AMERICAN CRYOSTEM CORPORATION Forward-looking Statements
We and our representatives may from time to time make written or oral statements
that are "forward-looking," including statements contained in this quarterly
report and other filings with the
· Inadequate capital and barriers to raising the additional capital or to
obtaining the financing needed to implement our business plans;
· Our failure to earn revenues or profits;
· Inadequate capital to continue business;
· Volatility or decline of our stock price;
· Potential fluctuation in quarterly results;
· Rapid and significant changes in markets;
· Litigation with or legal claims and allegations by outside parties; and
· Insufficient revenues to cover operating costs.
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
18 Background
We were incorporated in the state of
Overview
The Company filed its first Investigational New Drug Application (IND) with the
FDA for our ATCell™ cellular therapy product. The IND filing is titled "ATCell™
Expanded Autologous Adipose Derived Mesenchymal Stem Cells deployed via
Intravenous Infusion for the Treatment of Post-Concussion Syndrome (PCS) in
Retired Athletes and Military Personnel" File number 19089 was approved by the
FDA on
The Company built and validated a new cGMP clean room processing and
manufacturing area at our facility in
The Company has built a domestic and international patent portfolio consisting of 32 patents. Our 4 primary operating patents regarding the "collection - processing - cryopreservation and return to point-of-care" of adipose derived stem cells, have been granted.
The Company is expanding its efforts to attract and cultivate collaborative partners to accelerate its product development efforts, harnessing its manufacturing platform and tissue processing platforms. The R&D collaborations are to discover, develop, and commercialize cellular therapies, laboratory products and combinations thereof with synergistic technologies to create regenerative medicine applications and develop new intellectual property.
Adipose Tissue
The Company's manufacturing platform technologies, cell transportation products, cell culture mediums and cell therapies are focused on the acquisition and processing of adipose tissue as the primary raw material. Many of our developed technologies have been successfully applied to other raw materials such as bone marrow, umbilical and placenta tissue. Adipose tissue, also known as fat tissue or fatty tissue, is a connective tissue that is mainly composed of fat cells called adipocytes. Adipocytes are energy storing cells that contain large globules of fat known as lipid droplets surrounded by a structural network of fibers. tissue and other stromal tissues. The Company is focused on adipose tissue because it contains higher densities of mesenchymal stems cells (often 500 to 1000 times more) per gram of raw material when compared to other sources (bone marrow, umbilical cord tissue, etc). The higher cellular density of adipose tissue supports the ability to create regenerative cellular products more efficiently and with less expansion (lower passages and population doublings), which is preferred when producing cellular therapy products.
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Adipose tissue is considered one of the top human stem cell sources considering its accessibility, abundance, and least painful collection procedure when compared to other sources such as bone marrow. The adipose derived mesenchymal stem cells (ADSCs) that adipose tissue contains can be maintained and expanded in culture for long periods of time without losing their differentiation capacity, leading to large cell quantities being increasingly used in cell therapy purposes. Many published and peer reviewed reports show that ADSC-based cell therapy products demonstrated optimal efficacy and efficiency in various clinical indications for both autologous and allogeneic purposes, hence they are increasingly being considered as potential tools for replacing, repairing, and regenerating dead or damaged cells.
Adipose tissue is a specialized type of connective tissue that arises from the differentiation of mesenchymal stem cells into adipocytes during fetal development. Mesenchymal stem cells are multipotent cells that can transform into various cell types, including fat cells, bone cells, cartilage cells, and muscle cells among others. Adipose tissue can be found in a number of different places throughout the body. Adipose tissue is the most abundant type of fat in humans. It is distributed within subcutaneous fat, visceral fat, and bone marrow fat. Subcutaneous fat is found throughout the whole body, in the spaces between the skin and underlying muscles. Visceral fat is predominantly found around the organs in the abdominal cavity, such as the liver, intestines and kidneys, as well as in the peritoneum (a serous membrane that lines the outside of the abdominal organs). Adipose tissue is also present in bone marrow (a sponge-like tissue present in the central cavity of bones). In addition, adipose tissue can be found in the pericardium surrounding the heart, or cushioning other parts of the body, like the soles of the feet, eyeballs, and certain blood vessels.
The main function of adipocytes is to store excess energy in the form of fatty molecules, mainly triglycerides. Fat storage is regulated by several hormones, including insulin, glucagon, catecholamines (adrenaline and noradrenaline), and cortisol. Depending on the body's immediate energy requirements, these hormones can either stimulate adipose tissue formation and storage (i.e. lipogenesis) or initiate the release of fat from adipose tissue (i.e. lipolysis). Under the influence of insulin, for instance, adipocytes can increase the uptake of blood glucose and transform it into fatty molecules, thereby increasing fat storage.
In addition to being an energy storing reservoir, adipose tissue performs important endocrine and metabolic roles by secreting several biologically-active factors known as adipokines. These molecules contribute to a variety of different functions, including regulation of energy balance, food intake and satiety, inflammatory response, and metabolism of steroid hormones. Finally, adipose tissue also helps cushion and protect parts of the body, as well as insulate the body from extreme temperatures.
