In 2022, ORHB successfully acquired PUR for $8.5 million, a strategic move that included obtaining three valuable patents:

Patent #1: Method and compositions for manufacturing ECM (Extracellular Matrix)

Patent #2: Methods of manufacturing and compositions of cell-conditioned medium and ECM using aspartyl-alanyl-diketopiperazine

Patent #3: Cosmetic methods and compositions for activating epidermal cells using immunological adjuvants

This acquisition marked the establishment of ORHB's Regenerative Therapeutics segment, housing the prominent PUR Biologics subsidiary. Positioned as the flagship within the ORHB portfolio, PUR has positioned the Company in the global medical device market, which is projected to reach $445.1 billion by 2026. Notably, PUR is strategically targeting three major categories—hip, knee, and spine—in the US, representing a combined market opportunity of $48 billion.

In this context, ORHB is already distributing PUR's exclusive technologies and a comprehensive array of nearly two dozen products through its network of distributors. These products are designed to regenerate cartilage, alleviate pain, and address the biological origins of degenerative disc disease and osteoarthritis in joints. Notably, the Company has a comprehensive biologic product line tailored for spinal applications.

Capitalizing on licensed patents and employing a platform-oriented approach, PUR is in the process of developing next-generation iterations of its existing products to cater to critical, unmet needs, ultimately enhancing surgical outcomes in cartilage and bone repair/growth. The Company's cost-effective platform technology not only accelerates healing but also holds the potential to reduce costs for hospitals. Additionally, the management's vertically integrated manufacturing strategy could potentially lead to profit margins surpassing industry averages.

PUR has successfully addressed the challenges associated with manufacturing Extracellular Matrix (ECM) from cadaveric allograft tissues, mitigating risks such as disease transmission from emerging viruses like Zika and SARS-CoV-2 (COVID-19). Unlike legacy technologies that rely on multiple human tissues, often obtained from newborn foreskin fibroblasts, PUR scientists have harnessed the potential of Induced Pluripotent Stem Cells (IPSC) to create a safer and single-tested donor source for ECM-producing fibroblasts under current Good Manufacturing Practice (cGMP).

By effectively expanding one donor tissue sample into a single-sourced Master Cell Bank, which undergoes thorough safety testing and is virus-free, PUR ensures the safety and quality of its products. Additionally, the use of IPSC technology enables the creation of designer cell types for specialized ECM products with enhanced therapeutic and regenerative capabilities. Ongoing research underscores the ECM's role in regulating mechanisms linked to chronic pain, and PUR is actively exploring the application of its ECM technology in addressing chronic pain and the opioid crisis stemming from recent overuse.

Currently, management is expanding its revenue base from synthetic bone grafts and allograft biologics while concurrently developing a pipeline of new products to sustain its impressive sales growth rate. Furthermore, with exclusive manufacturing capabilities providing human ECM biomaterials for new, internally produced items, there is potential for rising profit margins in tandem with increasing order sizes in the forthcoming quarters.

Harnessing the awarded patents and those currently pending, PUR is poised to embark on a new phase of innovation and evolution. This phase involves the development of several transformative products with the potential to secure 510(k) clearance. Among the new products in the pipeline are regenerative medicine applications in cell therapy and traditional medical devices utilized by orthopedic surgeons, all contributing to the overall revenue.

One particularly promising 510(k) product under development is nearing completion, featuring the prototype and clinical testing of a Bone Marrow Aspirate Device (BMAD) solution designed for bone and cartilage growth. In the research and development stage, this patented device activates immune cells from a patient's own bone marrow cells at the Point of Care, combining the marrow aspirate with a solid matrix for bone void filling—a common requirement in orthopedic surgeries. The BMAD, alongside a second version, has the potential to significantly enhance the activity and widespread use of stem cells in future Bone Marrow Aspirate (BMA) therapies.

