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Health & Biotech
Winning MasterChef and co-founding a cryopreservation business would seem to require different skills, but for Brent Owens the transition makes more sense than at first blush.
A former bobcat driver and winner of the 2014 Ten Network cook-off, Owens became interested in food cryopreservation and steered down a self-learning path.
“It was a stereotypical story of sitting at the kitchen table learning everything you could imagine about cryopreservation,” he says. “I hadn’t set foot in a university or opened any books.”
Owens and co-founders Brian Taylor and Sean Cameron yesterday witnessed the fruits of their labours, with the ASX debut of Vitrafy Life Sciences (ASX:VFY), following a $35 million capital raising at $1.84 per share.
After an intraday high of $2.09 the shares closed at $1.98, a 7.6% premium on the issue price and ascribing a $126 million market capitalisation.
When the trio founded Vitrafy in 2017, the idea was to focus on consumer applications – notably food – but the company has zeroed in on human and animal health.
“The idea was that if you could cryopreserve an egg, you could cryopreserve anything,” Owens says.
“We set out to reverse-engineer how egg preservation was conducted to create a scalable solution across different applications.”
On the human side, demand for cryopreservation is soaring in areas such as artificial insemination, blood products and cell gene therapy, where success depends on having the freshest material.
Cell gene therapy research is booming – notably the development of off-the-shelf ‘allogeneic’ cancer therapies derived from donor material.
Owens says a barrier to cell gene therapies is being able to preserve the material because it degrades quickly, resulting in costly wastage.
“We are able to wheel in our device next to the collection bed and cryopreserve [the material] rapidly.”
Owens says the opportunities are almost limitless in a global cryopreservation market valued by Grandview Research at US$186 billion.
“But that can be your Achilles Heel and we decided to focus on the highest impact, highest value areas and human health tops the list by a country mile.”
Vitrafy’s products consist of freezing, thawing and packaging devices, overlaid by algorithm-based monitoring software called Lifechain.
A key selling point is that freezing and thawing take minutes, rather than hours. The longer the time, the greater the risk of specimens degrading.
The device is based on principles of heat transfer, thermodynamics and fluid dynamics to remove heat from a sample “in a controlled and consistent way at various temperatures and speeds.”
This is crucial because a vial of stem cells, a unit of blood or egg and sperm samples require different freezing conditions and durations.
“We have ability to understand what those parameters are – that is part of the secret sauce – and vary the conditions to suit what the sample requires,” Owens says.
This year the freezing device won US Food & Drug Administration approval for sperm and ova and blood product applications, under a fast-track predicate device path.
Not surprisingly, Vitrafy intends to prioritise entry into the US, the biggest cryopreservation market ever since Walt Disney (supposedly) had his mortal remains frozen.
Last financial year the company gleaned $37,000 of revenue, from a contract with Tasmanian salmon producer Huon Aquaculture to freeze brood stock sperm.
That aside, the company has collaboration agreements of varying solidity.
One is with the Ohio-based Select Sires, which accounts for 25% of the bovine reproduction market (producing 26 million sperm straws annually).
The company will start a paid trial with Select Sires next year.
In human health Vitrafy is collaborating with the US Institute of Surgical Research, an arm of the Department of Defence, to improve storage of emergency blood products.
Owens says there’s an imperative is to improve the shelf life of blood platelets, which have poor quality post-thaw with only about half the material usable.
“We have done several validation studies on different biological material to show we can retain the quality of the sample in a safe and effective way.”
(A trial with Australia’s Red Cross Life Blood improved recoveries to 97.5%).
Cryopreservation is a highly competitive sector, with Vitrafy up against three much bigger global rivals.
They are the Nasdaq-listed Azenta Inc and Cryoport Inc and Cytiva, an arm of the New York-listed Danaher Corporation.
Azenta and Cryoport use nitrogen-based techniques and while Cytiva had a more refined method, Owens claims it is much slower than Vitrafy’s.
In any event, Owens says, there’s more scope for co-opetition than competition, given the parties tend to operate in different parts of the cryogenics supply chain.
Vitrafy will also vie for attention with the established ASX-listed rival Cryosite (ASX:CTE), which currently carries out work for more than 650 clinical trials for eleven of the top 15 pharma companies.
“We have met with Cryosite,” Owens says. “I would not see them as competitors, but potential partners down the track.
“They are more focused on biobanking and our equipment could be used as part of their processes.”
A future merger made in heaven, perhaps?
Vitrafy’s pricing model is also a work in progress, but the company anticipates a “managed service” model by which users are charged a monthly fee for the devices and the software, overlaid with a fee for the consumables.
While investors might be sceptical about Vitrafy’s lack of solid contracts, they can take solace in the calibre of the board and management.
The CEO, Kate Munnings, headed the formerly ASX listed IVF house Virtus Health. Director John McBain is the godfather of the sector, having founded Melbourne IVF.
Co-founders Taylor and Cameron have backgrounds in consumables exports and manufacturing respectively. Owens is the deputy CEO.
Despite Vitrafy’s – er- hot debut, some investors may prefer the comfort of Cryosite’s established revenue ($12.6 million last year, generating a $1.8 million net profit) to Vitrafy’s challenger status.
Owens has no problems with Vitrafy being the underdog, just as he was on MasterChef until he wowed judges with dishes such as pearl barley with poached scampi, pickled cabbage and fresh chervil.
He says the MasterChef experience of overcoming collapsing souffles and avoiding knife cuts has imbued him with all the ingredients to succeed in the commercial world.
“Winning a comp like that is not about skills, but resilience: learning to adapt to stressful situations,” he says.
“You just need to have a crack and learn on the fly. You jump in the deep end and either figure it out or you don’t.”
Health & Biotech
Health & Biotech
Health & Biotech
