PohlmanA_Capstone project_20160422 - SF Comments

Advances in Dry AMD (Age-Related Macular Degeneration):
An Encapsulated Allogenic Stem Cell Therapy using Neuroprotection to
Preserve Visual Function in Cases of Geographic Atrophy
Alyson Pohlman
Master in Biotechnology
Capstone Project
Spring 2016

Alyson Pohlman Capstone Project Spring2016
2
Reviewer’sComments (technical sectionsonly)
Grade – A 98% (585/600 points)
Overall Comments
Excellentjoboverall. Especiallyappreciatedthe waythe final negative recommendationwas
approached.
Overall Organization & WritingStyle
Verywell organized,andexplainedacomplex topicquite clearly. Excellentwritingstyle.
Executive Summary
Extremelywell done –comprehensive,succinctand clear.
Introduction,Background, Technical & BusinessRationale
Verygooddiscussionof the disease,the technologyandthe choice of company.
TechnologyAnalysis
A thoroughandclear explanationof the disease andthe detailsof how the technical approach might
work. There were some concernsaboutthe relative scale of the cell capsulescomparedtothe retina
and some otherpractical considerations.
The IP analysiswassomewhatsuperficial,butthe analysisof the substantial competitive technology
space and newJapanese regenerative medicine regulatoryframeworkwere bothgood. The discussion
on manufacturabilitywasgood,butthere were some significantunansweredquestionsaboutscalability.
Businessand ImplementationAnalysis
The overall businessandimplementationanalysiswasquitegood. Atthe end,the author clearly
recommendedagainstimplementationof the product,whichisafirstin the program. Thiswas verywell
done – the entire topicwasanalyzedquite thoroughlyandwithobviouspositiveintent,butthe author
identifiedanumberof critical issuesthatmade the final recommendationaveryreasonable one.

3
Table of Contents
EXECUTIVE SUMMARY 4
INTRODUCTION, BACKGROUND, AND TECHNICAL AND BUSINESS RATIONALE TO THE
PROBLEM 6
Problem: 6
Unmet need and proposed solution: 7
Statement of risk: 8
Company proposal: 9
ANALYSIS OF THE TECHNOLOGY 11
Underlying science: 11
Proposed solution: 17
Alternatives considered: 17
Current and future applications: 18
Global Intellectual Property summary: 19
Legal and/or regulatory expectations: 20
Existing or emerging competing technologies: 21
Manufacturability challenges and considerations: 23
ANALYSIS OF THE MARKET OPPORTUNITY 25
Target Customer: 25
Market size: 25
Industry attractiveness based on potential for profitability: 26
ANALYSIS OF THE STRATEGIC OPPORTUNITY 30
Product components: 30
Company strength and weaknesses: 30
Arenas: 31
Required resources and capabilities: 32
Acquisition of additional capabilities: 34
Staging and pacing: 35
Sustainable competitive advantage: 37
Value creation: 39
IMPLEMENTATION CHALLENGES 41
Social, cultural and ethical concerns: 41
Political, environmental, and economic considerations: 42
SUMMARY AND CONCLUSION 44
METHODS 46
REFERENCES 47
APPENDIX 50

4
Executive Summary
The number one cause of visual loss in people over 50 years of age in the developed world is
Age-Related Macular Degeneration (AMD). Dry AMD is the slow, progressive thinning of
central retinal tissue associated with widespread oxidative damage, inflammation and aging. In
dry AMD, the macula loses function through the geographic atrophy of retinal epithelial cells and
their supported rod and cones. For the patient, this results in a loss of independence due to an
inability to see faces, drive, or read. There are currently no approved treatments available to
either repair or replace areas of retinal degeneration.
In this report, a proposed technological solution and commercialization partner for a dry AMD
treatment are evaluated. As can be seen highlighted in the flow diagram below, three key
perspectives guide this analysis, a review of the technological solution, an exploration of the
market opportunity, and an examination of the strategic fit of the company tasked with
development.
This prospective technology incorporates Stem Cell Inc.'s propriety HuCNS-CS® neural stem
cell line with Austrianova's sodium cellulose sulfate encapsulation "Cell-in-a-Box" technique to
treat degenerating retinal tissue with paracrine growth factors that have been shown to promote
and repair retinal functionality. This innovation builds on the established safety profiles and
cGMP facilities associated with these techs to satisfy regulators and abbreviate the time and
cost to market entry. Additionally, the encapsulation technique partnered with the allogenic stem
cell therapy offers benefits of site-specific longer lasting distribution, increased patients'
convenience and access, removes the need for a concomitant immunosuppressive therapy, and

5
works with purified cells of a non-controversial origin that can be cryogenically preserved for up
to 5 years.
The suggested market has been identified as those in Japan with Stage 3 dry AMD including
geographic atrophy. With an increasingly aging population, clearly defined regenerative
medicine regulatory pathway, and a national commitment to regenerative medicine, this market
offers significant appeal. However, stiff competition exists. Many rivals' solutions are farther in
the development process, and alternative methods may offer advantages in price, safety or
efficacy. Furthermore, while there is a government mandate in Japan to support and adopt
regenerative medicine treatments, a prolonged downturn in the Japanese economy, in tandem
with a dwindling tax base and issues of access, indicate that Japan's goals for the adoption of
government funded regenerative treatments may not be completely realistic.
Lastly, Fujifilm subsidiary Japan Tissue Engineering Company (J-TEC) has been selected to
develop this technology through licensing for the Japanese market. Reinvented as a leader in
regenerative medicine with a recent history rich in acquisitions in this space and a specific
commitment to dry AMD, Fujifilm brings a depth of resources and capabilities necessary to a
successful commercialization effort. As the first company to have approved regenerative
treatments in Japan, J-TEC also has a wealth of experience in somatic stem cell-based
treatments and contacts in this market upon which to build. Yet, misgivings about the
partnership cannot be ignored. Many of the capabilities observed are found only to have a
temporary competitive advantage that may prove not unique or sustainable enough. With a
corporate strategy that explicitly focuses on tissue engineering, the neuroreplacement approach
of this tech will represent a significant corporate deviation. This is compounded by J-TEC's
focus on autologous versus allogenic treatments, and its lack of stake in this intellectual
property. Without a tireless advocate like an inventor on board, reservations exist that this
technology may easily be lost within Fujifilm's expansive portfolio.
In conclusion, while this technology and commercialization plan offers notable advantages,
when analyzed against market forces and industry attractiveness, pursuing this solution is not
recommended. In its place, Fujifilm may wish to stay truer to its roots by pursuing an all-in-one
acquisition with a later-stage alternative approach designed to fill this unmet market need.

6
Introduction, Background, and Technicaland Business Rationale to the
Problem
Problem: Age-related macular degeneration (AMD) is the fourth most common cause of
blindness after cataracts, preterm births and glaucoma. It is estimated to affect between 24
million and 50 million people worldwide.1,2
However, among those over 50 years of age in
developed countries, AMD is the number one cause of visual impairment. With ever increasing
aging populations resulting from generational forces and longer life spans, the impact of AMD
will only be more widely felt. Indicators predict that by 2020, 165 million people will have AMD,
and by 2040 that number could rise to
288 million.3
AMD affects the functionality of cells in
the central area of the retina, or macula,
which can be seen in context to the
anatomy of the eye in Figure 1. While
disruption of the macula’s
photoreceptors by AMD does not lead to
complete blindness, the macula is
responsible for the central vision used in
such critical daily tasks as reading,
driving and identifying faces. AMD is
diagnosed based on the presence of
hallmark “drusen”, yellow deposits of
extracellular materials such as proteins and lipids which accumulate between the retinal
pigment epithelial (RPE) layer and Bruch’s membrane (Figure 2). AMD is associated with the
presence of many small or several large druse (Figure 3), though the exact link of druse to AMD
progression and RPE function is not fully understood 1,3
Figure 2 Relationship
of retinal epithelial
layer (RPE) with
Bruch’s Membrane
and the choroid,
healthy versus AMD.
http://www.sec.gov/A
rchives/edgar/data/11
15285/0000950123040
10324/y01243y01243z
0018.gif
AMD is segmented
into three phases;
early, intermediate and advanced. Early AMD is identified by the presence of medium “hard”
Figure 1 Anatomy of the eye. http://gemclinic.ca/wcm-
docs/images/images%202/Anatomy.jp
Drusen

7
drusen and no visual loss. Intermediate phase AMD
indicates the presence of large drusen or pigment
changes, and may be asymptomatic or have some
visual loss. In its advanced phase, visual loss is
occurring. Eyes with AMD are further divided into 2
types; “dry” and “wet”. Though dry AMD accounts for
90% of AMD diagnoses, the associated visual
impairment progresses slowly, if at all. In the 10% of
cases that are wet, there is a sudden vision loss. That
loss is often the result of a hemorrhage or edema
which blocks or distorts portions of the central visual
field. Because of the dramatic nature of wet AMD, and
the well-studied biology of neovascularization,
extensive research and breakthrough treatments have
been introduced in recent years that can stop visual
loss, and in the best cases, reverse it. In contrast, advanced dry AMD currently has no
approved treatments beyond a supplement combination that may reduce the risk of disease
progression 25% in patients with intermediate phase disease.1,3,4
It is important to note AMD can
occur in one eye or in both, and may appear in different phases or types between eyes.4
Unmet need and proposed solution: For those who do experience severe vision loss
from dry AMD, it is the result of a biologic process called geographic atrophy (GA). GA is
characterized as a loss of well-defined areas of RPE cells, which leads to degeneration of the
corresponding photoreceptors (rods and cones), ultimately thinning retinal tissue to a level of
non-functionality. Currently, GA results in 20% of cases of legal blindness, and affects 1.75
million Americans.3
Causes being studied for GA include oxidative stress, inflammation,
genetics, heredity, and lifestyle influences, and research and Phase I/II clinical trials are
currently ongoing in all of these areas.3,5
Treatment approaches including adult autologous and
allogenic stem cells, embryonic stem cells, and induced pluripotent stem cell transplants are
being developed to allow for regeneration of the RPE, in the hope that the economic, physical,
and emotional toll of dry AMD can be halted or reversed.6
However, the current approaches all
have obstacles that could limit their potential efficacy and commercialization potential, including
ethical implications, sourcing, patient convenience, safety, and manufacturing challenges. Due
to the size of this market for this unmet need and the early stage nature of other proposed
treatment strategies, an alternative approach utilizing encapsulated stem cells as
neuroprotectors that secrete growth factors to slow or stop the degenerative processes
associated with geographic atrophy is being proposed.
Currently anticipating a Phase II trial, American company Stem Cell Inc. (SCI) has shown great
promise using its purified allogenic human neural stem cells HuCNS-CS®
in the treatment of
GA.7
However, while its approach addresses ethical concerns associated with embryonic stem
cells and provides a convenience and better understood in-human safety profile than induced
pluripotent stem cells (iPSCs), it does require patients to complete extended
Figure 3 Fundus photograph depicting the
macula and the AMD hallmark drusen.
www.macularhope.org

