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EX-21 - SUBSIDIARIES OF THE REGISTRANT - Harvard Apparatus Regenerative Technology, Inc.v334458_ex21.htm
EX-23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - Harvard Apparatus Regenerative Technology, Inc.v334458_ex23-1.htm
EX-10.15 - CONFIDENTIAL TREATMENT REQUESTED - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-15.htm
EX-10.20 - SPONSORED RESEARCH AGREEMENT - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-20.htm
EX-10.22 - NOVEL SURGERY AGREEMENT - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-22.htm
EX-10.18 - PATENT RIGHTS ASSIGNMENT - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-18.htm
EX-10.21 - NOVEL SURGERY AGREEMENT - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-21.htm
EX-10.19 - CONFIDENTIAL TREATMENT REQUESTED - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-19.htm
EX-10.17 - EXHIBIT 10.17 - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-17.htm
EX-10.16 - EXHIBIT 10.16 - Harvard Apparatus Regenerative Technology, Inc.v334458_ex10-16.htm

As filed with the Securities and Exchange Commission on February 15, 2013

Registration No. 333-185389

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



 

AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933



 

HARVARD APPARATUS REGENERATIVE TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Its Charter)



 

   
Delaware   3841   45-5210462
(State or other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

84 October Hill Road, Holliston, MA 01746
(508) 893-8999

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)



 

David Green
President and Chief Executive Officer
Harvard Apparatus Regenerative Technology, Inc.
84 October Hill Road, Holliston, MA 01746
(508) 893-8999

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



 

Copies to:

 
Josef B. Volman, Esq.
Chad J. Porter, Esq.
Burns & Levinson LLP
125 Summer Street
Boston, MA 02110
(617) 345-3000
  Ilan S. Nissan, Esq.
Christopher J. Austin, Esq.
Goodwin Procter LLP
620 Eighth Avenue
New York, NY 10018
(212) 813-8800


 

Approximate date of commencement of proposed sale to the public:

Promptly after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 
Large accelerated filer o   Accelerated filer o
Non-Accelerated filer o
(Do not check if a smaller reporting company)
  Smaller reporting company x

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

 

 


 
 

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The information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated February 15, 2013

[GRAPHIC MISSING]

         Shares of Common Stock



 

This is an initial public offering of common stock of Harvard Apparatus Regenerative Technology, Inc. We are selling          shares of our common stock. Harvard Apparatus Regenerative Technology, Inc. is currently a wholly-owned subsidiary of Harvard Bioscience, Inc.

Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $      and $     . We intend to apply to list our common stock on the NASDAQ Capital Market under the symbol “HART”.

We are an “emerging growth company” under federal securities laws and are subject to reduced public company disclosure standards. See “Prospectus Summary — Implications of Being an Emerging Growth Company.”

Investing in our securities involves significant risks. See “Risk Factors” beginning on page 8.

   
  Per Share   Total
Initial Public Offering Price   $     $  
Underwriting Discounts and Commissions   $     $  
Offering Proceeds Before Expenses   $     $  

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The underwriters may also exercise their option to purchase up to an additional       shares of common stock from us, at the public offering price, less the underwriting discounts and commissions for a period of 30 days after the date of this prospectus.

The shares will be ready for delivery on or about            , 2013.

Summer Street Research Partners

The date of this prospectus is            , 2013.


 
 


 
 

TABLE OF CONTENTS

TABLE OF CONTENTS

 
  Page
PROSPECTUS SUMMARY     1  
RISK FACTORS     8  
MARKET DATA     28  
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS     28  
OUR SEPARATION FROM HARVARD BIOSCIENCE     29  
USE OF PROCEEDS     32  
DETERMINATION OF OFFERING PRICE     32  
DIVIDEND POLICY     32  
CAPITALIZATION     33  
DILUTION     35  
SELECTED HISTORICAL FINANCIAL DATA     37  
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     38  
BUSINESS     45  
MANAGEMENT     70  
DIRECTOR AND EXECUTIVE COMPENSATION     74  
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS     82  
PRINCIPAL STOCKHOLDERS     93  
DESCRIPTION OF SECURITIES     95  
SHARES AVAILABLE FOR FUTURE SALE     101  
MATERIAL U.S. FEDERAL TAX CONSIDERATIONS TO NON-U.S. HOLDERS     103  
UNDERWRITING     107  
LEGAL MATTERS     112  
EXPERTS     112  
WHERE YOU CAN FIND MORE INFORMATION     112  
INDEX TO FINANCIAL STATEMENTS     F-1  

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give to you. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock.