In addition to adipocytes, adipose tissue contains the stromal vascular fraction (SVF) comprised of cells including preadipocytes, fibroblasts, vascular endothelial cells, and a variety of immune cells such as adipose tissue macrophages. Far from being hormonally inert, adipose tissue has, in recent years, been recognized as a major endocrine organ, as it produces hormones such as leptin, estrogen, resisting, and cytokines (especially TNF?). Adipose tissue contains some of the highest concentrations of adult stem cells, progenitor cells and immune cells.
Processing Technology
The FDA considers processing and expanding cells as the manufacturing of a drug product. The Company's completed proprietary, patented processing and manufacturing platform is designed for the collection, preparation and cryo-preservation of pure adipose tissue and adipose tissue derived cells. The processing platform has been validated to enable the Company to deliver cellular therapy samples with repeatable and identifiable characteristics of safety, potency, viability, and purity which are the core FDA requirements for the cGMP manufacturing of all drug products. Our manufacturing platform is approved by FDA for use in our current clinical study of Post Concussion Syndrome for the manufacturing of the cellular therapy samples. The Company believes that the platform is suitable to support the Company's growing pipeline of product development and planned clinical studies, and future biologic license applications for an array of target diseases and conditions.
The Company believes the reproducibility of scientific studies is a substantial issue in cellular therapy research, from drug discovery and development through clinical trials as researchers throughout the world continue to use different protocols for processes associated with cell sample preparation, cryopreservation, and cold chain management. We believe our validated manufacturing processes for our ATCell™ product solves this issue. The samples we produce with our patented platform and proprietary products have proven purity, consistent viabilities above 80 percent, and cell identification panels across six biomarkers and proven sterility. Our standardizing handling, storage, and transportation protocols substantially improve the quality and reproducibility of adipose tissue derived stem cells and the adipose tissue collection, processing, storage and retrieval which is designed to permit us to accelerate the time line of creating and processing cellular therapy products - from lab research to regulatory submission and FDA approval.
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Each individual process has the potential to create multiple autologous products and to generate multiple revenue streams including customer fees for storage of biomaterials. Our processing platform and methodology allow the opportunity for continuing revenue streams from each tissue sample received and processed including, cellular therapy treatments, pure tissue storage for secondary procedures, processing, and handling fees and CRYO storage and release fees.
We are leveraging our patented platform and developing our product portfolio to create a global footprint of licensed laboratory affiliates, physician' networks, patients, research organizations, and licensees who purchase tissue collection, processing and storage services or consumables from our Company.
Products and Services Therapy Product Development
During the Company's initial stage of developing its manufacturing protocol and products chose adipose tissue as its source material following review and experiments that included other biomaterials and cell sources such as bone marrow and peripheral blood samples. The selection of adipose tissue is based upon a number of factors including high cell density and its wide array of other cell types including precursor and immune cells that may be derived and developed as future products. Although the Company is currently focused on the development of cellular therapy products utilizing adipose derived mesenchymal cells, the platform is designed to be easily extendable to permit the acquisition and expansion of additional cellular derivatives from other biomaterials.
A significant amount of research, case studies and anecdotal evidence has been published over the past several decades concerning the study of cellular therapies for a wide range of diseases and maladies from ALS and Parkinson's to wound healing and immunological support. The Company, recognizing that each new application for therapy approval requires a standalone clinical study, has refined its development strategy to initially encompass mild traumatic brain injury and immunosuppression as core targets for its development strategy. We focus our efforts on expanding our product pipelines based upon our intellectual property portfolio, collaborative development relationships, target market size, medical need, disease classification, and international licensing and partnering opportunities.
The completion, submission and approval of our validated manufacturing platform is the culmination of the Company's development efforts. Validation of the manufacturing platform for the study has provided the Company with the opportunity to expand its efforts and resources on the further development of its downstream intellectual property. The objective is to provide deliverable commercial cell therapy products to address patient populations with large unmet medical needs such as brain injuries and conditions that include immunologic complications. The Company's continuing efforts in the development of additional products includes an increased focus on the recruitment of collaborative partners and the extension of our existing manufacturing capabilities to development of other adipose tissue derivative and cellular/biomaterial combination products. Leveraging our repeatable processing platform provides the Company with contributable technology and capabilities to rapidly develop clinical studies, accumulate complementary scientific data and attract strong collaborative and developmental partners.
Our activities include supporting collaborations by providing our products and services (ACSelerate™ and ATCELL™) with the goal and expectation that our products and services become the basis for new cell based Regenerative Medicine and cellular therapy applications.
Part of this strategic approach to therapy product development is to design, develop and launch new products and services that rely on our core processing technology and leverage existing products and services. Examples of this approach are the use of the CELLECT® collection kit/ box and materials to collect fresh tissue for cellular therapy sample processing, use of our patented non-animal growth medium for cell culture and use of our storage medium for cryo-storage. Management is currently pursing collaborative product development agreements with healthcare institutions, universities, and other biotech companies.