8
immunosuppressive therapy.7,8
Further, issues of localizing and sustaining delivery have been
noted in contemporary ocular stem cell approaches. As the population affected by AMD is
geriatric and more likely to suffer from concomitant conditions and be at greater risk of infection,
immunosuppressive therapies represent an increased risk factor and serious commercial
detractor.
In contrast to the approach SCI and other developers are taking, using stem cells to regenerate
tissue, this technology focuses on realizing the potential of secreted growth factors to act as
neuroprotectors rather than neuroreplacements. This treatment aims to protect and preserve
vision for those with intermediate stage dry AMD characterized by signs of progressing
geographic atrophy. By applying the latest in sodium cellulose sulfate cell encapsulation
technology like that currently marketed by Austrianova’s Cell-in-a-Box®, this treatment for dry
AMD will implant and isolate allogenic neural stems cells, allowing growth factors to stabilize
and support existing retinal stem cell and retinal epithelial cells in the macula. Through
encapsulation, the need for immunosuppressive therapy can be eliminated, and other benefits
such as site-specific, extended release and ease of manufacturing can be realized.6-17
Statement of risk: Of course, like with any early stage technology, great risks apply in a
number of areas; technological uncertainty, marketplace unpredictability, human variables, and
financial unknowns. Many of these risks are associated with any type of venture, while others
are unique to areas of emerging science and stringent regulatory environments like that of
biotechnology.
Though research has become more widespread in the area of stem cells, very few innovations
in this field that are subject to FDA regulation have had time to reach the marketplace. In fact,
in the United States, there has yet to be a clearly defined regulatory pathway for regenerative
medicine. This, in and of itself, brings great risk to any company that would invest in the costly
and timely discovery and development process. Additionally, there are many unresolved
questions related to the efficacy and long term safety of the technology. If the technology does
prove to retain vision, will the results be significant enough to differentiate this product from
other possible market entrants? With so much research being done in the use of stem cells in
the treatment of dry AMD, there are undoubtedly concerns about a race to entry. There are also
questions that need to be addressed relative to safety, the ease and frequency of treatments,
and end user product costs. In an industry known for high costs, stem cells are notably
expensive to obtain and proliferate. Third party payer criteria have yet to be established, and
could limit revenue potential and patient access.
Risks must also be considered involving the development team and the collaborative process,
as well as those related to the expense and availability of the human resources that will be
critical to a successful commercialization. Moreover, there are limitless assumptions and
variables in the financial realm that could make or break this project including unknown
development costs, internal timelines and potential regulatory delays. Clinical trials come with
their own uncertainty, not just in outcome but also in site identification and activation, patient

9
recruitment and retention, and data management and integrity. Finally, issues of licensing and
intellectual property uncertainty must be anticipated and resolved favorably.
Company proposal: With all of these considerations in mind, Fujifilm has been proposed to
implement the development and commercialization of this technology. Founded in 1934 and
located in Toyko, Japan, Fuji Photo Film. Co. Ltd. was built on selling photographic equipment.
Over the years, it grew and expanded to include “imaging and information solutions”. However,
due to the introduction and widespread adoption of electronic imaging in the last decade, Fuji
Photo faced a crisis of a diminishing and potentially obsolete market. In 2006, rather than going
the way of ice wagons and Blockbuster, Fuji Photo Film Company became Fujifilm Group, a
conglomerate dedicated to “exercising pioneering leadership” in areas including industrial
products, graphic systems, recording media, highly function materials like those used in LCD
technology, and healthcare. With the rebranding, it redefined its corporate mission;
“We will use leading-edge, proprietary technologies to provide top-quality products
and services that contribute to the advancement of culture, science, technology
and industry, as well as improved health and environmental protection in society.
Our overarching aim is to help enhance the quality of life of people worldwide.”18
Specifically, Fujifilm issued a commitment to the emerging field of regenerative medicine.
Having worked for years in the field of medical imaging, Fujifilm recognized a number of
established regenerative medicine capabilities. It noted that its work with the complex chemical
makeup and microenvironments in film production is similar in scale and complexity to
managing microenvironments within human cells. Additionally, Fuji Photo had spent years
working with the protein collagen. Collagen, present in photographic film, can also be used to
create scaffolding for cell culturing and tissue regeneration. With this knowledge, Fujifilm
developed an entire extracellular matrix recombinant peptide product line. These core
capabilities and a vision to work on cutting edge innovation has led to Fujifilm’s business
expansion that, as seen in Figure 4, is ongoing today.19
In the last two years, the Fujifilm
Group has made a number of
strategic acquisitions to further
expand its expertise and position
within this marketspace. In 2014, it
acquired Japanese Tissue
Engineering Inc. (J-TEC). In
addition to bringing its autologous
cultured epidermis and autologous
cultured cartilage technologies into
the folds, J-TEC also brings a
depth of regulatory understanding
and quality assurance experience,
Figure 4 Fujifilm product line evolution and diversification.
http://www.fujifilm.com/innovation/

10
as the holders of the first two Japanese regulatory approvals in the field of regenerative
medicine.19
The following year, Fujifilm acquired Madison, Wisconsin-based Cellular Dynamics
Inc. (CDI) and launched CDI Japan. As CDI are the pioneers of iPSCs, which are widely held as
the next revolution in drug discovery and possibly regenerative treatments, the acquisition of
CDI truly cemented Fujifilm as a driving force in regenerative medicine.20
(Appendix: Fujifilm’s
Therapeutic Initiatives Timeline, March 2015)
Even with such an active portfolio, there is still room for Fujifilm to leverage its core capabilities,
not only in regenerative medicine, but also in sales and marketing, manufacture, finance, and
administration, for other treatment approaches and indications within this niche. In the March
2015 presentation on Fujifilm’s Therapeutic Initiatives, CEO Shigetaka Komori specifically
mentioned Age-Related Macular Degeneration as an unmet need, or target, for regenerative
medicine.21
While iPSCs represent an exciting future avenue for treatment, allogenic stem cell
treatments have already found regulatory approval and commercial entry; iPSCs have yet to be
established as safe for uses beyond drug discovery.8
Additionally, encapsulated allogenic stem
cells offer a quality of convenience in its ability to be prepackaged and stored that iPSCs and
autologous stem cells do not. By combining two early development technologies and adding it to
the J-TEC portfolio, there is an opportunity to build on the successes and expertise of members
of the Fujifilm Group to create a ready to use stem cell technology that addresses an
untreatable prolific disease associated with a large economic impact.
Furthermore, this strategic development decision would serve a market demographic that is
known to be expanding, both in Japan and worldwide. It would capitalize on both the clarity and
collaborative nature of Japan’s new regenerative medicine policies and pathways to mitigate
much of the uncertainty about regenerative medicine in other markets. Working with J-TEC, who
is currently launching initiatives in Thailand and China for their products, there is an opportunity
to benefit from its experiences to achieve expansion beyond Japan, and even potentially to
other indications that could benefit from the advantages of encapsulation and the power of stem
cell paracrine factors.22

11
Analysis of the Technology
Underlying science: As has been previously noted, causes of the retinal thinning, or GA,
seen in dry AMD (Figure 5) have been hypothesized to include oxidative stress, inflammation,
genetics, heredity, and lifestyle influences.
In dry AMD, it is believed that the primary cause of cell death is apoptosis due to widespread
oxidative damage. In patients with AMD, upregulated nutritional metabolites and proteins
associated with oxidation have been noted in support of that theory. Also, inflammation related
to the immune system is believed to play a role in the in the development of extracellular debris,
plaque build up, and the eventual formation of AMD’s hallmark drusen. Investigational
approaches are being designed to target and better characterize the various genes and
signaling pathways that may
cause or exacerbate
degeneration of the macular
tissue. Tactics include delivery of
neurotropic factors, gene
replacement or gene silencing,
and the implantation of donor
RPE cells. Yet, as allogenic RPE
cells do not attach well to Bruch’s
membrane, or proliferate
efficiently enough to survive long
term, other options including stem
cell applications must be
pursued.23
In contemporary discussions
about the enormous potential of
stem cells treatments, much
focus is paid to the concept of
tissue generation from
differentiated stem cells,
replacing old, poorly functioning
cells by introducing and
incorporating new, proliferating,
healthy cells.
However, in animal models stem
cell uses for cardiovascular repair
have shown that the functional
improvement post-stem cell
implementation goes far beyond
the benefits achieved by
Figure 5 On top left, a fundus photograph of an eye with GA. On the
top right is an OCT cross section of the same eye demonstrating
thinning of the retinal. Below is a healthy fundus photo and
corresponding normal OCT.
http://imagebank.asrs.org/Content/imagebank/OCT(1).jpg/image-
full;max$643,0.ImageHandler
http://ewanstilwell.com.au/wp/wp-content/uploads/2014/05/OCT-normal-
retina-macula.jpg