This technology has the ability to prime and activate immune cells, even in the bone marrow of older patients, which still retain the capacity to differentiate into therapeutic cell types. Notably, this addresses the decline that naturally occurs with aging, generating meaningful numbers of MSCs, M2 Macrophages, and T-Memory Cells. This disruptive device technology provides a solution to the challenges associated with centralized factories producing immunotherapies, leading to significantly reduced costs compared to treatments that require such centralized facilities and intricate logistics—costs that often range from $100,000 to $1,000,000 per treatment.

In essence, PUR's products in development are tailored to regenerate cartilage and bone, with a specific focus on repairing cartilage and spinal disc degeneration, as well as addressing osteoarthritis. The inherent characteristics of the product platform have prompted management to explore the creation of what could potentially be the first orthobiologic product addressing pain and addiction. PUR envisions that this innovative offering could potentially decrease the reliance on opioid pain management drugs, thereby potentially reducing the incidence of opioid addiction—a significant health crisis in the nation. This product is expected to undergo FDA clearance in the next 18-24 months.

The Regenerative Medicine Advanced Therapy (RMAT) biologic product is manufactured from iPSC-derived fibroblast ECM, accompanied by a next-generation BMA solution and a novel personalized cell-based immunotherapy. These components collectively serve as a cell-based pain therapy, aiming to reduce opioid use. Additionally, a second-generation BMAD is in development as a cell-based pain therapy to address opioid addiction, based on a patented composition of immune cells and the activation of personalized stem cells.

As of April 2023, ORHB boasts an extensive sales force comprising over 300 representatives through various distribution partners, positioning them to potentially market PUR's offerings. Of particular significance is the strategic alliance with Precision Spine, a key player in the spine therapy market. Precision Spine, historically recognized for its comprehensive spine implant portfolio, has become a one-stop shop for customers, thanks to PUR. The collaboration has been facilitated by an advantageous pricing and compensation model, solidifying PUR's position as the preferred producer for Precision Spine and its sales team.

Furthermore, PUR's recent product introductions, namely advanced synthetic offerings such as PURbridge, PURcore, and PURfiberXP, expand the Company's portfolio in the spine sector.

PURbridge addresses the critical need for bone growth in spine procedures, featuring a proprietary bridge-like structure composed of bioactive glass, absorbent Tri-pore NanoCrystals™, and flexible collagen fibers. PURcore, a moldable synthetic with an interconnected micro-pore structure, promotes rapid colonization of the patient's cells and growth factors, facilitating bone regeneration. PURfiberXP, derived from cortical bone fibers, exhibits exceptional bone-forming capacity and is ideal for enhancing bone regeneration in spine patients.

With these innovative products, PUR's complete biologic line is now offered by 207 sales distributors to existing customers, including 280 hospitals and approximately 340 spine surgeons conducting 800 surgeries monthly. Looking ahead, expectations include an FDA submission for the Bone Marrow Aspirate Device (BMAD) in the coming quarters, with potential clearance in late 2024. Simultaneously, management remains focused on introducing new proprietary products, FDA-approved in-licensed offerings for white label sales, and the expansion of the sales and marketing channel.

A recently awarded patent related to technology activating immune cells holds immense value in the portfolio. With the market value of cancer immunotherapy projected to reach $271.84 billion by 2030, this patent catapults PUR Biologics into the realm of cell and immune therapies, paving the way for groundbreaking medical treatments for patients dealing with immune-compromised and chronic pain conditions. By unlocking the full potential of immune cells, PUR aims to create more effective therapies that combat degenerative and diseased conditions, offering new avenues for restoring the immune system's healing capacity.

Looking toward the future, the development of novel business management software by ORHB aims to standardize processes at the point of surgical care, enhancing logistics and efficiency. With PUR being the current cash cow, the forthcoming launch of the HippoFi-Pay™ division during the FY24E fiscal year, starting July 2023, is anticipated. This Software as a Service (SaaS)-based approach is expected to yield significantly higher gross margins for ORHB, potentially making a material impact in calendar year 2024.