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My own background in healthcare covers the
last 20 years. I've had a lot of experience in healthcare M&A at Pfizer, where I led acquisitions for the R&D division
globally, as well as a private equity and hedge fund PM at Morgan Stanley and Citibank. Humacyte , I would say, is by far one of
the most exciting companies that I've come across and reminds me a fair bit of a previous SPAC transaction with DermTech.
DermTech as of Friday was up nearly 12 fold over the transaction price and represents one of the best performing SPAC deals in
the industry. When I look at Humacyte , there are a number of points that stand out for me that are exciting for both physicians
and patients, as well as for investors. Humacyte is the most advanced and significant player in the bio-engineered human tissue
space. There are other companies that are working on cadaveric tissue or working on animal tissue, such as bovine tissue, or even
on plastic grafts. But there is no other company that I've come across that is as profoundly impactful as Humacyte in the
work that they're aiming to do.
As you know, biotech manufacturing is a very
critical aspect of success. A lot of companies create tremendous signs and have been tripped up by manufacturing. So the fact that
Humacyte has developed in house manufacturing that can operate at commercial scale is of significant value to patients and providers,
as well as for shareholders. The company has a commercial partnership with Fresenius Medical Care, which is very critical given,
given who Fresenius is and their tremendous footprint in the marketplace. The fact that Fresenius can commercialize homicide's
initial products represents an important de-risking of their plans.
Now in terms of the transaction summary and
valuation, we valued Humacyte in two parts. We valued Humacyte on a base valuation of $800 million, which is roughly the same as
their last private round, which involved Fresenius putting in 150 million a couple of years ago, so this is very attractive in
our view. Humacyte has done a lot over the last two years, and the very involvement of Fresenius itself is hugely impactful to
their plans. In order to create an incentive link for management, we've put together an earn out plan where when the stock
rises by 50%, the company is eligible to receive another seven and a half million shares, and when the stock doubles, they will
receive another seven and a half million shares. And what this effectively represents is a number which is a little below 20% above
their last private round. So it's a very attractive price in our view.
The difficult thing of course is to find these
tremendously innovative, disruptive companies. When we look at vascular MedTech companies, we see again, companies that have performed
really well since their IPO and created a lot of shareholder value. Our view is the way one would look at Humacyte is by examining
all of the end markets that they're going to impact, whether it is AV access for dialysis, or it is for peripheral arterial
disease, or it is for coronary arterial bypass grafts, or for type 1 diabetes. If you look at all of these end market areas, these
are huge market opportunities adding up to well north of $150 billion as we discussed earlier. And if you look at the leaders in
these different areas, one can get a sense for how large Humacyte might be, given that they touch all of these areas, they're
not just focused on cardiovascular or on dialysis. So we're very excited about this opportunity and are excited to bring
this to the market on the heels of our DermTech transaction. And with that, I will pass this over to Laura to take you through
the company background. Thank you.
We have extensive clinical data. We've
been implanting our engineered tissues into patients for over eight years, and we have over 800 patient-years of efficacy and exposure
data. These implants have been done at 60 sites across 6 countries and involve over 430 patients. Importantly, we were the first
product to receive the RMAT designation from the FDA. RMAT stands for Regenerative Medicine Advanced Therapy, and we were the first
technology to receive this designation from the FDA in 2017. Our engineered tissues are manufactured in-house. We've managed
to bring this production process up to commercial scale. We're a vertically integrated technology company, we manufacture
all of the products that we're studying in our clinical trials. We have a terrific patent portfolio, we have 87 issued patents,
and we have dozens of patents that are currently under evaluation. We also have a deep store of trade secrets and manufacturing
know- how, which really provides a strong barrier to entry for other companies.
Importantly, we also have a strategic partnership
with Fresenius Medical Care. Fresenius invested $150 million into Humacyte's technology platform back in 2018. Importantly
Fresenius also has come into our existing pipe investment with this most recent transaction. We've already partnered with
Fresenius to work with them, to commercialize some of our earliest product applications, including vascular trauma, dialysis access,
and peripheral arterial disease. If we go to slide 11, we can see that Humacyte aims to entirely transform how we practice medicine
across many types of disease. Humacyte is aiming to grow replacement tissues and ultimately organs so that there's no more
waiting to harvest tissues and organs from other individuals or from the patient. We also have shown already in our clinical trials
that we help patients avoid limb loss and amputations due to their vascular disease. Because these tissues are not immunogenic,
our patients need no immunosuppression, so they're not tied to a lifetime of these medicines, and also it's critical
to note that patients will now not need to have tissues and vessels harvested from one part of their body to help revascularize
another part. This is really the next generation of clinical care.