12
engraftment alone.13,22
In fact, it is becoming widely accepted that the larger impact of stem cell
activity may be linked to the extensive secretion of paracrine factors associated with stem
cells.13
If this is the case, the advantages that can be achieved by partnering stem cells with
encapsulation may be well suited to serve as an engraftment alternative for dry AMD. Stem cell
paracrine factors have been linked to “anti-apoptosis (anti-death) of cells, regeneration of
damaged tissue, recruitment of the body’s own tissue-specific precursor cells and
proliferation/inhibition of relevant cells types including blood vessels”.13
(Appendix: Adult Stem
Cell Paracrine Factors)
First, to provide the rationale for the
selection of allogenic adult stem cells
in this technology, it is critical to
identify and understand the
differences between types of stem
cells. All stem cells share the
qualities of self-renewal and
differentiation.24
The graphic shown
in Figure 6, provided by the National
Institute of Health, describes the
origins of the three distinct types of
stem cells currently being researched
for their medical usability. In addition
to being distinguished by origin,
embryonic cells, adult stem cells, and
genetically reprogrammed stem cells
(iPSCs) are classified by their ability
to differentiate. Embryonic cells are
initially totipotent; able to give rise to
any of the known 208 cell types.
After a few days, however, that potential becomes limited and the cells become pluripotent.
Pluripotent cells can still differentiate into all cell types except for the extraembryonic or placenta
cells. Adult stem cells, also known as somatic cells, are multipotent and are even more
restricted, differentiating into only a small numbers of cell types. Stem cells are further
delineated as autologous or allogenic; from one’s own blood or from a donor. iPSCs result
from the genetically reprogrammed reversion of adult stem cells to a pluripotent state. 24
When selecting the optimal stem cell type for this therapy, many factors came in to play.
Currently, investigational treatments for dry AMD utilize each of the origin subgroups.
Considerations, including ethical implications, technical limitations, product specifications,
manufacturing concerns, and customer and provider convenience will be discussed in more
depth later in this section and throughout the report. Based on those analyses, encapsulated,
allogenic adult stem cells have been selected for this therapy designed to mobilize endogenous
stem cells within the retina over a prolonged periods of time to conteract the natural reduction of
RPE density that comes with age and is exaserbated in those with dry AMD.23
Figure 6 Three types of stem cells by origin;embryonic,adult,
induced pluripotent.embrhttp://media-
cacheec0.pinimg.com/736x/bc/98/bb/bc98bb2a7e9b964be7056dfd9
842dcb3.jpg

13
Speciifcally, SCI's propriety platform line of neural human stem cells, HuCNS-SC®
(Figure 7)
has been chosen. HuCNS-SC® is a highly purified, donor derived cell line that has been
expanded and cryogenically frozen to create an easy to use “stem cell in a bottle” platform
technology. To develop the line, SCI isolated neural
stem cells within human brain tissue through the use of
specific cell surface markers and monoclonal
antibodies. Once isolated, the cells were screened and
purified. Preclinical studies with this line showed
differentiation into three different cell types: astrocytes,
oligodendrocytes and neurons.25
These cells have been evaluated for their safety and
therapeutic benefits in Phase I/II trials for conditions
including spinal chord injury, Pelizaeus-Merzbacher
Disease, Neuronal Ceroid Lipofuscinosis, and dry AMD
with GA. In the dry AMD trial, cells were transplanted
subretinally. Results at 6 and 12 months included stable or improved contrast sensitivity and
visual acuity, plus increased macular volume and foveal thickness.7,25
However effective this
treatment may be on its own, concerns still exist about the rejection of foreign “donor” cells and
the need for immunosuppressive therapy to accompany implantation. Thus, an alternative in the
form of encapsulated HuCNS-SC® cell delivery is being proposed.
Prior to March 2000, it was believed that mammalian eye had no regenerative capabilities.
However, at that time, retinal stem cells (RSC) were first discovered. Using murine models,
single pigmented cilairy margin cells were cultured with the neural stem cell growth factor
fibroblast growth factor (FGF2). Using this method, sphere colonies formed that exhibited the
ability to differentiate into retinal-specific cell types including RPE and photoreceptor rods and
cones. Further, once activated, these cells continued to proliferate with or without additional
growth factors. This dispelled the idea that ocular tissues could not regenerate, and that stem
cells were not present within the adult eye.26
It also provided the clue that there is an
endogenous mechanism that allows these cells to repair some disfunction within the eye. Yet,
on its own, this process seems to fall short of addressing the severity of damage associated
with AMD.23
In this therapy, the focus would be on providing additional therapeutic growth factors, that, when
applied early enough in the degenerative process, could assist retinal stem cells in the
maintenance of existing cells, preventing widespread apoptosis from taking place. In fact,
degeneration of neural cells is well characterized within AMD. Thus, supplying the growth
factors of neural stem cells, like those in HuCNS-SC®, may act as a rescue for the overall
functionality of multiple kinds of cells like RSC and neural cells that are critical to retinal utility.
Further, in previous transplants of cells it has been indicated that cells that are “biochemically
Figure 7 SCI’s proprietary HuCNS-SC® neural
stem cell.
http://www.stemcellsinc.com/Clinical-
Programs/HuCNS-SC-Platform-Technology

14
committed”, but not yet fully differentiated, like the HuCNS-SC® may actually be more likely to
breakdown physical barriers that allow for successful interactions with the existing tissue.23
Indeed, early data suggests that many of the neurotrophic growth factors associated with neural
stem cells may be the same as those that promote the “migration, integration, and
differentiation” of RSC into retina. Those factors include transforming growth factor (TGF-β3),
fibroblast growth factor (FGF), and epidermal growth factor (EGF). During development of
retinal cells, TGF-β3 has also been shown to regulate cell differentiation of progenitors into rod
photorecpetors.27
Additionally, hepatocyte growth factor/scatter factor (HGF/SF) has been linked
to both the maintenance and development of both photoreceptors and neurons.23
In SCI’s preclincial analysis of HuCNS-SC® implanted in the subretinal area of RCS rats, it
became clear that there are two ways to slow the natural degeneration of retinal cells, by
providing mechanical support to the dying photoreceptors through RPE cells and/ or providing
neurotropic support to promote photoreceptor survival. RCS rats have a Mertk gene mutation
that eliminates phagocytosis of RPE cells. This leads to a toxic build up that causes unchecked
apoptosis of retinal cells like that seen in AMD. Areas that were treated HuCNS-SC® exhibited
“preservation of the photoreceptor–bipolar–horizontal cell synaptic contacts in the outer
plexiform layer” and the presence of “phagosomes and vesicles exhibiting the lamellar structure
of outer segments”.28
These results are promising as they imply that HuCNS-SC® have a
phagocytic capacity that could that could be critical to preventing cell death during degeneration
that results from debris build up.
By encapsulating the stem cells, many of the safety concerns that exist for engraftment of adult
stem cells can be addressed without impeding functionality. Of primary concern for those
suffering from dry AMD must be the comparison of proposed non-encapsulated and
encapsulated solutions and the associated need for immunosuppressive therapy.7
Allogenic
cells provide convenience; donor originated cells can be prepared in advance and on larger
scales. However, they also are more likely to solicit an immune response from the body. Since
this population is geriatric, they are already high risk for infection and other debilitating ailments.
Use of an immunosuppressive therapy limits lymphocyte proliferation, weakening the immune
system, and increasing the risks associated with concomitant conditions. Once encapsulated,
immune responses cannot alter the stem cells and cells are protected from having their benefits
limited or makeup modified.13,29
Currently, little is known about what happens to stem cells post implantation. Because of the
sensitive nature of stem cells, they are unable to be tagged or tracked without negatively
affecting the cells, ruling out the traditional methods of biotechnology; antibody tagging,
fluorescence staining, or by use of a reporter gene.13
Because of the size of the capsules used
in this technology, it can be confirmed that the encapsulated cells do not migrate from the site of
insertion. This allows the stem cells to have a longer time of efficacy localized specifically in the
treatment area. Further, studies of unregulated stem cell therapies used in humans have shown
that the foreign cells can have tumorigenic capabilities. Encapsulation prevents the stem cells
from differentiating into inappropriate cell types in unintended areas of the body.13, 30

15
In order to achieve the benefits of its Cell-in-a-Box® intellectual property, cell bank and cGMP
manufacturing facility for sodium cellulose sulfate capsules, Singapore company Austrianova
has been chosen as a strategic partner for this technology. Its proprietary capsules have been
successfully used with multiple cell lines and stem cell types, and unlike alginate capsules, can
be successfully frozen for up to five years.13,30
The cell encapsulation material is semi-
permeable, is composed of sodium cellulose sulfate consisting of polymers of SCS and
polydiallyldimethyl ammonium chloride, has an established safety profile, and is currently
commercially available.24
Because of the limited size of the subretinal cavity, each round capsule will be 0.75 mm in
diameter and contain approximately 10,000 cells each. This size has been selected to allow for
optimal ratio of cell to oxygen and nutrients to cells in vivo. 31
To prohibit an immune response,
the capsule wall serves as a barrier with pores big enough to allow nutrients in and waste out.
However, the pores are too small to allow neutrophils, T-cells, and macrophages in. As this
technology has been used for the release of antibodies, it is important to note that antibodies
could indeed enter the capsule. However, for an immune response to be initially triggered,
antibodies of the right specificity would need to have physical contact with naïve B-cells,
something the capsule prevents from ever happening. In the case of burst capsules, and
specific antibodies did enter remaining capsules, a detrimental reaction still remains unlikely.
While antibodies might be able to “earmark” cells for further action through effector cells, the
remaining capsules prevent physical effecter cell/stem cell contact necessary for cell
elimination. Large complement proteins that can also eliminate cells in an immune response
remain too large and complex to enter the capsule pores. But, as shown in Figure 8, the pores
are large enough to allow for the release of the therapeutic paracrine factors. It is also important
to note that within the capsules, as would be expected in a 3D environment, the cells group to
form neuro spheres limiting their ability to migrate from the capsule.13
Of course, concerns do exist about what could
happen if environmental cues enter the stem
cells and cause unexpected differentiation, or if
cells could grow until bursting. Proof of concept
studies would be needed to address these
concerns. But as seen in Figures 9, 10, and 11
when subjected to growth and survival
assessments, stem cells encapsulated in
sodium cellulose sulfate showed no difference
in proliferation or morphological changes from longer life spans of the therapeutic benefit.13, 30
Figure 8 Austrianova’s proprietary sodium cellulose sulfate
capsule allows for secretion of growth factors from the
encapsulated cells, while also allowing nutrients in and
waste products out. http://www.austrianova.com/cell-
encapsulation-cell-in-a-box/cell-encapsulation-cell-in-a-
box-1/ewExternalFiles/Factsheet%2010_Non-
scientific%20overview%20Cell-in-a-Box.pdf