2022 Therapy Pipeline
The Company has developed and refined its pipeline around its flagship cellular
product, ATCell™, for clinical therapeutic use. The initiation of this pipeline
strategy occurred with the filing, approval and commencement of its
Post-Concussion Syndrome Phase 1 clinical study. During this review process, the
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1. The Company filed its first Investigational New Drug Application (IND) with
the US Food and Drug Administration (FDA) for the ATCELL cellular therapy
product. The IND filing is titled "ATCell™ Expanded Autologous Adipose Derived
Mesenchymal Stem Cells deployed via Intravenous Infusion for the Treatment of
Post-Concussion Syndrome (PCS) in Retired Athletes and Military Personnel",
File number 19089, which was approved by the FDA on September 17, 2020 . The
Company intends to invite additional developers of cellular therapies to
initiate additional arms of the clinical study focused on the use of ATCELL™
for use in systemic inflammatory response relief for patient suffering from
systemic diseases. A number of these additional study targets have been
identified and ongoing discussions support the Company's belief that clinical
investigations can be developed and rapidly added upon completion of the new
treatment protocol and outcome assessment methodologies.
2. DMD - The Company has completed the protocol for the treatment of Duchene
Muscular Dystrophy and is in final discussions with its Collaborative partner,
to select the principal investigator (PI) and clinical trial site selection.
3. Long COVID - The Company has completed the protocol for treatment of Long
COVID and is currently finalizing its FDA filings. We have completed, along
with a government partner the clinical protocol for a new Investigational New
Drug (IND) application to be filed with FDA within the next 90 days for Long
COVID. According to the Centers for Disease Control and Prevention ,
"post-COVID conditions can be considered a lack of return to a usual state of
health following acute COVID-19 illness." In the US, following COVID recovery,
it is reported that up to 30% of those afflicted, diagnosed, or treated for
COVID-19 have continuing symptoms and medical complications following recovery
from the acute illness.
4. Wound Healing - the creation of topical applications and ingredients used by
physicians in the wound care and cosmetic industries as well as therapeutic
cellular applications and bio-materials development. An initial pilot study
involving a minimum of 10 participants for the assessment of its autologous
tissue products for the wound healing market is underway. The Company is
combining its tissue products, which do not require FDA approval, with current
standard-of-care methods to accelerate and improve the healing of diabetic and
non-diabetic wounds and ulcers.
5. ATGRAFT™ - products include adipose tissue and cell sample processing and
storage as a form of personal "bio-insurance", and adipose tissue (fat)
storage for cosmetic fat engraftment procedures. High demand for pure and
natural aesthetics in fast growing cosmetic industry with non-FDA required
plastic, cosmetic, and reconstructive surgical "fat filler". The global facial
fat transfer market alone is expected to growth with a CAGR of 10.7% to $4.2b
by 2027.
About ATCELL™
The Company has established and trademarked ATCELL™ as the brand name for its line of adipose derived stem cell products. ATCELL™ is a purified sample of adipose tissue derived from adipose tissue through our manufacturing processes that can be incubated and grown (cultured) to large quantities in cGMP conditions.
ATCELL™ Adipose Derived Mesenchymal Cells Processed and characterized adipose derived cells created using the Company's proprietary, validated and patented Standard Operating Procedures (SOPs) of its manufacturing platform and the Company's ACSelerate™ patented cell culture media. Cell lines may also be custom created for patients desiring to store their cells for their own future use in Regenerative Medicine procedures, shipped "On Demand". Customer samples are collected by the physician in an mini liposuction procedure and delivered to the Company's facility utilizing the CELLECT® collection system and ACSelerate™ transport medium to conform to our validated quality control standards. The Company charges its customers a fee to process newly collected client tissue samples into cellular samples.
ATCELL's repeatable sample manufacturing process is designed to comply with the requirements of FDA to produce highly consistent and validated cellular products necessary to achieve regulatory approval. The validation of our manufacturing process and quality control results are of great value in biomanufacturing and serve as the basis for approval and commercial product development.
The Company's ATCELL™ cell lines are cultured in our patented ACSelerate™ cell culture media. All processed samples: tissue, cells, and research materials are made available for clinical study therapies, tissue transfer or sale to research institutions. All samples are tested for sterility, disease, lifespan, and population doubling rate (PDL). Cell morphology is confirmed by (i) flow cytometry (6 markers) and (ii) tri-lineage differentiation analysis using ACSelerate™ differentiation media. Each ATCELL™ line can be further processed and differentiated allowing the Company to provide genetically matched cell types. We believe this research methodology may provide opportunities for the Company's ATCELL™ and ACSelerate™ products to become the building blocks of additional commercial application development.
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The Company believes it can earn additional fees based upon storage and retrieval fees and for future product creation. Cell culturing and differentiation may be performed upon receipt of the raw tissue sample or at any time on a previously processed and cryopreserved tissue or master cell sample. ATCELL™ has shown that it is ideally suited for differentiation into additional cell types (bone, cartilage, etc.) utilizing our patented ACSelerate™ line of differentiation mediums.
