Investment Overview

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US Capital Investment Management

PROVIA LABS, INC.


US Capital Investment Management

INVESTMENT OPPORTUNITY


US Capital Global Securities (“USCGS”) is offering 80 Membership Units in USCIM Fund XXII Provia Labs, LLC (“Fund XXII”), a pooled investment vehicle on a “best efforts” basis. Fund XXII will be managed by San Francisco-based asset management firm US Capital Investment Management, LLC (“USCIM” or the “Manager”), investing in a senior secured convertible note of Provia Labs, Inc. (“Provia” or the “Company”). The Company will use the new financing to provide working capital, expand sales and marketing activities, debt retirement and meet other current and future business needs. The convertible note will carry an 11% annual accrued interest. To see details on conversion please refer to Supplement to Confidential Offering Memorandum of USCIM Fund XXII Provia Labs, LLC Exhibit 1.


COMPANY'S OVERVIEW


Provia is a revenue-generating stem cell processing, manufacturing, and banking company with a leading position in dental stem cell storage and related services. Provia’s primary service, Store-A-Tooth™, provides private banking of stem cells from children’s teeth for future use in the child’s personalized regenerative medicine. Store-A-Tooth™ is similar to cord blood stem cell banks like ViaCord (purchased by PerkinElmer) and Cord Blood Registry (purchased by AMAG Pharma). Provia has a proven and proprietary set of protocols for cell processing, expansion, validation, and cryopreservation. Provia’s laboratory provides these services under FDA guidelines for Current Good Manufacturing Practice (cGMP) human cell and tissue products. In addition, the Provia team has expertise and protocols for stem cells from cord blood, adipose tissue, bone marrow, amniotic fluid, placenta, and peripheral blood, allowing for future expansion of its stem cell banking operation as well as for processing cells for autologous (cells from the patient, processed and used for that patient) cell/tissue products and therapies.


Company’s Market


In 2000, scientists at the National Institute of Health discovered stem cells (non-controversial, adult mesenchymal stem cells – MSCs) in teeth. There are over 300 clinical trials studying MSCs to treat diabetes, spinal cord injury and other life-threatening and orphan conditions. With the discovery of MSCs in teeth, combined with highly specialized collection and storage services, clients can access an immediately available set of genetically matched stem cells for their own future personalized regenerative medicine.


Company’s Target Market


Approximately 30 million children will lose a tooth each year in the U.S. alone. About 7 million of them will have a scheduled extraction (e.g. wisdom teeth removals) and over 20 million children will lose an exfoliating baby tooth. Comparatively, while cord blood banking is a $1B industry in the U.S., it has an opportunity base of only 4 million babies born (cord sam­ples available) each year, with only one chance for parents to make a purchase decision (as opposed to a purchase opportunity with each lost tooth for dental stem cells).


Company’s Product Offering


Provia has a consumer business and a commercial business. The consumer business is the processing, storage, and distribution of a patient’s tissue and/or stem cells for future autologous (from you, for you) use – Store-A-Tooth™. The commercial business includes products and services that support cell and tissue research and therapy. On the commercial business side, the company sells the Proviasette™. The product is Provia’s patented specimen storage container used to store frozen human tissue specimens. The company currently does not actively market the Proviasette, but through word of mouth, it has over 40 pharmaceutical and biotech customers using them. Provia provides cell-processing services for autologous cell/tissue therapy – currently developing protocols for the delivery of processed autologous adipose tissue for plastic surgeons. Additionally, Provia collects donated dental, cord, adipose, and placenta specimens, expands the MSCs from these specimens into multiple vials for MSC research use. Through distribution partners, these vials are sold to academic and commercial stem cell researchers.


Company’s Revenue Model


Provia’s initial tissue and stem cell banking service is Store-A-Tooth™ which is the collection, processing, and storage of the stem cells found inside the dental tissue for future personalized cell therapy. Store-A-Tooth includes a one-time processing component and a recurring annual storage component Parents enroll in Store-A-Tooth for an initial fee of $1,749 and $120 per year for continued storage (comparable to cord blood stem cell banking). Provia generates a 63% profit margin on initial processing and 95% on perpetual storage services on an ongoing basis. Payment plans, lower price service options, need-based grants, family plans, etc. are all commonly used components of the pricing model.


Company’s Value Proposition


The fields of regenerative medicine and cellular therapeutics show great promise. According to research by TriMark Publications, the regenerative medicine market, which includes stem cell therapies, is expected to grow rapidly to over $35 billion by 2019.1 According to Frost and Sullivan, the broader cell therapy market will grow to $180B by 2030. The use of dental pulp as a source for versatile and potent stem cells continues to gain momentum in the research literature and as a source for therapeutics.2,3 Dental pulp mesenchymal stem cells (DPSC) have advantages in growth potential and plasticity over other mesenchymal sources.4 This has led to discoveries strongly suggesting similarities between dental pulp stem cells and neural stem cells found in the central nervous system. A number of researchers have shown that DPSCs can be used to treat spinal cord injury and hypoxic brain damage.5,6 The utility of DPSCs, in particular their ability to differentiate into endocrine tissue, has made them valuable in a number of diabetes research programs. Recent studies have shown that DPSCs can be efficiently turned into pancreatic cell types and can reverse diabetes in mice.7,8