16
Figure 11 Using an AlomarBlue™ assay, Austrianova encapsulated cells demonstrated longevity.30
Additional benefits of encapsulation include:
 The capsules provide a microenvironment with good biocompatibility in which the stem
cells can to not only grow, but be preserved and regulated to prolong the treatment
benefits. This higher accuracy and longer lasting distribution of the paracrine factors
provides a treatment that can be achieved with lower doses and smaller amounts of the
costly starting material.13
 Encapsulated allogenic adult stem cells are already being used in other later stage
investigational treatments, and have promising safety profiles.32
Figure 10 Stem cells are shown before, during and 18 hours
after encapsulation and no morphological changes are
observed after release.30
Figure 9 Over 60 days, encapsulated cells showed continuous
viability and growth.13

17
 In both the case of an unanticipated adverse event, or once the optimal treatment
duration had been reached, the capsules can be easily identified and removed, a feature
favored by regulators.13
 The source material is widely available, easy to reproduce and characterize.13
 The capsule prevents fibrous overgrowth, and has been demonstrated to be robust
enough to be delivered via catheter or needle.13
Proposed solution: While actual product specifications such as capsule amount, therapeutic
benefit, and frequency will be subject to a complete preclinical analysis, a target product profile
will need to be competed to reflect all customer needs, regulatory specifications, and developer
goals.
At this time, the proposed product is:
 3 x 0.75 mm capsules per treatment
 Delivered by sub-retinal injection in clinic (Figure 12)
 Removed at 2 years
 After removal, procedure repeated as needed based on
o 2 line visual acuity loss over 1 year, or
o 15% reduction in contrast sensitivity, or
o Increase of 10% in GA on fundus photography, or
o Decrease of 10% in OCT central median values
 Does not require concomitant immunosuppressive therapy
 Can be removed in the sign of an AE
 Is available in a convenient, prepackaged form
 Can be stored or shipped frozen for up to 5 years
Alternatives considered:
As will be clearly
demonstrated in the upcoming
review of the competitors,
there are many different
approaches being
investigating to solve the
unmet need for dry AMD
patients. Many options and
alternatives were investigated
during the design of this
project and were rejected.
Figure 12 Subretinal injection. http://jirehdesign.com/wp/wp-
content/uploads/2013/09/suvr0050-510x309.jpg

18
Key considerations are detailed in the following chart:
Approach Reason for Rejection
Neuroreplacement Huge amounts of competitors are using this approach; concerns about
immune rejection; high cost, low convenience of autologous treatments; cell
migration and tumorigenic capabilities; requires larger amount of starting
materials. Also muddying a replacement approach is the precision of donor cell
integration, the vascular complexity, and the complex mechanisms of
secondary synaptic rewiring28
ESC Controversial origins
iPSC New, early in human use; delayed market entry; unknown regulatory
obstacles; QC Concerns and technical challenges including pseudogenes,
regions rich in AT, and genes too long to sequence due to software
considerations, and potential server of other technical fails24
Alginate capsules Cannot be frozen; limits shipping and distribution options
Combination w non-
stem cell progenitor
cells
Requires immunosuppressive therapy or autologous approach
Other alternatives are still being considered and will be evaluated for their advantages during
preclinical testing and product design. Those include decorating the capsules with additional
growth factors, genetically modifying cells to enhance growth factor expression, and using a
different location for delivery: intravitreal, intraretinal, or on the ciliary margin where RSCs are
located. Also, evidence indicates that a tandem approach with non-stem cell progenitor cells
could boost the paracrine factor effectiveness, and this might need to be pursued further if early
results indicate a need for increased efficacy.
Current and future applications: As has been previously mentioned, other indications
being investigated for HuCNS-SC® use include spinal cord injury, Pelizaeus-Merzbacher
Disease, and Neuronal Ceroid Lipofuscinosis. Any condition impacting the central nervous
system through the eye, spinal cord, and brain could be a candidate for some therapy involving
neural stem cells. However, current applications of this particular stem cell line have been
limited to transplantation, and encapsulation has not been previously investigated. But, the idea
of combining stem cells with a microenvironment such as encapsulation or a hydrogel matrix is
also a heavily researched space with studies looking at therapies for Huntington’s Disease,
ALS, Parkinson’s and other diseases that could benefit from the introduction of specific growth
factors or proteins.6
If this technology is successful it could also have value in the other retinal disorders like Retinitis
Pigmentosa or Stargardts. There could also be in uses in conditions that are caused by spinal
or brain cell degeneration such as Alzheimer’s. As such disorders represent highly debilitating
conditions with numerous unmet needs, it could be inferred that these markets would be able to
demand premium prices for a regenerative therapy such as this. However, careful attention to
the differences in the mechanisms of action would have to be paid. Stem cell paracrine activity
would be unlikely to be useful in spinal cord or brain injuries where, instead of tissue
preservation, new tissue growth is likely required.

19
Though this specific technology is not currently approved for use, cell encapsulation itself is not
new. It was first investigated in the early 1930s and revisited again in the 1960s. Contemporary
applications vary widely and include treatments for indications such as diabetes, cancer,
cardiovascular, monoclonal antibody therapies, and liver failure. Additionally, the capsule can be
based on a large number of source materials; alginate, collagen, gelatin, agarose, chitosan, and
as in this approach, cellulose sulfate.6
Global Intellectual Property summary: Figure 13 provides a visual map on SCI’s U.S.
patent holdings for its neural stem cells composition, manufacturing methods, and methods of
use. These cover the stem cells regardless of their origin, and are also held in European
equivalents. 17
To move forward with this
technology, J-TEC would
want to license or acquire
any U.S. patent that
impacts production of this
cell line in case there could
be future expansion to the
U.S. market, and also to
discourage development
among competitors.
Alternatively, Fujifilm could
accomplish this through an
outright acquistion of SCI.
Regardless of the means of
ownership of the U.S.
portfolio, this technology is
being introduced in Japan,
and will also require its own
IP protections through the
Japanese Patent Office
(JPO). J-TEC would have
to apply for Japanese
equivalents of its U.S.
holdings. Though not
without expense, J-TEC
and Fujifilm both have the capabilities and expertise in intellectual property management to
secure appropriate protections in a timely way.
Austrianova’s IP is held in Singapore and the PCT (Figure 14, as seen in a World Intellectual
Property Organization [WIPO] search).33
Figure 13 SCI’s HuCNS-SC® intellectual property portfolio.
http://www.stemcellsinc.com/Science/Intellectual-Property

20
Figure 14 Austrianova international granted patent application.
https://patentscope.wipo.int/search/en/result.jsf?currentNavigationRow=next&prevCurrentNavigationRow=1&query=FP:(austrianova)
&office=&sortOption=Pub Date Desc&prevFilter=&maxRec=20
Additionally, a patent for the combined methodology and composition would need to be sought
in Japan.
For freedom to operate, a search of the JPO yielded no patents related to cell encapsulation
using cellulose sulfate. There was however a number of underlying methodology patents on
neural stem cell differentiation that would need to have their claims investigated further by legal
counsel. Those include:
Patent Year- Number Abstract
2002 - 325571 METHOD FOR INDUCING DIFFERENTIATION OF RETINA
2007 - 014352 BIOLOGICAL FACTORS AND NEURAL STEM CELLS
2013 - 128477 METHOD FOR PRODUCING RETINAL-LAYER-SPECIFIC NERVE CELL34
Legal and/or regulatory expectations: As with any medical treatment, standards for
regulatory approval are rigorous, timely and costly. However, as part of a series of national
reforms to be expounded upon later in the implementation analysis, Japan has made a broad
reversal to its regulatory approach to regenerative treatments. In Figure 15, the standard and
new expedited pathways are contrasted, revealing a much quicker route to conditional market
entry.

21
Figure 15 Japan’s expedited regulatory process for regenerative treatments. https://www.i-d-a.com/japans-regulatory-
environment/expedited-approval-for-regenerative-medicines/
Under this new system, later stage clinical trials will be run in tandem with product launch. This
offers both advantages and disadvantages. Obviously, in an industry where the first to market
holds the longest and largest share, time to launch is huge factor to product success. Also,
longer development comes with larger costs. In contrast, in this expedited model, lower costs
are born before revenue can be made. However, a larger investment in market launch may be
made for a product that will not bare results in safety and efficacy. Further, if such a late stage
fail does happen, there is greater risk to patient safety, corporate liability, and brand reputation.
Clinical trials for this therapy will have to be carefully planned and executed to meet Japanese
Ministry of Health Labour and Welfare (MHLW) standards. They must be designed with
impeccable scientific logic and be implemented without causing delays or higher costs. This will
require clinical expertise and attention to somewhat unpredictable issues like subject enrollment
and retention. In the design of the Phase I protocol, J-TEC will want to work closely with MHLW
to make sure it meets the criteria for safety and likelihood of efficacy that has been set for the
initial NDA approval. While safety standards are expected to be high for a condition with this
level of invasiveness using a stem cell therapy, the safety benefits of encapsulation should help
lessen some of the regulatory examiner’s concerns. Further, the dry AMD indication benefits
from some commonly accessible and widely accepted clinical endpoints including contrast
sensitivity testing, ETDRS Visual acuity measurements, size of GA on fundus photography, and
macular thickness as read by Optical Coherence Tomography. However, as this is a slowly
progressing disease, return visits may need to be longer apart to truly assess efficacy.
Existing or emerging competing technologies: As can be seen in the chart below,
there are no shortage of companies or approaches looking to fill the unmet need in dry AMD.
Moreover, many have a potential market entry advantage in being further in the development
process. Also, it is possible that more than one strategy could prove viable. Notably, some of
these treatments may also have other significant advantages, such as lower costs it the cases
of the non-regenerative and non-biologic potions like Brimonidine.