The ATCELL™ processing, products and services are incorporated into multiple
granted patents including the granted claim of: "Systems and Methods for the
Digestion of Adipose Tissue Samples Obtained from a Client for Cryopreservation"
US 10,154,664 issued
Tissue Processing and Storage Services:
ATGRAFT™-An adipose tissue (fat) collection, processing and storage solution used by cosmetic and plastic surgeons to provide their patients with multiple tissue transfer and storage options. The ATGRAFT™ service, through one liposuction procedure, allows individuals to prepare for multiple future cosmetic or regenerative procedures by using their own stored adipose tissue as natural biocompatible filler, or for multiple cellular therapy applications over time without the trauma of further liposuctions. Many physicians currently offering tissue transfer or "stem cell (SVF)" therapies are required to perform a concurrent tissue harvest for each transfer or procedure which increases the opportunities for infection at the harvest site and the development of long-term complications related to the formation of scar tissue (stroma) at the harvest site(s).
ATGRAFT™ supported procedures include; breast reconstruction, layered
augmentations, buttocks enhancement, volume corrections of the hands, feet, face
and neck areas that experience significant adipose tissue (fat) volume reduction
as we age. ATGRAFT™ is processed and stored utilizing our cGMP standards so that
any stored fat tissue sample may in the future be further processed to create,
"ATCELL™", for use in Regenerative Medicine applications. The ATGRAFT™ service
is included in our granted patent "Business Method for Collection, Processing,
Cryogenic Storage and Distribution of a Biologic Sample Material" US Patent
Number 10,014,079, issued
The Company's charges processing fees for ATGRAFT™ tissue processing and minimum annual storage fees based on the volume of tissue processed. These processing and storage fees may be paid by the collecting/treating physician or the consumer. The Company earns additional fees upon sample retrieval, for the thawing, packaging and shipment of the stored samples to the physician or clinical "point-of-care" for immediate use upon receipt. Additionally, physicians may request that any stored ATGRAFT™ tissue sample of 25ml or greater be reprocessed utilizing the Company's ATCELL™ and Autokine-CM™ processing to create topical therapy or cosmetic products, on-demand.
Laboratory Products; Culture Medium, and Manufacturing Services
CELLECT® Collection, Transportation, and Storage System - An unbreakable "chain
of custody" solution to collect and deliver tissue samples utilizing proprietary
and patent pending methods and materials. The CELLECT® service is the required
platform for the collection and transportation of live adipose tissue samples to
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ACSelerate™ Cell Culture Media Products - Manufactured patented cell culture
media products for growing human stromal cells (including all cells found in
human skin, fat and other connective tissue). Certain of the Company's
ACSelerate™ cell culture media lines are available in animal serum free, which
may be suitable for human and therapeutic uses, or in a low serum version for
application development and research purposes. The patented ACSelerate™ cell
culture media line(s) were specifically developed to address increasing industry
demand for fetal bovine serum-free cell culture products. The use of fetal
bovine serum (FBS) and other animal products in cellular therapy application
development and manufacture raises concerns and generates debates within the
scientific and regulatory community relating to potential human/animal
cross-contamination. These same concerns may lead to additional expensive and
expansive testing and documentation requirements with the FDA during the
application and approval process for new cellular therapies manufactured with or
containing animal or animal derived products. FDA concerns are evidenced in
their Guidance's and Guidelines regarding cellular therapy involving human
cells, tissues and products (HCT/Ps) published and maintained by the FDA.
Management believes that eliminating or greatly reducing
The Company entered into a licensing and manufacturing agreement with
On
The Company supports its marketing efforts by making ATCELL™ samples available for research purposes and for internal product development through our collaborative and partnering programs. We believe these cell lines may be suitable for use by private researchers and universities for use in pre-clinical trial studies and in-vitro research. We also believe that the Company's ability to provide these materials for these research and development collaborators, partners and other third parties extends the Company's ability to become a primary source of clinical grade materials and services necessary to support approved applications and treatments.
The Company has created several versions of its ACSelerate™ cell culture media including:
· ACSelerate-MAX™ -xeno serum free cell culture media,
· ACSelerate-SFM™ - animal serum free cell culture media,
· ACSelerate-LSM™ - low
· ACSelerate-CY™- for differentiation of ATCELL™ into chondrocytes (ATCELL-CY™),
· ACSelerate-OB™- for differentiation of ATCELL™ into osteoblasts (ATCELL-OB™)
· ACSelerate-AD™ - for differentiation of ATCELL™ into adipocytes (ATCELL-AD™)
· ACSelerate-MY™- for differentiation of ATCELL™ into myocytes (ATCELL-MY™)
· ACSelerate-CP™- non-DMSO (Dimethyl Sulfoxide) cellular cryopreservation media
· ACSelerate-TR™- sterile transportation medium designed to maintain the
viability of the tissue during the shipment of adipose tissue to our processing facility.
The Company continues to optimize additional versions of ACSelerate™ media that
may be necessary for use in future applications. On
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Contract Manufacturing, Autokine-CM® Anti-Aging, Autologous Skin Care Product
Line- Under agreement with
CRYO's contract manufacturing services can be extended to develop custom and/or white label products and services for both local and global cosmetic and regenerative medicine companies, physicians, wellness clinics and medical spas. The Company intends to expand its relationships and contract manufacturing regionally through its physician networks and globally through its International Licensing Program.