Dealer Prospectus Delivery Obligation

Until            , 2013 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

The following summary highlights selected information contained in this prospectus. This summary does not contain all the information that may be important to you. You should read the more detailed information contained in this prospectus, including but not limited to, the risk factors beginning on page 8. References to “we,” “us,” “our,” or the “company” refer to Harvard Apparatus Regenerative Technology, Inc.

Business Overview

We are a clinical stage regenerative medicine company developing life-saving medical devices.

Our first products are a bioreactor and a synthetic scaffold that can be used by surgeons to create a replacement trachea, or airway, for patients who need an airway transplant. We believe our products are the first to enable the application of regenerative medicine techniques to the production and transplant of complex, three-dimensional human organs like the trachea. Our bioreactor technology has been used in six successful human airway transplant surgeries, including what we believe to be the world’s first transplant of a regenerated airway. In addition, we believe the second surgery using our technology was the world’s first transplant of a regenerated airway using a synthetic scaffold. The patients who received these two airway transplants are alive more than four years and 20 months, respectively, following their surgeries, and each of these surgeries was published in The Lancet, one of the world’s most respected peer-reviewed medical journals. The six human airway transplants to date have been led by Professor Paolo Macchiarini, a world-renowned thoracic surgeon of the Karolinska Instituet, one of Europe’s leading research hospitals.

Our products are currently in development and have not yet received regulatory approval for sale anywhere in the world.

We believe our technology could enable surgeons to cure nearly all primary trachea cancers. Our products address the critical challenges to trachea transplant: the shortage of suitable donor tracheas and the risk and expense of lifelong anti-rejection drug therapy. Because the scaffolds are synthetic, our technology will eliminate the need to wait for suitable donor tracheas. Our technology also obviates the need for anti-rejection drug therapy because the surgeon uses the patient’s own bone marrow cells to seed the scaffold. In addition, patients with trachea cancer treated using our products have not required either chemotherapy or radiation therapy after the transplant, thus potentially eliminating the significant side effects and expense of such therapies. Because these substantial costs and risks can be reduced or even eliminated with our technology, we believe our products can both help save lives and reduce overall healthcare costs. None of the surgeries using our products have involved human embryonic stem cells and we do not currently expect surgeons to use such cells with our products.

We intend to seek separate, independent 510(k) clearances in the U.S. and CE marking in the EU to allow us to market our trachea scaffolds, bioreactors and clinical infusion pumps for medical-device uses. In addition, we may seek approval under the orphan biologics pathway for the use of our scaffold and bioreactor system, including cells, for regenerated trachea transplant, which could provide market exclusivity for up to seven years. Based on initial review of FDA and EU regulatory precedent, and our understanding of the status of ongoing clinical investigation of the trachea scaffold products, we expect to receive regulatory approval to market our regenerated trachea transplant products in the EU by the end of 2015 (under the advanced therapy medicinal products regulations) and, assuming our trachea transplant products qualify for accelerated review, we expect to receive FDA approval to market our trachea transplant products in the U.S. by the end of 2016. We note, for example, that both the orphan drug pathway and ‘Fast track’ review with accelerated review times are available for products intended for the treatment of a serious or life-threatening condition and that demonstrate the potential to address unmet medical needs for such a condition. We believe that both of these criteria apply to our trachea transplant products. The estimated regulatory approval timelines are based on our key assumption that we will be able to market the tracheal scaffold, bioreactor, and clinical infusion pump components of the regenerated tracheal transplant products as medical devices in both the U.S. and the EU. The estimated timelines are also grounded on the assumption that the regenerated tracheal transplant products will be reviewed in the EU under the advanced therapy medicinal products regulations and in the U.S. under FDA’s ‘Fast track’ review and accelerated review times. Each of these assumptions are discussed further and called out as relevant risk factors.