22
It is important to note that this chart only represents well-publicized development efforts, and
may not fully encompass those approaches still in early stage or academic investigations. Like
all new technologies, there is always the potential that this technology may be less effective or
affordable than projected, or that a new market entrant could have a superior or more attractive
product in any number of ways such as delivery route or frequency. Yet, all "competitors" are
also likely to have their own unique roadblocks to approval. In the case of CDI, it has a threefold
regulatory challenge; it must develop and get approvals for a degradable scaffolding, new
instruments to deliver their therapy, as well as the reprogrammed cell itself.24
Treatment Method/Strategy Delivery
Route/frequency
if Indicated
Stage of
Development
Outcomes
Investigated
Lampalizumab Biologic:Anti-factor
D monoclonal
antibody
Intravitreal Injection Phase III Shown to have 20%
reduction in area of GA
GSK933776 Biologic:Humanized
mouse IgG1
monoclonal antibody
target FC receptor
binding
IV Phase II Rate of change in area
and Visual Acuity
MacuCLEAR MC-
1101 1.0%
Drug designed to
reduce choroidal
blood flow
Topical:Drops/BID Phase II/III Visual function
Bone Marrow CD34
Stem cells
Regenerative:
neuroreplacementor
neuroprotection
Single Intravitreal
injection,200,000
cells
Phase I Tolerability, feasibility,
and visual function
hESC derived RPE
Cells
Regenerative:
neuroreplacementor
neuroprotection
Single Sub-retinal
injection
Phase I/II Safety and visual
acuity
Autologous Bone
Marrow Stem Cells
Regenerative:
neuroreplacementor
neuroprotection
Injections ofBMSC
retrobulbar,
subtenon and IV
Unspecified Visual Acuity
HuCNS-SC Regenerative:
neuroreplacement
Single Sub Retinal
injection.1 million
cells
Phase I/II Safety and visual
acuity
Brimonidine Drug for
neuroprotection
through alpha-
adrenergic agonist
Eight Intravitreal
Implants
Phase II Area of GA and visual
acuity
LEAD Laser Procedure applied to
early stage druse
2RT Nanaosecond
Laser
Unsepcified Disease progression
from early to advanced
Autologous iPSC Regenerative:
neuroreplacementor
neuroprotection
Implanted on
scaffolding
Pre-clinical35

23
Manufacturability challenges and considerations: The combination of these two
propriety technologies, the SCI HuCNS-SC® and the Cell-in-a Box® capsules, offer large
benefits for manufacturing. In an area of emerging science such as regenerative medicine, there
are inherent scale up and manufacturing questions that have to
be addressed. All such obstacles require additional time and
expense to reach a successful resolution. Yet, these two techs
both come with established full scale cGMP facilities, greatly
eliminating uncertainty about the manufacturing resources
needed.
As seen in Figure 16, Stem Cell Inc. has been using the same 4
step process and quality system since 2006 to create its
existing cell bank, and like Austrianova, has built-in quality
control for identity, purity, potency, and stability.
In fact, Austrianova's smallest scale machine generated batch is
40,000 capsules, with over 2000 capsules produced per
minute.31
Further, SCI has a large existing cell bank, and
Austrianova's capsule materials are notably easy to source,
eliminating any short term supply chain concerns. Also the
universal specifications with which this device will be produced
add to ease, convenience, and cost efficiency, as no machine
turnover or quality control adjustments will be needed between
batches.
A further advantage to the encapsulation approach is that it
creates an alternative to monolayer dependent cell culturing,
without some of the disadvantages of a bioreactor mechanism.
Though SCI will be providing the initial cell line materials,
smaller starting volumes can be used in the encapsulation.
Austrianova has the facilities to allow the cells to grow and
expand more within the capsules, again saving costs and
circumventing the labor intensive process of manual culturing.
By expanding the cells within the capsules, the cells avoid the
physical stress associated with stirring and sheering. Moreover, the capsule itself serves as a
"protector" preventing external damage such as cell collision, as well as working as a substrate
or scaffolding for cell growth.
Finally, as has been referenced earlier, this technology and its manufacturing gain all the
advantages that can be achieved from cryopreservation; convenience, stability, and improved
patient access. Stability options for transport include:
 -80°C in dry ice or chest freezer
 -150° C to -178°C in liquid nitrogen13
Figure 16 SCI’s manufacturing
process.http://www.stemcellsinc.com
/Clinical-Programs/Manufacturing

24
Both of these options allow for long range transport and long term storage. As can be seen in
Figure 17, there was no negative effect to cell viability as a result of long term cell storage. In
fact, at 5 years up to 90% cell viability remained.36
This level of longevity and flexibility does
add to its value as a technology and offers an implementation advantage over many of the
other proposed stem cell
alternatives that require
customization and
sensitive handling.
Figure 17 Encapsulated stem cells
frozen for 5 months and 4 months
at -80°C viability were thawed
and the viability assessed.13

25
Analysis of the MarketOpportunity
When evaluating the commercial potential of this technology, both market size and growth rates
must be considered. Since regulatory boundaries often define marketability and speed of entry
for emerging medical treatments, Japan and its evolved regenerative regulatory approach has
been proposed as the primary market for product launch.
Target Customer: To assess the market, first the customer must be clearly defined. For this
technology, the patient using this treatment will be living in or visiting Japan, be over age 65, is
more likely to be male, and is experiencing slow central visual loss associated with diagnosed
Stage 3 dry AMD.37
This patient is committed to maintaining his or her central vision to protect
critical daily activities like reading, using a computer, driving, or distinguishing among faces. He
or she is either proactive in his or her own healthcare, or is open to expert opinions provided by
physicians on newly developed treatments. Because this technology will not require the use of
an immunosuppressant, a patient’s other health issues do not create a significant barrier unless
they limit his or her mobility in a way that impedes implementation, follow up visits, or device
removal. The patient also must have adequate access to the solution and the means, through
personal finances or a third party payer, to cover the treatment costs.
Though the patient may represent the end user, clearly there are other decision makers in the
buying chain that must be considered for such as doctors, hospitals, and insurers. Like patients,
they also look for the distinct features and benefits such as convenience, safety, efficacy, and
affordability that this product seeks to deliver. Because Japan’s healthcare economy is
dominated by a single payer and small, private but affiliated insurers, questions of affordability,
access, and adoption are significantly different than those faced in the United States. Of course,
actual costs of the raw materials, manufacture, monitoring, overhead, intellectual property, and
profitability must all be accounted for in pricing, regardless of who pays for it. Favorably, Japan
has announced a national economic mandate that will be discussed in more depth later, which
is designed to create an advantageous climate, including insurance reimbursement, for
companies that offer effective, safe, and innovative regenerative products. In time, its ability to
truly execute that vision could prove less favorable.
Market size: As the eleventh most populated country in the world, Japan currently has a
population of 126.4 million people.38
Since, by definition, AMD is clearly linked to a geriatric
population, trends in aging cannot be ignored. Currently, Japan is the oldest country in the
world.39
According to the Japanese Ministry of Health, Labor, and Welfare, those 65 and older
will make up over 40% of the population by the year 2060. Compounding that, the population is
one of the healthiest worldwide. This correlates into ever-increasing life spans. By 2055, the
average life expectancy of a Japanese woman is predicted to increase from 86 to 90 years and,
for a Japanese man it could rise from 79 to 84 years.40
In 2013, the Hisayama Study, set in Japan, concluded that incident rates of AMD were
consistent between Caucasians and Asian populations. The study also reported that:
 In those over age 50, the onset of early AMD was 12.7% and late AMD was 0.87%41

26
 In ages 50-59 years, prevalence of early and late AMD increased to16.1% and 0.27%
 In ages 70-74 years, it rose even higher to 31.2% and 0.98%37
As the population ages, the number impacted by AMD will likely increase proportionately.40
Based on the 2010 census, 43% of the Japanese population are over age 50.42
With a noted
incident rate of geographic atrophy of 3.6 percent after 15 years for those with AMD, based on
the current population, there are approximately 20,000 cases in Japan that could benefit from
this intervention.43
With such a remarkable rate of aging, this number will only grow, setting the
Japanese population market apart for products like this that are geared towards seniors. With
projected prices for regenerative treatments of 50M yen ($512, 000 US) per treatment, this
could imply a market as big as 10B yen or $88M US in initial annual sales.44
When considering the possibility of eventually launching this product worldwide, it is also key to
note that the trends in aging seen in Japan have been identified on a smaller scale in Europe
and the United States. In 2014, one fifth of Western Europeans were 65 years old or older, with
a projection of reaching a ratio of 1 to 4 by 2030.45
In the United States today, senior citizens
make up 14.1% of the population, yet by 2040, it is estimated that 21.7% will be over age 65.46
While Japan with its clearly defined regulatory pathway is more prepared to launch a
regenerative product currently, an aging global population bodes well for the marketability of this
product over time as stem cell therapies advance in success and public perception, and other
countries follow suit in the regulatory arena.
Industry attractiveness based on potential for profitability: With market growth
correlating directly to an expanding geriatric patient base, other implications of these aging
trends must be also considered. Twenty years ago Japan had six workers for every retiree.
Currently that number is 3:1, with a prediction that in 20 more years it will be 2:1.40
With a lower
ratio of workers to retirees and a declining birth rate, the tax base of Japan faces a dire
reduction in revenue. As the government is the primary payer and health care spending will
inevitably increase with aging, the question of solvency arises. Regardless of their passion for
innovation, the Japanese economy must remain strong to actually cover the high cost
regenerative treatments otherwise, the lack of buying power relative to price that is noted in
Figure 18 , the Porter’s 5 Forces analysis, could become an obstacle to industry profitability.
Also noted in Figure 18, one of the other biggest threats to the success of a product in this
market is the level of overcrowding that exists in the research space, both in pre-clinical and
clinical stage investigations. The fierce competitive rivalry in the dry AMD pipeline validates the
claim that markets are being created by demand for products that address unmet needs for the
rising geriatric population. It is also important to note that barriers for entry are comparable
between companies unless a competitive position can be achieved through lower development
costs and quicker times to market that translate into lower consumer prices. In this case,
competitive advantage is being sought by utilizing core technologies with already established
safety profiles and cGMP facilities, and by selecting the more clearly defined regulatory pathway
provided by Japan. It has yet to be seen if other competitors will follow a similar regulatory
strategy which could significantly dilute the Japanese dry AMD market. This tech also adds

27
differentiating product features like convenience and accessibility, and proposes advances in
safety and efficacy that would be crucial for long term adoption and profitability. However,
questions still exist as to whether those features can be leveraged enough to make a significant
impact on market position.
Figure 18 Porter’s Five Forces external analysis.
In the following chart, a comparison of the capabilities of companies competing for market entry
in this space is provided. It illustrates the wide variety of competitors, from start-up and
academia to multinational pharmaceutical companies and conglomerates. It also identifies the
reality that, while Fujifilm and J-TEC may have the capabilities necessary for successful
commercialization, it is not alone in holding that distinction, and may prove to be too far behind
in the development cycle.

