Kepley BioSystems Incorporated (Kepley) is a North Carolina biotech founded in 2013. Focused on disruptive innovations and global solutions, the company is poised to compete in multi-billion dollar markets with answers to urgent social and environmental challenges, including:
GLOBAL DRUG AND DEVICE SAFETY AND SPECIES PRESERVATION
- Ranching horseshoe crabs to sustainably harvest LAL (limulus amebocyte lysate), vital to ensuring global safety of pharmaceutical and medical devices
- Enriched feed for migrating shorebirds
SEPSIS/ANTIBIOTIC MICROBIAL RESISTANCE (AMR) AND ONCOLOGY SOLUTIONS
- Ranching horseshoe crabs to sustainably harvest LAL (limulus amebocyte lysate), with breakthrough developments in human testing to screen for septicemia
- …and an autologous breast cancer treatment as an alternative to chemotherapy
GLOBAL FOOD SAFETY AND SPECIES PRESERVATION
- Sustainable, synthetic crustacean and fish bait
- (In development) Recreational and artisan synthetic bait, chum and casting for “protein on the plate”
- On-site, terrestrial production of aquaculture feed
CANINE WASTE MANAGEMENT AND SHELTER ADOPTION AID (TO STEM EUTHANASIA)
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:
Kepley BioSystems anticipates that with each spinout the affiliation with the mother company would endure contractually and resident Kepley BioSystems skills persist. These skills include institutionalized grant writing and process skills that facilitate access to new and continued non-dilutive program funding. Kepley BioSystems does not anticipate direct investment into the parent company as valuation approaches have not caught up with this particular business model. Kepley BioSystems remains a proven invention hothouse owed to the business model and academic advantages.
Notably, this unique business model approach has historical precedence rooted at MIT and established by Dr. George Hatsopoulos. By way of his doctoral thesis defense, Hatsopoulos foreshadowed one of the biggest milestones of his career — the founding of Thermo Electron Corporation. Thermo Electron (originally affiliated with MIT), successfully used this precise spinout model until late in the founder’s life. Along the way, Thermo Electron was made up of over 100 discreet operating companies, which ultimately consolidated though divestiture and concentration under the single multi-national, ThermoFisher. In 2016, Hatsopoulos explained this business model philosophy:
“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.”
– G. Hatsopoulos (MIT Infinite History Project).
Hatsopoulos applied that philosophy after reading an article about heart disease in the New York Times, which inspired him to develop a team within Thermo Electron dedicated to developing the first artificial heart. One notable principle in the Thermo Electron and Kepley BioSystems approach remains, the National Small Business Innovation Research (SBIR) Grant process that supports scientific research for America’s emerging enterprises. Today, Kepley BioSystems has multiple pending SBIR submissions with different agencies. These programs intersect industry and academia, allowing intellectual property control by Kepley BioSystems, while leveraging leading experts and emerging STEM students at National Universities during the proof-of-principle phase. This relationship bolsters Kepley BioSystems innovation capacity and supports current University needs - by providing funding (typically 1/3rd of the total grant that supports research and academic overhead), student training, scholarship, publication and involvement in meaningful product-driven research efforts.
Thus, the scientific reach within the global academic world is not limited due to Kepley BioSystems highly scholastic group that publishes frequently on topical science and innovation. The SBIR funding mechanism serves as a seed fund for the emerging enterprise, however the entity cannot exceed 200 employees. The ability to spin out product programs as individual companies while collaborating with leading Universities and the resources and expertise intrinsic to academia, no product development program at Kepley BioSystems exceeds 200 people prior to exit and divestiture. The federal SBIR funding strategy provides non-diluting R&D capital to scientifically inclined invention hothouses and becomes a new technology subsidy, especially when the science is directed towards socially and environmentally responsible products. In the Federal science granting philosophy exit motivation is sacrosanct and represents the essence of our national economic model. Likewise, granting agencies prefer that a full spectrum of the nation’s financial systems is employed and encourage venture capital participation within their funded companies leading to American enterprise, global competitiveness and worthiness for unbeatable economies. Kepley BioSystems represents a unique inventiveness and business model case dating back to Hatsopoulos philosophies while developing Thermo Electron. Unfortunately, few companies have enjoyed this agile innovation and scholastic process that leverages valuable grants and strategic collaborations with leading academic institutions to drive the development of highly pertinent technology.
In late 1991, Thermo Electron purchased a company, International Technidyne Corporation, that became Dr. Hatsopoulos’s favorite acquisition. While International Technidyne was smaller in size compared to the majority of operations within Thermo Electron’s portfolio, by 1993 International Technidyne accounted for 10% of their entire profitability. The principle product and enterprise experts at International Technidyne were Terry Brady and Dr. Frank LaDuca, both of whom are now integral to Kepley BioSystems invention and originality efforts.
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.
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