International Licensing Program - COVID RISK FACTOR
The development of our products could be disrupted and materially adversely
affected in the future by a pandemic, epidemic or outbreak of an infectious
disease like the recent outbreak of COVID-19. For example, as a result of
measures imposed by the governments in regions affected by COVID-19 businesses
have been suspended due to quarantines or "stay at home" orders intended to
contain this outbreak. Furthermore, many patients had concerns about making
hospital and physician office visits for fear of contracting the virus. These
factors may have direct adverse impact on our ability to enroll participants in
our clinical trial programs. In addition, travel restrictions, stay-in-place
orders and other measures including information control. specifically in Asian
countries, such as
The Company is aware many jurisdictions outside the US currently permit cellular
therapies and regenerative medicine applications. The Company has targeted these
jurisdictions for licensing its technologies to local operators and facilities
and receives numerous unsolicited international inquiries concerning the sale or
licensing of our SOPs, culture medium products and tissue banking services for
use in the Regenerative Medicine and Medical Tourism Markets. The Company
believes that the inquiries to date are a result of the global boom in Medical
Tourism, Regenerative and Personalized Medicine and the slow pace of approval of
cellular therapies and regenerative medicine applications in the US. To address
the Company's sales, marketing and branding opportunities globally, the Company
has included in its international licensing program metrics to vet potential
partners and collaborators and their facilities. To date we have licensed our
technologies in
The Company believes it can take advantage of the significant growth of the
global cellular therapy market through its international licensing and marketing
efforts. A recently published study by
(https://www.transparencymarketresearch.com/pressrelease/stem-cells-market.htm)
On
The
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During Fiscal 2020 and 2021, due to the continuing effects of the COVID pandemic
and associated government policies and regulations Baoxin suspended its
processing activities. Baoxin is an emerging biotechnology company in
On
In 2017 as part of the Company's transaction with Baoxin, HIT and the Company
agreed to transfer certain product and distribution rights granted to HIT under
its 2014 agreement to Baoxin. The Company was paid of fee of
The current pandemic, changes in Chinese regulations and policies regarding
On
The current COVID pandemic has delayed CRYOVIVA's scheduled launch of its marketing campaign several times and unfortunately, CRYOVIVA suspended their tissue banking operations in 2020 and 2021. We are currently in discussions with them concerning the restart of their operations and initiation of their marketing program for calendar 2022 although there is no certainty that the effects of the pandemic will ease sufficiently to do so in the near term.
In
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Collaborations / Partnering Opportunities / Acquisitions
The Company recognizes the benefits of collaborations with industry and
university partners and has increased its efforts to attract and develop these
relationships. Strategically, the Company believes that with a current approved
IND application with the
The Company has developed a strategy to expand the opportunities to commercialize its products by increasing its ability to identify and pursue collaborative and partnering opportunities by cultivating and engaging new relationships with biotechnology companies engaged in similar or complimentary development activities. Included in this strategy is the increased recruitment of consultants and other biotechnology experts to identify potential collaborators, partners and acquisition candidates. The Company's goal is to develop additional standardized cellular processing models to support FDA IND treatment protocol approvals. This may be accomplished by further identifying, and validating certain mechanisms and characteristics of mesenchymal stem cells related to regulating modulation of immune response(s) and promoting tissue regeneration and stability (homeostasis) for the treatment of traumatic injuries, inflammation, auto-immune diseases, and brain and organ damage associated with viruses such as SARS-CoV-2 (COVID-19), including, the expanding group of patients dealing with the chronic and debilitating symptoms of what is commonly termed "Long Haul COVID" or "Long COVID." To date the Company has completed agreements with the following entities for development of new products and cellular therapy targets although the successful commercialization of new products and therapies resulting from these activities cannot be assured or predicted at this time.
WRNMMC
On
A
Through the Collaboration entitled "Stem Cells for Regeneration and Medical
Innovation, a multi-faceted and multi-staged research project with
WRNMMC is part of
The missions of the MHS are complex and interrelated: To ensure America's 1.4 million active duty and 331,000 reserve-component personnel are healthy so they can complete their national security missions.
· To ensure that all active and reserve medical personnel in uniform are trained
and ready to provide medical care in support of operational forces around the
world.
· To provide a medical benefit commensurate with the service and sacrifice of
more than 9.5 million active-duty personnel, military retirees, and their
families. 27
The MHS also provides health care, through the TRICARE health plan, to:
· Active-duty service members and their families,
· Retired service members and their families,
· Reserve component members and their families,
· Surviving family members,
· Medal of Honor recipients and their families
· Some former spouses, and
· Others identified as eligible in the Defense Enrollment Eligibility Reporting
System
The MHS has a $50+ billion budget and serves approximately 9.5 million beneficiaries. The MHS employs more than 144,217 in 51 hospitals, 424 clinics, 248 dental clinics and 251 veterinary facilities across the nation and around the world, as well as in contingency and combat-theater operations worldwide.