28
Competitor Country Type Capabilities Stage of
Development
Roche Swiss/USA Multinational
Pharmaceutical
company
Development, Regulatory,
Quality, Marketing,
Finance,Clinical,Project
Management,HR,
Manufacturing
Phase III
GSK Great
Britain/USA
Multinational
Pharmaceutical
company
Development,Regulatory,
Quality, Marketing,
Management,HR,
Manufacturing
Phase II
MacuClear Inc. USA Start-Up Development,Clinical,
Regulatory
Phase II/III
UC-Davis USA Academia Development,Clinical,
Regulatory
Phase I
Astrellas Pharma Japan Multinational
Pharmaceutical
company
Quality, Marketing,
Management,HR,
Manufacturing
Phase I/II
Retinal Associates of
South Florida/MD
Stem Cells
USA Clinical/Private
Research
Development,Clinical,
Regulatory
Unspecified
Stem Cells Inc USA Start-Up Development,Regulatory,
Quality, Clinical,Project
Management,HR,
Manufacturing
Phase I/II
Allergan Ireland/USA Multinational
Pharmaceutical
company
Quality, Marketing,
Management,HR,
Manufacturing
Phase II
Center for Eye
Research Australia
Australia Academia Development,Clinical,
Regulatory
Unspecified
Cellular Dynamics Inc.:
a Fujifilm Group
Company
Japan/USA Multinational
Pharmaceutical
company
Quality, Marketing,
Management,HR,
Manufacturing
Pre-clinical
Beyond buyer power, new entrants, and the competitive rivalries outlined above, when thinking
about industry attractiveness, it is also critical to look at the influences of supplier power and
substitute product. For this product, both of these areas have revealed relatively low threats
comparatively to the other factors seen in the Porter analysis. Specifically, the substitutes
available do not have sufficient efficacy to truly block adoption of a superior tech. However, it
should be noted that supplements, low vision devices, and healthy lifestyle choices do have a
wider accessibility and affordability than a more invasive, aggressive, and likely more effective,
regenerative treatment approach.
For this technology, supplier power also presents an interesting dichotomy. By working with two
specific suppliers, SCI and Austrianova, there is the potential to be trapped into proprietary

29
approaches that, in time, could prove less desirable in terms of cost or method. At face value, it
also gives a high level of power to the supplier. Yet, the advantages achieved through these
alliances are designed to drive profitability. This tech utilizes their established cGMP processes
to make the unclear manufacturing path for regenerative products, particularly during scale up,
less murky. Additionally, because both these companies are early-stage, this alliance will add
critical value to the supplier in the form reputation and revenue that will be key to their own
profitability.

30
Analysis of the Strategic Opportunity
Product components: In this case, for the customer to receive the end benefit of an
effective and convenient way to slow, stop, or reverse vision loss resulting from GA and AMD,
many components must work in harmony. Stem cells must be collected from donors, purified
and cultured, and eventually encapsulated, filled and frozen. The capsules must be shipped
and stored in clinical facilities. In those same facilities, patients must be properly diagnosed and
prescribed the treatment. The physician must use his or her expertise to prepare the treatment
and perform the procedure in the recommended manner. Time must be allowed to elapse for
the paracrine factors to stimulate the repair of the existing damaged tissue. Follow up visits
must be conducted to measure efficacy and review safety. Finally, the device must be removed,
and follow-up maintained to evaluate the need for retreatment or any long term side effects.
Company strength and weaknesses: At face value, both J-TEC specifically and Fujifilm
generally have many confirmed strengths that are applicable to achieving market entry for this
technology. However, when measuring the strategic opportunity, it is equally important to note
the areas of weakness. The chart below provides a comparison of both.
Strength Why It Helps Weakness Why It Could Hurt
J-TEC Has 3 approved on
the market
regenerative products
Proven Development,
Regulatory, Quality,
Technical, Clinical,
Manufacturing, Financial
and Market experience
Focuses
exclusively on
tissue engineering
No commitment or
expertise in non- tissue
engineering approaches
First
commercialization of
regenerative med
product in China
 Multinational product
launch experience
 Access point into
world’s largest market
Has no stake in the
IP
 Requires licensing
 Needs a committed
project champion
Somatic stem cell-
based
 Also Somatic stemcell-
based
 Has culturing expertise
Autologous Stem
Cells source
 Allogenic Stem Cell
source requires very
different collection
approach
 No experience with
encapsulation
Fujifilm Huge regenerative
medicine presence
 Access to industry
alliances with diverse
capabilities
 Financial resources and
commitment to this area
Capabilities in
iPSCs, autologous
stem cells and viral
and vaccine techs47
May spread too thin by
diversifying too far from
their core capabilities
Established presence
in desired
marketplaces
 Japan
 United States
 China
Buys companies
not technologies
Limited experience with
placing a specific
technology within a
subsidiary
Dedication to dry
AMD
Already convinced of the
market opportunity
Too big Tech may be too early in
development and get lost
within their enormous
portfolio
As will be discussed, these indicated strengths and weaknesses vary in their potential levels of
impact on strategic fit. When developing a successful strategy for the launch of this technology,

31
key competencies must be correctly identified, and steps taken to recognize and remedy any
critical gaps.
Arenas: Before determining what driving resources will be needed for successful
commercialization, it is beneficial to do an external analysis of the path Fujifilm and J-TEC need
to take to achieve their goals for this technology. In Figure 19, a strategy diamond is presented
to illustrate a number of the aspects of strategy that will be addressed in this section.
Figure 19 Strategy diamond internal analysis.
In this context, arenas are defined as the places in which the company will be active with this
product. To understand the correct arenas for this product the market and industry must be
defined. This product will be a regulatory-approved therapeutic known to be safe and efficacious
in the treatment of geographic atrophy in cases of age-related macular degeneration.
Additionally, it will be most favorably launched in Japan as it has the clearest regulatory
pathway for this type of treatment approach, making the market the Japanese dry AMD market.
Moreover, it will not be a recommended treatment for those with early dry AMD. In fact, due to
the high cost of this intervention, only those with Stage 3 progression will be targeted, further
defining the market as intermediate to advanced dry AMD treated in Japan. Physically, the
treatment will be prescribed and administered in retina or other specialized ophthalmology or
regenerative medicine facilities.

32
Required resources and capabilities: After considering the product components, the
company’s strengths and weaknesses, and the arenas of activity, it becomes clearer what
resources will be required for successful commercialization of this tech in the chosen market,
and what vehicles will be needed to get there. As can be seen in Figure 19, more than the
product components are needed for this technology to truly reach a patient and provide
therapeutic benefit.
First, J-TEC must successfully complete product development, meeting internal and external
requirements for efficacy and safety. This necessitates expertise in many functional areas
including product design and preclinical evaluation, clinical, regulatory, quality, resource and
project management, upper management, and manufacturing. Positively, J-TEC has exhibited
these capabilities during the development and launches of its three other regenerative products,
autologous cultured epidermis, autologous cultured cartilage, autologous cultured corneal
epithelium, and its R&D lab tissue product lines.48
J-TEC’s technological prowess in the area of somatic stem cell-based regenerative treatments
has already been confirmed. It has demonstrated competency in discovery and proven
experience in development. It has been through the complex and iterative pre-clinical process,
and shown the ability to establish a sound targeted product profile and feasible product
development plan, as well as to be adaptable and make good, technically viable decisions.
Conversely, J-TEC’s area of stem cell expertise is focused on neuroreplacement rather than
neuroprotection. Furthermore, allogenic stem cell harvesting and encapsulation are out of their
scientific wheelhouse. J-TEC has no experience with prepackaged treatments, and no
background in ophthalmology. Lastly, it has no propriety intellectual property in this space. All IP
would need to be acquired and managed through licensing or acquisition.
Evident by its current market presence, J-TEC also has a track record of designing and
implementing clinically significant trials for regenerative approaches that demonstrate both
safety and efficacy. It has familiarity with unique ethical considerations of stem cell technologies,
and knows how to train physicians and recruit and retain patients for treatments that are not yet
well characterized. Moreover, it has the regulatory knowledge and relationships necessary to
see a product through trials to approval. Regulatory experience is invaluable at all stages of the
product development cycle; it is essential during clinical trial design to develop the protocol,
select clinical endpoints, and establish inclusion and exclusion criteria, as well as during data
analysis and the NDA process.
After product development has concluded and the product and process have satisfied regulatory
requirements, J-TEC must launch the product. Doing so requires successful marketing,
education and sales campaigns designed to promote adoption. This technology can benefit from
J-TEC’s existing sales and marketing infrastructure. It has familiarity with the Japanese
customer and healthcare system, and experience with physician education and outreach. J-TEC
also has demonstrated an ability to launch its regenerative products in additional markets such
as China, which offers a capability that could be beneficial from a long-term perspective.

