Executive Summary

Business – Stem Sel Srl is a spinoff, Ltd company located in , . It is participated by the incubator AlmaCube Srl, an Ltd company participated by the University of Bologna and by Unindustria Bologna, the association of industrial companies of Bologna county. The startup, Stem Sel business is based on development, engineering, production and distribution of an instrumentation (and relevant disposable devices) named Celector. Celector implements an innovative and patented technology developed for the isolation, separation and selection/sort of human stem cells from different tissues such as “discarded” tissues (e.g. placenta, umbilical cord, lipoaspirate, dental pulp). Celector allows for stem cell characterization and future use for cell therapy in Regenerative Medicine. Stem Sel cooperates with opinion leaders in cell preservation and manipulation, such as the worldwide excellence Rizzoli Orthopedic Institute (IOR), Bologna, Italy. Stem Sel has recently agreed with IOR a cooperation partnership based on the project “Distretti 2” of the Emilia-Romagna Region (District 5: Pharmaceutical Industry and Biotechnologies, Theme 4: manipulation of human cells and tissue for regenerative medicine of the human locomotor system). The opinion leaders that collaborate with Stem Sel contribute to finalization of the Celector development towards most mature applications of cell therapy. These applications have been chosen among those capable to give an answer to most emerging needs in the field of cell therapy. The opinion leaders have already expressed a very positive judgment on the key role of Celector, which they consider as a revolutionary technology when compared to current competitors/analogs. The business idea and early business planning of Stem Sel was supported by the Spinner Program of the Emilia-Romagna Region. Stem Sel won the StartCup 2013 Edition 2012, the business plan competition between high-tech business projects of the Emilia-Romagna Region. Stem Sel led first among 52 projects selected by a panel of expert entrepreneurs and investors. Stem Sel was awarded with the UK Trade Investment's UK-IT Entrepreneur Award 2012, and it also entered the European phase of the Intel Business Challenge 2012.

Market – It has been esteemed by online sources that in 2014 the market of technologies and equipment for cell therapy will reach 400 M$ in US, and 1000M$ worldwide. By the end 2016 it is expected to rise up to 800 M$ in US, and 2500 M$ worldwide. Nevertheless, still few players are present in this market. Potential clients for a first version of Celector are R&D labs of research centers of (a) companies that collect and store stem cells for transplants (cell banks), or of (b) companies producing stem cells-based products for cell therapy (cell and tissue engineering factories). These clients develop new applications based on stem cells, particularly multipotent stem cells such as mesenchymal stem cells (MSCs). MSCs currently are most promising stem cells for clinical applications: about 400 cell factories are sponsoring many of

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the thousands MSC-based clinical trials in the world.

Competitiveness – Competitive trait of Celector mostly lies in its ability to select multipotent stem cells without any manipulation. This feature is fundamental for (1) passing regulatory restrictions, and (2) separating and selecting those stem cells for which marketed technologies are still poorly effective/efficient. Moreover, if compared to analog technologies (e.g. magnetic- assisted cell sorting, MACS® by Miltenyi Corp), Celector features these additional advantages: (1) lower investments to purchase and run the instrumentation, (2) lower operating and maintenance costs, (3) disposable separation device, (4) full preservation of cell vitality, (5) reduced process times.

Intellectual property - Celector is based on a technology patented in Italy (IT1371772) and USA (US12/299350), with a patent pending in Canada (CA2649234). The patents are owned by the University of Bologna. Stem Sel is exclusive licensee until the patents expire. For the disposable fractionator device a patent application is about to be filed by Stem Sel.

Product development – The startup phase is planned as follows: (1) engineering at the pre- competitive level (July 2014); (2) industrialization, certification and testing at the ready-to-market level (March 2015), (3) beta testing and small-scale distribution/commercialization (by December 2015). Steps (1) and (2) involve outsourcing of some activities. In particular, engineering and industrialization of the Celector prototype are under development in collaboration with two local SMEs which are excellences in the “mechatronic” field: Mechinno Srl (, Bologna, Italy), and Tonioni Srl (, Bologna, Italy). Towards step (3) Stem Sel Srl already looks for commercial/distribution partners able to target B2B customers such as companies, hospitals and research institutes that will perform tests and applications with stem cells. In cooperation with the commercial and distribution partners, promotion of Celector will be performed by contacting potential customers at trade fairs, publications, exhibitions, conferences, and especially through practical demonstrations. An expression of cooperation between Stem Sel and SIAD Healthcare Spa (Assago, Milano, Italy) has been recently agreed. SIAD Healthcare Spa is a multinational company operating also in the commercialization and distribution of equipment and facilities for clients operating in the cell banking and cell factoring sectors.

Team - With its internal team Stem Sel deals with activities of (1) R&D management including IP enhancement and technology promotion, (2) eco-fin management such as financial planning, fund raising and corporate financing, (3) promotion and communication management. Stem Sel founder team is composed of researchers and entrepreneurs who, since quite a few years, have been dealing with academic research and its technology transfer/declination to the market: (1)

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Dr. Barbara Roda (CTO and Project Manager), tenured researcher in Bioanalytical Chemistry and CTO of byFlow Srl, a spinoff of the University of Bologna, is the one who initially developed the project and generated the Stem Sel business idea; (2) Dr. Pierluigi Reschiglian (President/CEO), full professor of Bioanalytical Chemistry, President/CEO of byFlow and certified SPINNER consultant in Business Administration; (3) Dr. Andrea Zattoni (CFO), permanent researcher in Bioanalytical Chemistry and CFO of byFlow Srl; (4) Kristel Martinelli (Product Engineer), PhD student in Chemistry. Support to the R&D activities of Stem Sel is carried out by: Eng. Martina Di Venere (Product Manager), master degree in biomedical engineering, Eng. Pietro Mattiazzi (Hardware Engineer), master degree in Electronic Engineering, Niccolò Dionisi (Software Engineer), master graduate in Computer Science, and Martina Rossi (Quality Engineer), PhD student in cellular biology. The short-term development plan involves enforcing human resources for the biological/medical activities.

Eco-fin plan - For development and engineering of the Celector prototype until the ready-to- market phase, an investment of 400 K€ has been already set. Approximately 50% of this investment has been bootstrapped by byFlow Srl through projects financed by the Emilia- Romagna Region, and by internal resources. The other 50% has been covered by a “seed” VC investment from four business angels who since foundation entered Stem Sel equity. A startup investment of approximately 1M€, preferentially as a mix of in-kind industrial/in-cash VC value, is sought for the low-scale production and distribution of Celector. This second-type investment is required to also support R&D activities for the "medical device" version of Celector. Together with the commercial/distributor partners, the startup sale phase aims for the commercialization of a limited number of Celector and related consumables. It is prudentially estimated that 20 units of Celector can be sold in the first year, and 30 units in the second year. This estimated sale volume will allow Stem Sel reaching the breakeven point between the first and second year of commercialization. The relevant turnover is figured out as follows: Years Instrumentation Disposables Service and training Total Quantity Price (€) Quantity Price (€) Quantity Price (€) Turnover (€)

1 2 20 35.000 1400 500 10 3000 1.430.000 3 30 35.000 2000 500 15 3000 2.095.000

Exit strategy - Stem Sel exit strategy preferentially looks for a trade sale of the majority stake of shares to a corporate player operating in the market of cellular technologies (strategic partner) and/or to private equity, corporate VC investors.

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