Muscular Dystrophy
In
The terms of the Agreement call for the Company to work with RACEMD to develop clinical therapies and studies focused on mitigating the effect of the disease, improve muscle strength and quality of life in the short term and to build upon successes to seek a more curative cellular therapy solution to extend life expectancy over the long term. The Company is in the final stages of completing its plans with RACEMD to submit an initial safety study for use of ATCell as the treatment protocol and expects to make its initial filing to FDA in early 2022. RACEMD has committed to funding the initial studies and to assist the Company in creating non-dilutive funding opportunities for larger advanced studies in the future.
On
Intellectual Property
From the Company's formation, our strategy has been to invest time and capital
in intellectual property protection. This strategy is intended to strengthen our
Company's foundation in any defensive or offensive legal challenge. In addition,
we are developing our IP portfolio to ensure and enhance our business
flexibility and allow us to gain favorable terms in potential future
collaborative partnerships with third parties. Our intellectual property
portfolio currently includes four issued
28
Title Technology Patent / Application
Number
ACS cell culture media
Cell culture media, Kits, and line US Patent No. 7,989,205
Methods of Use Covers 12 types of Issued August 2, 2011
Medium
ACS cell culture media US Patent No. 9,487,755
Cell culture media, Kits, and line Issued November 8, 2016
Methods of Use Additional claim Granted Continuation of US
for all 12 medium types Patent No. 7,989,205
ACS cell culture media US Patent Application
Cell culture media, Kits, and line No. 15/344,805
Methods of Use Continuation of Granted Continuation of US
Patent covering Patent No. 7,989,205
additional improvements
PCT/US15/68350
30 month National Phase
A cell culture medium entry date of June 31,
Human serum for cell culture for growth of human 2017, additional
medium for growth of human adipose stromal cells International Filings
adipose stromal cells for human and for China, India, the
therapeutic applications European Union, Saudi
Arabia, Israel, Brazil,
Mexico, Australia and
New Zealand.
Company Core Tissue US Serial No 13/194,900
Collection Processing Filed June 6, 2010
A Business Method for and Storage Methodology Patent Application
Collection, Cryogenic Storage Covers CELLECT Kit, Published
and Distribution of a Transport and December 5, 2013 Claims
Biological Sample Material Cryopreservation Medium Granted US Patent No.
for ATGRAFT and ATCELL 10,014,079. Continuation
Products filed upon issuance.
Developed Improvement
Company Core Tissue established; Divisional,
A Business Method for Collection Processing Continuation-In-Part
Collection, Cryogenic Storage and Storage Methodology claiming priority to US
and Distribution of a Continuation covering Serial No. 13/194,900
Biological Sample Material Improvements imminent (PCT
Application filing
planned)
Systems and Methods for the Adipose Tissue Digestion
6, 2011, Claims Granted
For Cryopreservation US Patent No.10,
154,664. Continuation
filed upon issuance.Systems and Methods for the Adipose Tissue Digestion Developed Improvement Digestion of Adipose Tissue Laboratory Processing established; Divisional, Samples Obtained From a Client Methods
Continuation-In-Part
For Cryopreservation claiming priority to US
Serial No. 13/646,900
imminent (PCT
Application filing
planned)
Compositions and Methods for Company Adipose Tissue U.S. Serial No.
collecting, Washing, Storage Platform for 14/406,203 National
Cryoprocessing, Recovering and Cosmetic Procedures Phase entry date of
Return of Lipoaspirate to Covers the core December 5, 2014 based
Physicians for Autologous processing adipose on PCT/US2013/044621
Adipose Transfer Procedures" tissue for ATGRAFT
adipose tissue dermal European Union
filler product Application No.
EPI3800847.9
China Application No.
2013800391988
Compositions and Methods for Company Adipose Tissue Developed Improvement
"Collecting, Washing, Storage Platform for established; Divisional,
Cryoprocessing, Recovering and Cosmetic Procedures Continuation-In-Part
Return of Lipoaspirate to Covers additional claims claiming priority to US
Physicians for Autologous related to ATGRAFT Serial No. 14/406,203
Adipose Transfer Procedures" process not included in imminent (PCT
original application Application filing
planned)
Systems and methods to isolate Isolation of stem cells US Serial Nos.