33
However, existing sales representatives and technical support staff are not established within
the AMD/ophthalmology market, and specialized staffing would still be needed.
Quality must be designed into this product during every stage of development and manufacture.
J-TEC has an established quality program management program and quality policy which
complies with both ISO9001:2008 and the Pharmaceutical and Medical Device Act. J-TEC's
quality management system is depicted in Figure 20.49
Though this approach is specific to
tissue engineered products it could be easily adapted to reflect quality considerations for both
the method and product resulting from this technology.
Figure 20 J-TEC’s Quality Management System.49
Manufacturing presents another specific set of resource needs and capabilities required. Again,
J-TEC brings experience to the table. Specifically, it has first-hand knowledge on clean
environments, facility control and system monitoring, and employee training to execute the

34
highest cGMP standards.50
Yet, its experience is focused on autologous stem cell treatments
which require a very different set of proficiencies for cell handling. Further, because of the
specialized nature of the encapsulation process, this product relies on intellectual property and
manufacturing facilities outside of the J-TEC's current facilities. A higher level of coordination
and skill sets in cross-company communication, project management, and contracts will be
required.
The ability to secure, allocate and manage project resources is also imperative. J-TEC and
Fujifilm have proven proficiency in areas of fundraising, revenue generation, budgeting, and
other financial management activities. This level of experience and established resources are
critical during the development phase of a technology when projected revenue alone is
insufficient, costs need to be monitored, and difficult decision need to be made.
Building on J-TEC's existing human resources infrastructure will be key to the integration of a
new product like this into its portfolio. Staff will either need to be reassigned or hired into the
existing culture of J-TEC. Human resources will be responsible for recruiting top talent and
maintaining all personnel policies and initiatives during a time of anticipated growth.
Project Management is also an essential capability that benefits from an established set of
practices and seasoned personnel. Again, key to the integration of this project will be the
structuring of the project team itself, and its interaction with the larger company. If the company
as a whole can find an enthusiasm for this solution, it could help neutralize the technical
differentiators between this product and J-TECs existing product lines and restore a sense of
corporate identity. Additionally, J-TEC offers in-house experience on supply chain management
and regenerative medicine distribution strategies, and has a veteran legal team, all of which
could be beneficial.
All of the capabilities that J-TEC possesses are ultimately only as valuable as its leaders’ ability
to apply them effectively. Good leadership and vision from industry veterans will be just as
important as the novel nature of the approach and its predicted efficacy. For the past 12 years,
Yosuke Ozawa has led J-TEC from development to market entry and through its recent
acquisition by Fujifilm Group. With direct experience in getting regenerative markets from
concept to customer, Ozawa and his leadership team have a lot of business and technical
acumen that will be essential for a successful launch of this product.
One of the most critical elements to getting this product to market will be identifying a project
champion, likely within parent company Fujifllm, who will fight through all of the knowable and
unknowable obstacles to make the product and its benefits a reality. There is no innovator on
site, or in-house person driving this, and the champion will be needed if this project stands any
chance of going the distance amidst Fujifilm's diverse portfolio and J-TEC's proprietary focus on
tissue engineering.
Acquisition of additional capabilities: If committed to this project, there are a number
of approaches or "vehicles" that J-TEC can utilize to mitigate deficiencies in its resources and

35
capabilities. Those methods can include additional hiring and restructuring, acquisition and
mergers, or the pursuit of strategic alliances and partnerships. In the following analysis, the
deficiencies have been outlined and possible solutions identified.
Capability Deficiency Proposed Remedy Alternative Solutions
Cell line intellectual property,
expertise, and cGMP facility
Exclusive license and supplier
agreement with Stem Cell Inc.
with a product restriction for dry
AMD
Acquire Stem Cell Inc.; select an
alternate stem cell line that is
already proprietary or can be
acquired through more favorable
licensing
Encapsulation intellectual
property, expertise and cGMP
facility
Form a strategic partnership
with Austrianova that includes
the authority to use their Cell-in-
a-Box IP and facilities to
produce this product
Purchase Austrianova; select a
different encapsulation
technology and license it;
license Cell-in-a-Box
methodology and employ it with
in-house manufacturing and
quality standards
Expertise in AMD-product
development and clinical
Hire a medical advisor Coordinate with academia or
professional retina societies;
reassign or collaborate with
existing Fujifilm staff with
expertise in this arena
Expertise in AMD- sales, tech
support, and distribution
Hire specialized sales and
support teams
Train existing teams; outsource
to an agency with
ophthalmology specialty or
established distribution chain
Contract specialist/cross
company project manager
Utilize in-house talent and
reassign them to this specific
project team
Hire outside legal services or
outsourcing consultants
Project Champion Nominated by Senior
Management based on
availability and interest areas
Recruit talent from Stem Cell Inc
or Austrianova with existing
commitment to these underlying
tech solutions
Staging and pacing: The next element of strategy deals with the sequence and speed of
the moves needed to actualize the strategic vision. Again, the stages and pacing for
commercializing this technology are illustrated within the strategy diamond in Figure 19.
To begin, a proof of concept study will be needed to assess the viability of the final product.
Before that can be arranged, J-TEC will need to initiate discussions with SCI about the potential
use of its propriety cell line for this purpose. As SCI has currently suspending its Phase II dry
AMD trial due to insufficient funds, it is likely it would be amenable to a short term investigational
partnership that would let J-TEC hire Austrianova to test these combination of techs for viability
and optimization.
Currently, Austrianova offers proof of concept services for just this purpose. A basic feasibility
study includes the manufacture of approximately 40,000 capsules for assessing cell
encapsulation numbers, health, growth and cell viability. It can be completed in 2 months for a
cost of around $11,000 USD.31

36
If the results match expectations, the next step would be securing the foundational IP for the
technology, including all method and utility patents, and any trade secrets essential to
development. This proposal specifies an exclusive license and supplier agreement between J-
TEC and SCI for this product area. All territories will be included to protect for any potential
future expansion. A strategic partnership agreement with Austrianova would also need to be
reached before any other resources could be committed towards product development. Both of
these may take significant time and negotiations and a 90 day window for contract development
is being allotted so as to not delay market entry. Both companies have a great deal to gain, but
also must ensure that their development goals are being met on favorable terms. If this project
were to be unsuccessful or "shelved", it could be detrimental to these smaller companies, so
partnership will require a great deal of internal consideration and highly structured contracts that
protect all parties.
After IP agreements are in place, preclinical development must be completed and data prepared
to support the implementation and design of a Phase I safety in human clinical trial. An
additional six to nine months have been proposed for this process. Also during this time,
discussion should commence with MHLW so that regulatory compliance needs can be
anticipated and met at all stages of development. If early preclinical results indicate promise,
work can begin concurrently on the study design, protocol development, and study site
selection.
Phase 1 is also anticipated to take 6-9 months to complete but times could vary greatly as a
result of slow recruitment, retention issues, safety concerns, or because of protocol revisions
necessary for meaningful endpoints and regulatory compliance. However, after the six month
mark, MHLW may be willing to begin its initial NDA review.
Following a successful initial NDA review, market entry may be possible. Due to the nature of
the new Japanese regulatory approach, if granted, a conditional market launch will need to be
planned and executed in tandem with additional clinical trials focused on broader issues of
efficacy and safety.
Market launch will require the development of a promotional strategy, training and management
of the sales team, and finalization of distribution chains. It will also involve outreach and
education initiatives, as well as advertising campaigns. Most critically, insurance coverage will
need to be secured for the Japanese central payer system and with the associated secondary
private carriers. This process could take anywhere from three months to a year, though the
race to market entry will be a powerful motivator to move quickly on any remaining
implementation action items.
The final stage will be post-market surveillance that takes two forms. First, to meet with
regulatory expectations, additional trials comparable to Phase II/III will need to be conducted
with broader populations to either support or refute claims made during the initial NDA review
and market launch. Lastly, additional post-market surveillance may be required or may be
deemed beneficial for purposes of product differentiation. Both of these courses of action could

37
take 3-5 years. This indicates the overall anticipated staging and pacing timeline could range
anywhere from 20 months to 35 months for market entry, and four and a half years to eight
years before all human studies have been completed on this product.
Sustainable competitive advantage: As outlined in Figure 19, the next question is to
address is how and if Fujifilm and J-TEC can "win" with this approach. While there are clearly
merits to this technology and partnership, is this approach the right strategic fit for J-TEC and
Fujifilm to yield a sustainable competitive advantage in the Japanese dry AMD market?
In the simplest of terms, for J-TEC to have a sustainable competitive advantage with this
product it must do one of two things, be able to offer either lower prices or higher quality
compared to competitors or substitutes. To evaluate which resources or combination of
resources are necessary to achieve a competitive advantage, a VRINE analysis can be seen in
below. For this review, the assumption is made that all of the additionally required capabilities
have been successfully acquired.
To guide this analysis, the following questions were asked:
 Valuable: Does the resource or capability allow the organization to meet market
demand?
 Rare: Is the resource or capability scarce relative to demand?
 Inimitable/Non-Substitutable: Is it difficult for the competition to imitate the resource or
capability or substitute other capabilities that yield similar benefits?
 Exploitable: Can the organization exploit the resource?51
Capability Valuable Rare Inimitable/Non-
Substitutable
Exploitable
Product
Development
Yes, essential for
revenue growth
Yes, few
companies have
succeeded in
regenerative
product
development
No, other companies have
successful development
approaches and this area is
growing
Yes, experience can be
used to shorten time to
entry and get early
marketposition
IP Yes, if tech is
proven feasible
Yes, tech is for
unmetneed
No, other competing
companies do have IP in
this space that could
potentiallybe substituted
Yes, associated with
established cGMP
facilities resulting in
lower costs and may
offer better efficacy and
safety to demand
premium pricing
Technical
Expertise
Yes, experience
cannotbe
substituted for
Yes, specialized
experience with
these techs
Yes, to these techs Yes, have proven track
record of creating and
supporting products
Clinical Yes, essential for
regulatory
approval and
revenue growth
Yes, experience
with successful
clinical trials in
regenerative
techs
No, other companies now
have experience with
getting regenerative
productthrough Japanese
trial requirements.Also, an
alternative solution might
Yes, could resultin
shorter time to market
and lower costs

