The KBI Story

Kepley BioSystems, a Cascade of Disruptive Innovation

 

Christopher Kepley and Terry Brady met at Luna Innovations, a Virginia-based tech company, when they were working together as an executive scientist and corporate advisor, respectively. When Kepley was later recruited back into academia, they met and devised an innovative business model to drive enterprise from an academic foundation with compelling equity distribution and managerial responsibility for biotech scientists. The model established Kepley BioSystems Incorporated (KBI), and they named, Anthony Dellinger, an outstanding nanoscientist in the final months of completing his PhD as president of KBI with a generous equity stake in the enterprise and an initial funding plan to qualify for non-dilutive SBIR and other government-sponsored research grants with applied scholarship and a commitment to identification and pursuit of global solutions. Another vital component of the model included the affiliation with the university where Kepley had returned to academia, which afforded access to collaborative resources and a state-of-the-art research laboratory.

 
 

The first KBI product grant submission was for a biomedical invention that failed to win funding on the first pass, despite encouraging scoring that reflected the quality of the research and promising composition. The second KBI invention took biotech far afield from medicine or healthcare into a space without competition and intellectual property barriers: the crustacean fishing industry. As lobster and crab traps are typically baited with wild fish and thus lured into traps, the hypothesis was that the crustacean olfactory system and consequent attraction could be stimulated by mimicking the molecular composition of decaying fish and thus, with a synthetic and entirely sustainable bait. In researching the grant, a $20 billion market in crustacean bait annually consuming billions of small, schooling “baitfish” promised the potential to replenish an increasingly threatened, key species in the food chain while disrupting a global industry. The hypothesis with respect to the precise chemistry of the olfactory stimulating compounds was verified by HPLC as the basis for continued research as proposed in the second KBI grant submission.

 
 

That publication, "A sythetic crustacean bait to stem forage fish depletion", can be read online through the journal Global Ecology & Conservation.

KBI was awarded an NSF Phase I grant and embarked on the audacious development work to make a synthetic bait. Achievement of Phase I milestones was followed by a diligent and successful submission for Phase II funding. This allowed for field testing with market enthusiasm and promising efficacy, but the private funding needed for commercialization failed to materialize despite publications and strategic focus on public relations efforts to build awareness and investor interest. KBI was perceived as a bait company rather than a biotech by those most likely to grasp the science of the innovation, and the company could not scale up for profitable production using NSF funds, earmarked exclusively for research activities. Final optimization of the formulations and completion of the automated manufacturing module have nonetheless continued with gratitude for the NSF investments to date.

In the course of the synthetic bait research and development, KBI acquired unparalleled knowhow and market insights into the crustacean fishing industry – and increasingly, the recreational sector, worldwide. The KBI founders considered a strategic detour into aquaculture to address a myriad of broad, legitimate and scientifically challenging industry opportunities, but ultimately remained focused on a mission to achieve global solutions through disruptive innovations that built on the core biotech competencies of the team.

 
 

While field testing the synthetic bait, eel and whelk fisheries expressed interest in using the bait in their traps as a substitute for wild horseshoe crabs; their interest brought this ancient arachnid to the attention of the KBI team. Two NSF-sponsored student interns reviewed the horseshoe crab literature and wrote a review paper that catalogued unsustainable biomedical and fishing industry practices that appeared to be threatening the viability of the species and an array of shorebirds that depend on their annual spawning for sustenance during migration. This foray revealed a raw materials market in excess of $100 million and a biotech endotoxin kit market of $1 billion based on the “harvesting” of a unique component of the horseshoe crab blood with sensitivity to gram negative bacteria in parts per trillion.

 
 

A broader understanding of established practices presented a myriad of opportunities for provisional methods and device patents and the husbandry of the animals in a natural habitat with a robust food supply designed to enhance hematologic wellbeing and vitality. How to feed “ranched” horseshoe crabs quickly focused on worms, a staple of the horseshoe crab diet; however, cultivating annelids as a primary food source posed a challenge due to a lack of protein and nutritional density.

That is, worms are typically comprised of about 30% protein and 70% “empty stomach.” This suggested yet another opportunity to develop biologically enhanced worms as living, encapsulated carriers by engorging that 70% with optimized nutrients. As the KBI team developed additional methods for annelid farming to produce horseshoe crab food, the enriched worms offered a natural alternative to fishmeal in aquaculture, as fish have been attracted to live worms for time immemorial. This revealed yet another global solution: to conserve wild fish caught to feed farmed fish in a $185 billion aqua feed market.

 
 

The nutritionally dense formulation also let to a provisional patent for a migrating shorebird food as an alternative to the otherwise threatened horseshoe crab eggs with a unique “caviar” matrix to mimic a primary foraging target. Once again, the scholarship to ensure a compelling value proposition revealed yet another prospective global solution in a $220 billion poultry feed market, largely based on the same fish species as ingredients in bird feed – and as an organic alternative to feedstock augmented with hormones and antibiotics. From the crustaceans to arachnids to annelids, to shorebirds, every application of biotechnology reaffirmed the core strategy of building on biotech competencies, not attempting to limit the direction of the business to a single industry in aquaculture.

 
 

The husbandry of horseshoe crabs was further validated and endorsed with an evolving collaborative network that has included the Georgia Department of Natural Resource and NOAA, SeaGrant in Coastal Georgia. A small estuary refuge and a limited number of horseshoe crabs with systematic, supportive management could meet current biomedical industry demands while providing a compelling rationale for gradually prohibiting wild capture of more than 600,000 crabs every year – and thereby replenishing the species and the birds that depend on it.

Successful, proven “ranching” of horseshoe crabs would also promise the possibility for an unlimited supply of the blood and the prospect for addressing yet another global challenge: Given parts per trillion sensitivity for gram negative pathogens, a bedside screening test for asymptomatic septicemia could allow for early intervention and appropriate therapy for 2 of 3 ICU hospital acquired infections. Such consistent, early intervention could likewise significantly reduce the risks of antibiotic “superbugs” through treatment before the infections could overwhelm the drugs. The epidemiologic possibility of a world with untreatable infections is looming without new tools and medicines to treat sepsis, the third leading cause of death and posing a $1 trillion global healthcare burden.

So, today, strategically speaking, Kepley BioSystems remains a biotech company addressing billion-dollar, global solutions with disruptive innovations. This promising foundation has achieved a myriad of critical milestones in pure research and non-dilutive funding. Collaborative equity partnerships are vital to leveraging and seizing the vast potential for this novel biotech enterprise going forward.

 
Kepley BioSystems, a Cascade of Disruptive Innovation