and expand stem cells from from urine of patients 62/335,426 and
urine for use in research and 62/439,106
therapeutics
29
Additionally, the Company has in-licensed the following IP:
Patent Title Use of Patent Application #
Cosmetic compositions including Protein Genomics and
tropoelastin isomorphs American CryoStem USPTO #5,726,040
(wound healing) (Autogenesis)
collaboration
Protein Genomics and
Cosmetic compositions American CryoStem USPTO #6,451,326
(wound healing) (Autogenesis)
collaboration
Recombinant hair treatment Protein Genomics and
compositions American CryoStem USPTO #6,572,845
(wound healing) (Autogenesis)
collaboration
Wound healing compositions and Protein Genomics and
methods using tropoelastin and
(Autogenesis)
(wound healing) collaboration
Business methods, processes and
systems for collection, Personal Cell Sciences
cryogenic storage and and American CryoStem USPTO application #61/588,841
distribution of cosmetic collaboration
formulations from an obtained
stem cell based a biological
Trademarks
In addition to patents, the Company has registered the following trademarks with
the
Market Size and Opportunities
By leveraging our proprietary Adipose Tissue Processing Platform, the Company is
working to address multiple high growth, multi-billion dollar market
opportunities prevailing within the Regenerative Medicine, Cosmeceuticals,
Medical Tourism and
30 Global Stem Cells Market
A report from
A report published by
Regenerative Medicine Market
The Global Translational Regenerative Medicine market is expected to grow
significantly over the forecast period. The Global Translational Regenerative
Medicine market was valued at
Cell Culture Market
Cell Culture Market Global Forecast to 2023, according to "marketsandmarkets"
the cell culture market is expected to reach USD
Marketing and Distribution
The key objective of our marketing strategy is to position
We plan to continue direct marketing programs focused on reaching regenerative medicine physicians and plastic and cosmetic surgeons to join our network of providers that offer our services to their patients. This marketing initiative has been implemented using a traditional sales approach common to the pharmaceutical and biotechnology industries. This fundamental sales approach at the core of our marketing activities is being strategically and tactically expanded using a combination of in-house sales personnel and outside independent channels.
Our plan, capital permitting, provides for a comprehensive integrated marketing approach using various traditional and new media, such as the Internet, social media/blogging, video, print, TV, radio and trade shows to reach targeted potential consumers and promote awareness of our Company and our branded products and services. The essence of this targeted strategy is to reach the end-users as quickly as possible and to accelerate the adoption curve of our products and services. We also plan to utilize outside marketing resources and trade groups to increase the number of surgeons willing to offer our products and services to their patients.
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Development of Regional
Development of International Markets
International Licensing Program - Globally, many jurisdictions outside the US permit the use of adipose tissue based cellular therapies and regenerative medicine applications. The Company has received numerous inquiries concerning the sale or licensing of our products and services in these jurisdictions. The Company believes that the inquiries to date are a result of the global boom in Medical Tourism and the slow pace of approval of cellular therapies and regenerative medicine applications in the US. To address these inquiries and to expand the Company's sales, marketing and branding opportunities the Company has designed and is offering an International Licensing Program.
The program is designed to permit the licensing of the Company's products and services to organizations that meet the Company's financial and technical criteria. The licensing program allows for a variety of business relationship including franchising, partnering and joint venturing. Marketing efforts to date have been to clinics, physician and hospitals in foreign jurisdictions capable of rapidly building or committing the appropriate facilities and personnel to create the required laboratory facilities to operate the CELLECT®, ATGRAFT™ and ATCELL™ services in their local market. Strategically, the Company's international licensees will maintain the branding of the Company's services along the lines of the "Intel Inside" branding program.
Qualified Licensees can quickly take advantage of the rapidly expanding
opportunity to collect, process, store and culture individual regenerative cell
samples for their clients with the comfort and confidence that they are
providing services that have been developed to conform to
Licensing programs may be initiated through a letter of intent (LOI) agreement between the Company and the prospective licensee. This LOI agreement is designed for due diligence and facility qualifications purposes. The Company receives an initial fee under the agreement which may or may not be credited toward future royalty payments. Following evaluation of the prospective licensee the Company will enter into a final Agreement which outlines all upfront fees, minimum royalties and consumable purchase obligations of the Licensee.
Significant to our international development activities is the global expansion
of the
During Fiscal 2020 and 2021, due to the continuing effects of the COVID pandemic
and associated government policies and regulations Baoxin suspended its
processing activities. Baoxin is an emerging biotechnology company in
See Note 3, Note 13 and Note 14 for additional information.
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In 2017 as part of the Company's transaction with Baoxin, HIT and the Company
agreed to transfer certain product and distribution rights granted to HIT under
its 2014 agreement to Baoxin. The Company was paid a fee in the transaction and
was provided with an initial ownership position in a planned
The current pandemic, changes in Chinese regulations and policies regarding
CellSource
Corporate Information
Our principal executive offices are located at
Available Information
We file electronically with the
Going Concern
As of the date of this annual report, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our proposed business.
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We have suffered recurring losses from operations since our inception. In addition, we have yet to generate an internal cash flow from our business operations or successfully raised the financing required to expand our business. As a result of these and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.
Our plans with regard to these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency, and (ii) implementing a plan to generate sales of our proposed products. Our continued existence is dependent upon our ability to resolve our liquidity problems and achieve profitability in our current business operations. However, the outcome of management's plans cannot be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.
Results of Operations - Three Months
The Company's revenue for the quarter ended
Operating expenses increased to
Administrative expenses increased to
Interest expense for the quarter ending
Net loss for the first quarter of Fiscal 2021 was
Liquidity and Capital Resources
As of
Accounts Receivable increased to
Convertible debt increased to
The Company will continue to focus on its financing and investment activities, but should we be unable to raise sufficient funds, we will be required to curtail our operating plans or cease them entirely. We cannot assure you that we will generate the necessary funding to operate or develop our business. Please see "Cash Requirements" above for our existing plans with respect to raising the capital we believe will be required. In the event that we are able to obtain the necessary financing to move forward with our business plan, we expect that our expenses will increase significantly as we attempt to grow our business. Accordingly, the above estimates for the financing required may not be accurate and must be considered in light these circumstances.