1. http://www.trimarkpublications.com/regenerative-medicine-markets
2. La Noce M., et al. Dental pulp stem cells: State of the art and suggestions for a true translation of research into therapy. J Dent. 2014 Feb 28.
3. Martin-Piedra MA., et al. Cell viability and proliferation capability of long-term human dental pulp stem cell cultures. Cytotherapy. 2014. 16(2):266-77
4. Stanko P., et al. Comparison of human mesenchymal stem cells derived from dental pulp, bone marrow, adipose tissue, and umbilical cord tissue by gene expression. Biomed Pap Med Fac Univ Palacky Olomouc Czech Repub. 2013. 157:1-5.
5. Yamamoto A, et al. Multifaceted neuro-regenerative activities of human dental pulp stem cells for functional recovery after spinal cord injury. Neurosci Res. 2014. 78:16-20.
6. Fang CZ, et al. Intraventricular injection of human dental pulp stem cells improves hypoxic-ischemic brain damage in neonatal rats. PLoS One. 2013. 8(6):e66748.
7. Ishkitiev N., et al. Pancreatic differentiation of human dental pulp CD117 stem cells. Regen Med. 2013. (5):597-612.
8. Kanafi MM., et al. Transplantation of islet-like cell clusters derived from human dental pulp stem cells restores normoglycemia in diabetic mice. Cytotherapy. 2013. (10):1228-36.


ENROLLMENT’S GROWTH


Enrollments for Store-A-Tooth have been growing consistently quarter over quarter with an average growth of 28% per quarter. This is an important factor, due to the recurrent nature of this revenue item for up to 20 years.


Total Enrollments

US Capital Investment Management

Click in the graph to enlarge


COMPANY’S FINANCIAL SNAPSHOT

Company’s Revenue Growth


Provia’s highly regulated autologous cGMP laboratory processes cells for consumers (Store-A-Tooth), researchers (via distribution partners), and soon it will serve clinicians.  Provia’s growth will come from consumer and commercial lines of business.  Approximately $650,000 of Revenue from 2013-2015 came from a single NIH contract.  Provia’s core business (Store-A-Tooth and commercial laboratory services) grew significantly during this period (in 000s): $235.4 in 2013; $248.3 in 2014; $390.3 in 2015; and $560.7 in 2015.

Income Statements


Numbers in thousands, for year-ending December 31


US Capital Investment Management

COMPANY’S MANAGEMENT TEAM


Howard Greenman, Chief Executive Officer


A co-founder of the Company, Mr. Greenman was most recently Vice President, Interim CEO for HealthCare IT, Inc. (HCIT) – a biomedical services firm specializing in human tissue banking. While at HCIT, he formed partnerships with global pharmaceuticals as well as academic medical institutions to standardize the processing of donated biospecimens. Prior to HCIT, Mr. Greenman led the strategic marketing function for Philips Medical’s Remote Patient Management Division, part of Philip’s New Ventures. Prior to Philips, Mr. Greenman was Director of Business Development for Ardais Corporation, a biobanking company that set the standard in biobanking ethics, logistics, and quality by building one of the largest repositories of research quality cancer tissue in the world. Additionally, Mr. Greenman worked in a numerous consulting roles within Accenture's Healthcare Practice, KPMG Peat Marwick’s Healthcare Strategy Group, Oracle, and the Boston Consulting Group. Mr. Greenman holds an M.B.A. from the Wharton School of Business in Healthcare Management.


Dr. Peter Verlander, PhD, Vice President, Scientific Affairs


A co-founder of the Company, Dr. Verlander was most recently the Associate Director for Strategic Development of the Laboratory for Molecular Medicine (LMM) within the Harvard Medical School - Partners Healthcare Center for Genetics and Genomics. Dr. Verlander is a molecular geneticist with nearly 15 years of experience in various aspects of human genetics in both academia and industry, including research at The Rockefeller University in New York on the molecular genetics of Fanconi anemia (FA). In 2000, Dr. Verlander came to Boston to join Millennium Predictive Medicine’s Patient Management effort. Dr. Verlander received his PhD in Microbiology from Duke University.


Dr. Joseph C. Laning, Vice President, Research and Development


Dr. Laning was the senior director of the Human Stem Cell Bank and Registry at the University of Massachusetts Medical School. He went to the medical school from ViaCell Inc. (part of ViaCord), a biotechnology company focused on researching and developing adult stem cells to treat cancer, cardiovascular disease, and diabetes where he was Senior Director, Analytical Biology. Dr. Laning earned his Ph.D. in Immunology from Harvard University.


Tim Beals, Senior Director, Business Development


Mr. Beals was most recently President of Cellogx, Inc. A division of Parcell Laboratories, where he led the establishment and successful launching of a processing and cryopreservation facility specializing in adult stem cells for research and clinical applications. Prior, he was the Vice President at the New England Cryogenic Center/ New England Cord Blood Bank, where he was responsible for developing new business focused specifically in autologous banking of adult stem cells, including umbilical cord blood, cord tissue, synovial fluid, adipose and amniotic fluid. Mr. Beals received a B.S. degree in Medical Laboratory Science from Quinnipiac College in 1980.