38
be developed that is non-
regenerative
Regulatory Yes, essential to
marketentry
Yes, few
companies have
experience with
getting
regenerative
productto
Japanese market
No, alternative solutions
could be non-regenerative
and more well
characterized
Yes, if competing
products are
regenerative in nature
Market Launch Yes, experience
with this territory
and treatment
type
Yes, first
companywith
experience with
getting
regenerative
productto
Japanese market
No, other companies can
imitate marketlaunch
strategies
Yes, established
approach and presence
in the territory could yield
an advantage
Manufacturing Yes, experience
in scale up
Yes, few
companies have
experience is
successful
regenerative
scale-up
No, other companies can
imitate or reverse
manufacture
Yes, established cGMP
facilities could resultin
shortened development
and lower costs
Quality Yes, established
quality program
necessaryto
grow revenue
No, quality
program though
firm specific is
not a limited
resource
No, is substitutable or
imitable
Yes, established quality
program saves
developmenttime and
lowers costs
Human
Resources
Yes, personnel
and
infrastructure.
Yes, this is a
highly specialized
field
imitable
Yes, established teams
and infrastructure with
proven experience could
lead to either faster times
and lower costs or
superior products
Finance Yes, fiscal
managementto
crucial to all
aspects of
commercialization
Yes, money is a
resource
associated with
scarcity
No, fiscal managementand
financial resources are both
substitutable
Yes, established sources
of capital and fiscal
management
infrastructure could lead
to lower costs
Project
Management
Yes, essential to
all aspects
product
development
No, specialized
skill butnot rare
imitable
Yes, established project
management
infrastructure could lead
to lower costs through
Leadership Yes No, do not have
the innovator
imitable
Yes, experienced
leadership could lead to
lower costs through
or to higher quality
products and outcomes
After considering J-TEC’s capabilities and resources in this format, it becomes clear that most
of its strengths, particularly in combination, do offer an exploitable advantage that could lead to
either lower costs through a shortened development process, or result in a higher quality
product and early market entrant that would be able to demand premium pricing, or both. Yet,
it is equally important to note that almost all these advantages are temporary rather than
sustainable. In fact, the only resource to offer a sustainable competitive advantage would be the
intellectual property and technology itself, and that is caveated in that it must be demonstrated

39
to be safer or more effective than any competitors, or simply be the first and only entrant to the
market space.
Value creation: Michael Porter says that "strategy relies on a unique set of trade-offs". No
one product or company can be everything to everyone. Decisions must be made to go one
direction, and therefore, forgo another. This begs the question, does this the option makes the
most sense to create value for J-TEC and their parent company Fujifilm? A review the economic
logic behind this strategy can be found in the strategy diamond in Figure 19. This product brings
the potential for high economic returns because it hopes to benefit from premium prices through
early entrance, higher access because of its convenience prepackaged nature, and lower costs
through an abbreviated development cycle based on somewhat defined techs.
To determine if this technology could truly add value it helps to look back at J-TEC’s two
business groups: Regenerative Medicine and R&D Support services.48
At face value, this
appears to be a portfolio where this technology could make a valuable impact. This tech is
regenerative in classification, does not have negative immune effects (much like J-TEC’s other
autologous treatments), and is planned for the same territory. Most importantly, while
capitalizing on areas of J-TEC’s functional expertise, it is designed for a different indication for
an unmet need in a growing market and will not cannibalize J-TECs current product lines.
Additionally, the product matches parent company Fujifilm’s specific interest in positioning itself
in the dry AMD market.52
Due to the worldwide potential of a product for this indication, Fujifilm
has already purchased CDI, a company tasked by the U.S. National Eye Institue to solve this
problem through a iPSC-based solution. Because of the incredibly low rate of technologies like
these to emerge from concept to product, it could be in Fujifilm’s best interest to “hedge its bets”
and diversify its efforts in a number of different approaches and markets. But does this truly fit
with J-TEC’s company strategy, or does J-TEC just seem to be the closest fit for a tech like this
within Fujifilm’s existing portfolio? Ultimately, J-TEC’s entire strategy is focused on tissue
engineering, not neuroprotection of existing tissue, and this level of deviation may dilute its
resources and fail to truly capitalize on its expertise.48
To create more value, Fujifilm might seek a one of the other plentiful solutions in development
for dry AMD that work through tissue engineering mechanisms. Or, Fujifilm might not want to
invest in an individual solution consisting of licensed components. Rather, it may wish purchase
an existing company that brings all the specialized capabilities necessary in one lump sum. This
was certainly done with the acquisition of J-TEC and similar entities such as CDI that offered
specific competencies that synergized with Fujifilm's larger strategic objectives. Further, there is
other activity in this specific market. That could make a direct competitor like Astellas Pharma a
more strategic acquisition than a fledgling start-up like SCI—Fujifilm would gain the
competencies and dry AMD solution, as well as the diversity of the rest of its portfolio, while
simultaneously eliminating a well-placed competitor.
The alternative of outright acquisition might even be more appealing when considering the
Japanese method of decision making; consensus. Having a product with so many distinct
parties involved could lead to additional complications when difficult development decisions and

40
challenges arise. This could serve as another motivator for Fujifilm to take an "all-in-one"
approach instead of pursuing licensing like what is called for in this solution. However, it would
be unlikely to complete a merger or acquisition without a much greater investment of resources
and time than the current proposal demands.

41
ImplementationChallenges
When evaluating commercial potential, it is essential to consider market forces that extend
beyond technical benefits and strategic merit. In fact, political, economic, social, technological,
environmental and legal considerations can have far reaching implications and have been
known to make or break a product’s success. This technology is no exception. During the
technical analysis, implementation challenges related to feasibility, efficacy, manufacturing and
therapeutic delivery
have been
addressed. Here
the most critical
remaining
implementation
challenges reflected
by the PESTEL
analysis in Figure
21 analysis are
discussed in more
depth.
Social, cultural
and ethical
concerns: While
stem cells have
been hailed as
“miraculous” and
“the key to
unlocking the future
of medicine”, their
use has not come about without controversy and mystery. Like most new technologies, stem
cells are surrounded by an air of uncertainty. Little can be known about their long term potential
or safety implications. Questions are often posed about the possibility of ethical misuse, or an
unnatural application to grow “humans in test tubes”. Even contemporary science fiction writers
suggest that stem cell technologies could spiral out of control and wreak havoc on society.52
Such a dialog can impact a customer base’s opinion. There can also be a concern about a
sense of foreignness any time something is implanted in a one’s own body. One of the
advantages of the encapsulation element of this technology is that the “foreign object” can and
will be easily identifiable and removable.
Furthermore, the ethical implications of the source of stem cell technologies is widely
misunderstood and hotly debated. Many hold the perception that all stem cell technology is
embryo-derived and therefore tied to questions surrounding morality and the origin of life.
Clearly, the source of this technology is routed in the use of adult stem cells, which serves as a
Figure 21 PESTEL external analysis.

42
differentiator, but it is unknown if the lay consumer makes such a distinction. Japan has long
been a pro-choice nation that even held mandatory sterilizations until the mid-1990s. However,
with the approval of the Maternal Protection Act, the declining birth rate and concerns raised
about a rise in abortions following the widespread availability of pre-natal genetics testing, that
attitude is shifting. Reproductive rights beyond economic factors and rape are criminalized, and
there is a widespread sentiment that fetal research is morally reprehensible.53,54
It is unknown
at this time if the national economic mandate to redefine the national industry can outweigh
misperceptions or ethical objections held by the public regarding regenerative medicine.
Another ethical grey area is how the new less conservative regulatory approach in Japan will
impact the public’s perceptions on safety. Will shorter clinical trials prior to marketability lead to
unsafe products on the market and increased public misgivings? Will the government or
developer be subjected to increased consumer litigation as result of expedited approvals? Or,
will it make the public excited to be on the cutting edge of technology? Japanese culture is
known to be one of consensus, but with the emerging nature of this market space, it is difficult to
predict what consensus will ultimately be reached about products like this one.55
For all that is ambiguous or negative about stem cells in the public consciousness, a number of
positive influences in stem cell perceptions in Japan provide a counterbalance. Japan, a country
known for deep national pride, is home to 2015 Nobel Prize winning scientist Shinya Yamanaka.
Dr. Yamanaka has been credited with one of the largest milestones in the history of stem cell
research; discovering the proteins used in the creation of iPSCs.56
Political, environmental, and economic considerations: Building upon that success,
Japan issued a national commitment to regenerative medicine. In 2012, when Shinzo Abe was
reelected Prime Minister, he introduced a set of broad sweeping economic policies that were
dubbed “the three arrows”. In his mission to reinvigorate an economy that had been stagnated
for two decades, Abenomics was focused on “an easy-money policy, fiscal stimulus, and
structural reforms”.57
Those reforms included not only lowering interest rates, but also
amending the regulatory processes in certain key industries to favor development. In 2104,
Japan’s Diet did just that by a passing a landmark pathway for regenerative medicine approval
that set the stage for the pathway referenced throughout this analysis.58
Prior to the regulatory
reforms, Japan lagged far behind in its approval of regenerative technologies, allowing only two
techs to market versus fourteen in neighbor South Korea, twenty in the European Union, and
nine in the United States.58
In a presentation in June 2015, the Government of Japan listed one
of the top priorities for the success of Abenomics as “accelerating the commercialization of
regenerative medicine”.59
With this type of economic and philosophical support from the
government, aligned with Fujifilm’s determination and capabilities, Japan could be a natural
location to launch any promising stem cell technology.
Another economic and political advantage to a product launch in Japan is that the government
and insurance system are working hand in hand to get regenerative products to the market. As
the primary payer, the Japanese government pays 70% of all medical expenses. Ninety percent
of the population is enrolled in a private supplementary insurance that covers the other 30%.

PohlmanA_Capstone project_20160422 - SF Comments

PohlmanA_Capstone project_20160422 - SF Comments

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Ähnlich wie PohlmanA_Capstone project_20160422 - SF Comments

Ähnlich wie PohlmanA_Capstone project_20160422 - SF Comments (20)

PohlmanA_Capstone project_20160422 - SF Comments