Also in our pipeline, we're studying the
use of these engineered vessels for coronary artery bypass. In the lower left you can see an image of a large animal heart that's
been bypassed with an engineered vessel that was grown in Humacyte s facility. This is part of a trial in large animals
to gain data that we'll submit to the FDA in order to gain approval for a phase one trial in heart bypass in humans. The
markets that are potentially addressed by Humacyte's products are enormous. For the products in which we're already
in clinical trials, those end markets approach $20 billion. Furthermore, for coronary artery bypass, the size of that market approach
is $70 billion. For our nonvascular products, which are also in Humacyte's, pipeline, such as replacement tracheas, lungs,
and esophagus, there are also massive markets on the order of $70 billion. So Humacyte is really not a one trick pony. Humacyte
has multiple products that are tee'd up for commercialization in the next few years, and then along and deep pipeline to
address many types of human disease.
Going to slide 15, you can see what our manufacturing
We start with cells that are harvested from
human blood vessels. These cells are actually taken from organ donors for whom the blood vessels are not useful for transplantation.
The cells are now cryopreserved in Humacyte's cell banks, so that when we want to make a batch of regenerative human tissues,
our first step is to take a small file of frozen human cells, and to grow them in the laboratory. We then take these cells and
attach them to a scaffolding that resides inside of a flexible plastic bioreactor. That bioreactor is then filled with a nutritious
medium that has vitamins and glucose and lots of growth factors for these vascular cells. Over a period of two months, what happens
is the cells grow and regenerate a completely functional human neo-artery that has been grown in the laboratory. Importantly, this
new human vessel contains cells and the extracellular matrix that they made, but really does not contain any polymer scaffold because
that scaffold has dissolved. In a final step in our process, Humacyte then exposes the engineered blood vessel to a series of detergent
washes, and what that does is it removes the cells from the tissue. So the final product that gets implanted into patients is actually
an engineered human blood vessel, but that blood vessel is only composed of the extracellular matrix proteins like collagen that
the cells made. Because the cells have been removed, there's really no immunogenic response to the tissue after it's
implanted into patients. Also because the cells are removed, these tissues are non-living and that means they have a shelf life.
Humacyte's current product shelf life is 18 months.
On slide 17, you can see a summary of the key
features of Humacyte s technology. Importantly, homicides tissues are off the shelf, they can be grown and then shipped
to hospitals and stored until a surgeon or a patient needs them. At the time of use the packaging is peeled and the surgeon reaches
in and takes the vessel out of the container, and then can immediately implant it into the patient. There's no donor site
harvesting, no need to strip veins out of patient's legs, or take cells from their bone marrow. There's also been no
evidence of immune response to these tissues. We've implanted over 400 patients and have never seen immune rejection for
any of these implants.
Because these vessels become living tissue
over time, they're also highly resistant to infection. We've seen this, particularly in our trauma patients and in
our dialysis patients who seem to have a very, very low incidence of infection when the HAVs are used to treat their disease, Humacyte's,
HAVs do become living tissue. Cells from the patient migrate into the HAV over time and transform it from a non-living implant
into a living blood vessel that really becomes the patient's own blood vessel. It's regenerative medicine in the truest
sense. Because these are regenerative tissues and they're living, they're also very durable. We've seen that
these vessels can last five, six, seven, eight years in patients with a variety of different clinical diseases.
Slide number 22 shows some of the impacts of
the HAV when used for treatment and vascular trauma. When a patient suffers acute injury of a blood vessel, the surgeon has several
options: one, he can strip a vein out of the leg and use that vein to repair the blood vessel in another injured part of the body.
However, that vein stripping is itself injurious, and it also takes time, so during the hour or an hour and a half, while a vein
is being harvested from the patient, the injured blood vessel and the injured limb are not receiving blood flow. This can lead
to increased risk of amputation and infection. To speed things up, sometimes surgeons use plastic graphs such as those made out