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There was no significant impact on the Company's operations as a result of
inflation for the nine months ended
Cash Requirements
We will require additional capital to fund marketing, operational expansion, processing staff training, as well as for working capital. We are attempting to raise sufficient funds would enable us to satisfy our cash requirements for a period of the next 12 to 24 months. In order to finance further market development with the associated expansion of operational capabilities for the time period discussed above, we will need to raise additional working capital. However, we cannot assure you we can attract sufficient capital to enable us to fully fund our anticipated cash requirements during this period. In addition, we cannot assure you that the requisite financing, whether over the short or long term, will be raised within the necessary time frame or on terms acceptable to us, if at all. Should we be unable to raise sufficient funds we may be required to curtail our operating plans if not cease them entirely. As a result, we cannot assure you that we will be able to operate profitably on a consistent basis, or at all, in the future.
In order to move our Company through its next critical growth phase of development and commercialization and to ensure we are in position to support our research collaborations and market penetration strategies, Management continues to seek new investment into the Company from existing and new investors with particular emphasis on identifying the best deal structure to attract and retain meaningful capital sponsorship from both the retail and institutional investing communities, while limiting dilution to our current shareholders. Management also focuses its efforts on increasing sales and licensing revenue and reducing expenses.
Effects of COVID 19
The development of our drug candidates could be disrupted and materially
adversely affected in the future by a pandemic, epidemic or outbreak of an
infectious disease like the recent outbreak of COVID-19. For example, as a
result of measures imposed by the governments in regions affected by COVID-19
businesses and schools have been suspended due to quarantines or "stay at home"
orders intended to contain this outbreak. Furthermore, many patients had
concerns about making hospital and physician office visits for fear of
contracting the virus. These factors had an direct adverse impact on our ability
to enroll participants in our clinical trial programs. In addition, travel
restrictions, stay-in-place orders and other measures imposed by governmental
agencies and health organizations to prevent the spread of COVID-19 and protect
the citizenry, have had an adverse impact on the flow of goods and services
between nations. The supply disruptions have resulted in shortages of goods and
materials. This could also impact our ability to produce the products we need to
conduct our clinical trials. In addition, these measures have resulted in delays
to the regulatory process, which may also have an adverse impact on our
business. Finally, initially, the outbreak of COVID-19 led to steep declines in
the Dow Industrial Average and other domestic and international stock indices at
the end of February and during March and
Commitments
Effective
Finance Lease
35 Operating Lease
The Company leases its office facility, in
The Company was not party to any litigation against it and is not aware of any
litigation contemplated against it as of
We anticipate that any further capital commitments that may be incurred will be financed principally through the issuance of our securities. However, we cannot assure you that additional financing will be available to us on a timely basis, on acceptable terms, or at all.
Related Party Transactions
On
From time to time the Company makes principal payments on the note. During the
three months ended
The principal balance of the Note is
The Company entered into an agreement with ACS Global, Inc wherein the Company
exchanged 1,000,000 newly created Series A Voting C
Terms of the Series A Voting Convertible Preferred Shares are as follows:
1. Each Series A Share is convertible into 20 shares of
stock
2. Stated annual dividend of
at the discretion of the Company's Board of directors.
3. Each preferred share shall have 20 votes on all matters subject to a Company
shareholder vote.
4. Convertible after one year at the discretion of the ACS Global board of
directors.
convertible Preferred Shares for 20,000,000 common shares held by ACS Global, Inc.
Terms of the Series A Voting Convertible Preferred Shares are as follows:
1. Each Series A Share is convertible into 20 shares of
stock
2. Stated annual dividend of
at the discretion of the Company's Board of directors.
3. Each preferred share shall have 20 votes on all matters subject to a Company
shareholder vote.
4. Convertible after one year at the discretion of the ACS Global board of
directors.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
36 Critical Accounting Policies
We prepare financial statements in conformity with
Basis of Presentation
Our financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United State of America, whereby revenues are recognized in the period earned and expenses when incurred.
Management's Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Long-Lived Assets
We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, we compare the assets' carrying amounts against the estimated undiscounted cash flows to be generated by those assets over their estimated useful lives. If the carrying amounts are greater than the undiscounted cash flows, the fair values of those assets are estimated by discounting the projected cash flows. Any excess of the carrying amounts over the fair values are recorded as impairments in that fiscal period.
Statement of Cash Flows
For purposes of the statement of cash flows, we consider all highly liquid investments (i.e., investments which, when purchased, have original maturities of three months or less) to be cash equivalents.
Recent Accounting Pronouncements
The FASB recently issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity.
The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives.
In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer's own stock and classified in stockholders' equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract.
The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.
The amendments in ASU 2020-06 are effective for our company for fiscal years
beginning after
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In
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