titanium came onto the market and showed the market for the first time the benefits of having designed Porosity in the disc space and for the in-growth that can happen with that. This has been successful in that regard, but titanium still suffers from the same old problems that I described earlier: inhibiting postoperative imaging and subsidence.

HA-Enhanced PEEK was then introduced by a really a global PEEK supplier named Invibio. And the idea of HA-Enhanced PEEK now is that you can take care of the limitation of PEEK in terms of its osteointegration. And as you see in the image on the right, you can get a direct opposition of the purple stain bone against the PEEK as opposed to having a fibrous tissue encapsulation. But the problem with this approach is it’s still limited by the fact that there’s no opportunity for in-growth with this material.

Just three years ago, Vertera was acquired by NuVasive after launching and introducing to the market a Surface-Porous PEEK. And so again, one of the two things are covered here. The surface layer of Porosity allows for limited bone in-growth, as shown on the image in the far right. You can see the purple stain bone again, but it’s still encapsulated by fibrous tissue because there’s no bioactivity. So because of this movement in the market, if you will, over the last few years, the market is now ready for what, again, we envisioned 15 years earlier, which is porous and bioactive PEEK, the HAPPE material. And if you will forgive my analogy, you could say that if HA-Enhanced PEEK were like peanut butter, and surface poorest PEEK were like chocolate, then clearly you can see where this is going. We offer the peanut butter cup that the market can now appreciate is superior to either alone, and we’ll hopefully crave.

In the spinal fusion space, it will be widely recognized by our clinical partners that what you’re really after are four things design porosity for in-growth, bioactivity for bone on-growth, the appropriate mechanical properties both strong enough and transferring load to the graph space, and radiolucency for post-op imaging. The HAPPE material is the only material that can provide all of these.

We do this through a patented dual-density design where we’ve got a dense HA/PEEK for load-bearing, and we’ve got the porous HA/PEEK for osteointegration. And we’re able to place the material where we want it through our proprietary manufacturing processes and have seamless integration between these two, so there are no joints or bonds for failure.

Our mechanical properties are able to mimic those of bone shown in the slide here, both cortical and cancellous, which neither titanium nor peek can do alone. And then our poorest material, as you can see in this image, has a consensus-like structure. It looks like bone; it feels like bone. I love to put our implant in the hands of surgeons and hear their reaction. They actually asked me if it is bone, okay? And so you can see the poor interconnections there. We designed it for bone integration. And we show that in our preclinical data here, where you can see highlighted in blue, a bone grew into our poorest material in an established ovine cortical bone defect model that’s used to evaluate materials pre-clinically. It grew into a depth of one to two millimeters into 10 to 12 week time period. Importantly, when you look closely, you can see that the bone in the scaffold is HAPPE. It is vascularized remodeling and a direct contact with the material.

Again, the material is hydrophilic, so because of this, HydroxyApatite and it’s able to absorb blood and plasma as it would when it’s implanted. And this is again because of the bioactive HA whiskers that we’ve put into the material that are embedded in the PEEK for reinforcement, and they’re exposed on the surfaces to provide that bioactivity.

So why HAPPE Spine? Why is HAPPE Spine an exciting company to watch? Behind this material platform, we’ve got a robust and growing IP portfolio spanning the material compositions processes, implant designs. We’ve developed a cost-effective and scalable manufacturing compared to what’s already out there with other implant technologies, and it’s adaptable for a variety of implant designs. We’re on a 510(k) regulatory path. We’ve already completed some testing, and we’re in the process of doing our longer-term biocompatibility tests for a Q4 submission later this year. We’ve got a clinical team behind us. We’ve already established an ACDF team of eight KOLs in that space. And we’ve thus far been very frugal, carefully managing capital 2.2 million use to date to get us to this point. And we’ve in just a month, we’ve actually already oversubscribed in a $3 million series A.

So let me disclose by thanking other team members that are not up here with me, including others that are out here at Genesis Innovation Group that are backing us. And I look forward to any conversations in the breakout room. Thank you.