Investor Updates

KEPLEY BIOSYSTEMS ACADEMICALLY SEATED AND VIRTUOUS BUSINESS MODEL

Kepley BioSystems operates as an academically seated development company with skills typically resident in fully formed operating high-tech companies. The company is bootstrapped, securing development capital through the grant process from National and State funding agencies since 2014. Affiliation and membership with the Joint School of Nanoscience and Nanotechnology (University of North Carolina at Greensboro and North Carolina A&T State University, Greensboro, NC) and The Gateway Research Park has enabled access to high-tech, biological and analytical laboratory facilities. The ability to access (ongoing) grant capital typically requires a broad and flexible set of scientific ingenuity and skills that, by nature, shifts the enterprise away from the traditional “pure play” investment framework. Academically, the enterprise is firmly seated as a life-sciences enterprise with several buckets of expertise and invention that address a broader spectrum of industries. The Kepley BioSystems Development Model is therefore a spinout strategy that would discreetly recast a set of products and technologies under a new company formation, classically filed as a C-Corp in Delaware at the point of outside investors. As such, new investors may opt for founding shares or more typically preferred shares in the enterprise. Presently, Kepley BioSystems offers investors four distinct programs emerging products and technologies that will ultimately be spinout entities:

“My concept of a technology company is, pick a lot of engineers and scientists, and physicists and chemists and so on, so forth. Have a group of outstanding people. And then look around, what is an emerging need that society has? And see if you can find solutions to that. And dedicate the company, not only in any one business, but in the business of creating new businesses. That was my model.”

INVESTOR UPDATE: SEPTEMBER 2019

At this time, Kepley BioSystems represents an exceptional opportunity in biomedical aquaculture yielding global impact for both the environment and human healthcare.

The group has just completed a Phase I National Science Foundation (NSF) feasibility study of a patent-pending approach to successful aquaculture of horseshoe crabs (HSCs) as a sustainable resource that many would know as a cornerstone of modern medicine in LAL endotoxin testing: Whereby, HSC blood provides a core component of pharmaceuticals and medical device sterility testing systems to ensure the safety of injectable vaccines, drugs and implants for millions of patients, every year, worldwide.

To date, the US species of this ancient arthropod is threatened; while the species used in the industry across Asia has been deemed endangered. Both trends are largely due to massive wild capture (and consequent high mortality) for biomedical bleeding and sterility test reagents. This US raw material segment is currently valued at $100 million per year; while the finished endotoxin kit market is estimated to be closer to $1 billion. The Asian markets have been estimated to be at least as large. The need to husband horseshoe crabs and bleed them sustainably could provide a compelling rationale for prohibition of future wild capture and potentially help replenish the species along the entire eastern seaboard.

Further, given antibiotic microbial resistance (AMR) in the ominous era of runaway pathogens, having a sustainable supply of LAL, sensitive to all gram-negative bacteria and many fungi, is more important than ever. The group has also achieved a breakthrough regarding the previously impenetrable interfering-substance barriers and configured a promising assay to screen for septicemia in healthcare settings to improve the draconian odds of sepsis morbidity and mortality. This new technology is especially relevant, as sepsis represents approximately 30% of hospital costs and deaths – and endotoxins are characteristic of an estimated 70% of the antibiotic resistant pathogens.

The Kepley HSC initiatives also led to development of a new feedstock to optimize the HSC system of hematopoiesis. Along the way, the early work toward synthetic horseshoe crab “eggs” remained close to scale up for addressing the increasingly threatened migrating shorebirds that depend on this keystone species (for nutritional and caloric density to reach their nesting grounds). These enrichment methods were also applied to prototypical annelid delivery organisms for traditional fish aquaculture feed.

The group is also focusing on recreational and artisan refinements of that the first product evolved in behavioral olfactory applications with funding by the NSF. With a food safety goal to stop wasting some 40 billion pounds of wild fish used as crustacean bait, every year, the group hypothesized that the increasingly threatened wild bait fish used in crustacean fishing attracted lobsters, crabs and crayfish to traps by emission of scent molecules. After successfully characterizing and formulating a synthetic version of these naturally occurring molecules – without any fish or mammalian components – the group engineered a matrix that can be optimized to release the attractant for various species and conditions. The crustacean bait fish industry has been estimated at $20 billion per year, yet it contributes to a growing incidence of baitfish collapse, a vital link in the oceanic food web. That said, it has required a correspondingly sizable entry price to achieve full, competitive operational scale for which the right partner has not yet been identified.

Notably, these olfactory attractants are recognized by most aquatic species. Thus, work has resumed for applications in recreational and artisan fishing, the latter of which contributes significantly to meeting protein demands throughout the world.

The next olfaction product was nonetheless easier to theorize and test with immediate feedback due to observable behavior.

Specifically, canines universally sniff the ground before bowel relief. Some dogs spend an inordinate amount of time in what can seem like a desperate, nervous process. The group has linked olfactory mediation of canine gastrointestinal neurobiology to defecation by characterizing and formulating a specific array of stimulant molecules. The product met with early success to yield great promise for helping ensure successful shelter adoptions. That is, the product could avert euthanasia resulting from relinquishment due to home soiling by helping new rescues reinforce appropriate responses in appropriate places after adoption. It also has obvious commercial application as “the solution for the dawdling dog” for busy dog owners to inspire the purpose of their walks when late for work or classes, before leaving their pets indoors the rest of the day.

This work has also illuminated opportunities connecting olfaction to animal nutrition, neurobiology, gastroenterology and domestic and barnyard animal wellbeing. The group is especially interested in the 20% of canines with gastrointestinal maladies without clear etiology – and has been designing olfactory components for self-directed stress management devices for domestic pets.

From an investment perspective at this time, the group has decided to seek equity capital to initiate commercialization to refine these opportunities before divestiture. With a few pending or ongoing grants, including the NSF Phase II for sustainable HSC scale-up and further automation, proposals are planned for Department of Defense and NIH regarding sepsis and healthcare acquired infections, as well as an imminent submission applying mast cells in a novel cancer treatment.

Please contact the company to arrange for a briefing by Skype, for a site visit in Greensboro, or to explore meeting in other locations based on the upcoming itineraries for the executives. The lead inventor, Terry Brady, would also always welcome investors to visit should they vacation in the luxurious island of Anguilla, British West Indies.