X-Therma: Cryopreserving organs and tissues to build a larger supply in order to meet the 5–10x greater demand for organ transplants and research.
Authors: J. Skyler Fernandes & Julia Samoylenko
Below is an overview of a video interview with J. Skyler Fernandes, General Partners at VU Venture Partners and X-Therma’s CEO Xiaoxi Wei, discussing the thesis for VU’s investment in X-Therma based on a massive market size opportunity and a high market penetration approach for selling X-Therma’s solution.
Thesis Overview:
One of the major challenges in the organ transplant industry is the time constraint on the usefulness of an organ before it can no longer be used for a patient. This challenge has created a market where there is a 5–10x greater demand for organs than the available supply. Currently, many organs can only be preserved for a short period of time, usually between 17 and 24 hours (e.g. Kidneys, Hearts) before they become unusable. This creates a time constraint for surgeons and organ procurement organizations, resulting in a significant waste of available organs. X-Therma’s cryopreserving technology aims to increase the time that an organ can be preserved for transplantation, currently capable of preserving an organ for 5+ days, and in the future potentially up to 2+ weeks, allowing for better matching and planning of organ transplants.
Inspiration For The Solution:
The company’s approach, inspired by antifreeze proteins found in fish that thrive in subzero temperatures, has the potential to preserve organs for much longer periods of time. The team developed a novel chemistry platform and AI-guided screening process that allows for the preservation of organs without the use of toxic chemicals, making it a game-changer in the industry.
VU’s Market Perspective:
As a general investment thesis for VU’s fund, VU looks to identify the largest market size opportunities across each industry, such as the largest market size by muscle type that humans eat (i.e. tuna with Finless Foods) and the largest market size by cell type of the human body that can be commercialized (i.e. blood with Membio).
VU has built up a strong level of intelligence across tangential industries such as:
- Plant based protein / meat (e.g. VU’s GP, Mr. Fernandes was the largest investor in Beyond Meat, which had a successful IPO)
- Lab grown (“cultured”) meat (e.g. VU’s portfolio companies: Finless Foods, Integriculture, Nova Meat)
- Lab grown cells / body parts (e.g. VU’s portfolio companies: 3D Bio Corp, Membio, X-Therma)
When VU evaluated the largest market sizes by organ type that could be lab grown, the clear underlying challenge was the timeline for commercialization of lab growing organs. X-Therma’s solution provides an immediate solution to the organ shortage problem compared to the timeline of when organs such as kidneys and hearts will be lab grown at scale. Additionally, once organs are able to be lab grown at scale, X-Therma will continue to play an important role of preserving all organs, including lab grown organs, for longer periods of time and to establish a larger inventory of organs.
Market Size & Revenue Potential:
If there is a 5–10x greater demand for organs than available inventory, and X-Therma can extend the preservation of organs from ~1 day to 7–14 days, then X-Therma could effectively create the inventory to meet up to 100% of the market demand. The market size and revenue opportunity is massive, for example, to achieve $1 billion in revenue, at ~$40K per organ (potential price of X-Therma’s solution), X-Therma would need to service only 25,000 organs.
In 2021, there were over 41,000 organ transplants in the United States, and an unmet demand of ~205K-410K organs (5–10 x 41K organs). If 25K organs = 6–12% market penetration (25K / ~205K–410K organs) to get to $1B in revenues, and X-Therma becomes the main industry player providing the majority organs, then X-Therma could acquire significantly more than 6–12% of the market, and in doing so could yield a future revenue potential of multiples of $1B.
Business Model:
In terms of business model, X-Therma is focusing on developing and commercializing their technology for organ preservation and regenerative medicine applications. The company plans to generate revenue through partnerships with organ procurement organizations and organ transplant centers, as well as through the sale of their preservation solutions to research institutions and biotechnology companies. The channels to sell organs are relatively concentrated in the United States, with roughly ~58 organ procurement organizations and ~250 organ transplant centers, making it relatively easy to cover with a small sales team of ~5 people.
Team:
Wei also emphasized the importance of X-Therma’s team in their success. The team, composed of experts in the fields of cryopreservation and regenerative medicine, has had significant success in extending the lifespan of organs through their cryopreserving technique and has received “breakthrough designation” by the FDA.
Competition:
When discussing other players in the industry, Wei acknowledged that while there are other companies working on organ preservation solutions, X-Therma’s unique approach of cryopreserving and non-toxic methods sets them apart in the industry and positions them well in the market.
Traction:
Wei also discussed the traction X-Therma has gained so far, with successful demonstrations of the ability to freeze hearts and preserve them for 24 hours without any ice formation and promising results in larger animal studies (a pig kidney for 5+ days) and human-sized organ studies.
Advice For Founders:
Finally, Wei shared some advice for fellow founders, emphasizing the importance of having a clear problem-solving approach and a strong team. She also highlighted the importance of being open to pivoting and adapting to market changes as a key to success.