SOURCES AND USES OF FUNDS



US Capital Investment Management

INVESTMENT OPPORTUNITY


US Capital Investment Management

RISK FACTORS


You should be aware that an investment in Units of the Issuer, and the Issuer's investment in Company Securities, involves considerable risks, including the possible loss of all or a material portion of your investment. Securities sold through private placements are not publicly traded and are intended for investors who do not have a need for a liquid investment. The abbreviated risks set forth below, as well as the detailed risk factors set forth in the Confidential Offering Memorandum and Supplement, are not the only risks facing investors.

The abbreviated risks set forth below, as well as the detailed risk factors set forth in the Confidential Offering Memorandum and Supplement, are not the only risks facing investors.

The Issuer is an early stage private company in the stem cell field. The Company is subject to a number of significant risks that could result in a reduction in its value and the value of the Company Securities, potentially including, but not limited to:

  • Market development stage in an emerging industry and, accordingly, more competitors are evolving, some larger, more diversified, and may have more experience in the stem cell industry.
  • Existing companies may enter the industry and become competitors and they may have greater financial resources, brand recognition, and experience than the management or the Issuer.
  • Changes in demand for cell products for research and cellular therapy could affect profitability.
  • Costs increasing more rapidly than market prices could reduce profitability.
  • The research on use of dental sourced stem cells for therapy may not advance at a pace necessary to maintain a compelling value proposition to bank.
  • The difficulties Companies face in managing rapid growth in personnel and operations.
  • Pricing pressure could adversely impact Company’s planned pricing structure and have an adverse effect on Issuer’s results of operations.

Investors must understand that by purchasing Units they are voluntarily assuming all of the risks of the investment, including any and all risks relating to the Company and Company Securities, whether disclosed in this Fund Summary, Offering Memorandum and Supplement or not.


CONFLICT OF INTEREST DISCLOSURES


The Manager and USCGS are affiliated entities. Charles Towle is Co-Managing Partner of the Manager, the Division Head and licensed principal of USCGS, and a stockholder of the parent company of the Manager and USCGS. Jeffrey Sweeney is Co-Managing Partner of the Manager and is also Chairman, CEO, and the controlling stockholder of the parent company of the Manager and USCGS. Conflicts of interest may arise in connection with Mr. Towle’s and Mr. Sweeney’s control of both the Manager and USCGS. Investors should be aware that these conflicts of interest, and a number of other conflicts of interest relating to the Manager and its affiliates, are permitted under the terms of the Fund’s offering documents. You should not invest in the Fund unless you are willing to accept these conflicts of interest and the associated risk.


DISCLOSURES


The Manager and USCGS are affiliated entities. Charles Towle is Co-Managing Partner of the Manager, the Division Head and licensed principal of USCGS, and a stockholder of the parent company of the Manager and USCGS. Jeffrey Sweeney is Co-Managing Partner of the Manager and is also Chairman, CEO, and the controlling stockholder of the parent company of the Manager and USCGS. Conflicts of interest may arise in connection with Mr. Towle’s and Mr. Sweeney’s control of both the Manager and USCGS. Investors should be aware that these conflicts of interest, and a number of other conflicts of interest relating to the Manager and its affiliates, are permitted under the terms of the Fund’s offering documents. You should not invest in the Fund unless you are willing to accept these conflicts of interest and the associated risk.

This presentation does not constitute an offer to sell or a solicitation of an offer to buy any security and may not be relied upon in connection with the purchase or sale of any security. Any offer would only be made by means of a formal offering memorandum. No offer or solicitation will be made prior to delivery of a confidential information memorandum, private placement memorandum, or similar offering documents (“Offering Documents”). Offer and sales will be made only in accordance with applicable security laws and pursuant to the Offering Documents, operating agreement, subscription agreement, and other definitive documentation.

This presentation does not purport to be all-inclusive or to contain all of the information that the Recipient may require and is qualified in its entirety by reference to the Offering Documents. This presentation is not a part of or supplemental to the Offering Documents or such definitive documentation. The Offering Documents and any supplements will supersede this Presentation in its entirety. Projections and other forward-looking information as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based on information provided by the Issuer and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. The Recipient should not rely on any information contained herein. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation. Actual results will vary from the projections and such variations may be material, including the possibility that and investor may lose some or all or its invested capital.

This presentation is confidential. By acceptance hereof, you agree that (i) the information must not be used, reproduced, distributed to others without the prior written consent; (ii) you will maintain the confidentiality of this information, not already in the public domain; and (iii) you will on use the information contained herein for informational purposes.

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Securities offered through US Capital Global Securities, LLC, member FINRA, SIPC.

IMPORTANT: All investing is risky, and no investor should decide to commit funds without first consulting with a competent professional adviser. Some or all invested funds can be lost. The past performance of any investment, investment strategy or investment style is not indicative of future performance. Future results may vary, and are not guaranteed. The value of investments and their income may increase or decrease, and a loss of principal – including all principal – may occur.

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