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Two regenerated trachea transplants performed in Russia in June 2012 began a clinical trial of trachea transplants for patients with either trachea cancer or trachea damage. This trial is funded by a $5 million grant from the Russian government to the Krasnodar Regional Hospital, one of Russia’s leading transplant centers. In addition, the EU has approved a separate $5 million grant with Dr. Macchiarini as principal investigator to fund two clinical trials in trachea transplant using our products. We expect these two EU trials to begin in 2014. We intend to use the results of these trials, together with the data collected on compassionate-use patients both in the U.S. and overseas, to help support our submission for approval to market our trachea transplant products.

In addition to the trachea, we believe that our products are applicable to the regeneration of other organs. Our collaborators are working on regenerating the lungs, gastrointestinal tract, heart valves and heart using our products. For instance, a collaborator of ours, Dr. Harald Ott of Massachusetts General Hospital, has succeeded in using one of our solid organ bioreactors to regenerate and transplant a whole lung in a rat. Another collaborator of ours, Dr. Robert Simari of the Mayo Clinic, is using one of our bioreactors in his research on the potential regeneration and transplant of human heart valves.

Market Opportunity

Current treatments for trachea cancer, such as radiation therapy, chemotherapy and surgery have poor outcomes, resulting in median survival of only 10 months and a five-year survival rate of only 15%. According to an article published in The Lancet Oncology, the incidence of trachea cancer is 2.6 per one million of population, reflecting an addressable market of approximately 2,400 trachea cancer patients per year worldwide. In addition to trachea cancer, certain types of trachea damage can be treated by transplanting a trachea. In particular, patients may receive a tracheotomy, or surgically created hole in their throat, to allow them to breathe. When the tracheotomies are in place for more than a few days, patients are at an increased risk of dying from pneumonia caused by aspiration of foreign material into the lungs. We estimate that there are approximately 3,900 patients per year worldwide with long-term tracheotomies at risk of death from aspiration pneumonia. In addition, there are approximately 250 patients in the developed world who are born without a trachea, a condition called tracheal agenesis, who may be treatable with a trachea transplant.

Combining patients with trachea cancer, trachea trauma and tracheal agenesis, we estimate the total addressable patient population for trachea transplants using our products is approximately 6,500 per year. While these estimates capture the number of new patients annually that are candidates for transplants using our products, they exclude what we believe to be a large pool of existing potential patients.

Additionally, we believe that our technology can also be used to address the lungs, gastrointestinal tract, heart valves and heart transplant markets. We believe that these markets collectively contain millions of potential patients with life-threatening and expensive conditions, and suffer from a lack of suitable donor organs, in addition to considerable logistical and other expenses in procuring organs.

Strategy

Our objective is to be the leading regenerative medicine device company focused on helping save human lives. Our business strategy to accomplish this objective includes:

Target life-threatening medical conditions.  Because we address life-threatening conditions, we believe it is easier to get patient informed consent for treatment, hospital ethics committee or Institutional Review Board approval and government regulatory authority approval as the patients often have poor or no treatment alternatives.
Focus on medical devices rather than cells.  Medical devices generally have easier and lower-cost clinical trial requirements than cellular-based therapies, provided that the FDA agrees that the injection system and bioreactor products we are developing are separate medical devices, and not part of an overall biological seeded scaffold.
Develop products that have a relatively short time to market.  The number of patients with trachea cancer is relatively small and median survival is only 10 months. Thus, we expect the size, length and expense of our trachea transplant trial will be low compared to clinical trials in larger indications with longer survival periods.

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Use trachea transplant as a platform to address other organs.  We believe our experience in developing proprietary scaffolds and bioreactors for trachea transplant gives us substantial expertise and intellectual property for developing products addressing diseases impacting other organs like the lungs, gastrointestinal tract, heart valves and heart.
Supply the complete bioreactor and scaffold system.  Our technology includes the bioreactor and scaffold which are used by the surgeon to create the synthetic organ. We believe there is considerable value in supplying the complete bioreactor and scaffold system.
Collaborate with leading surgeons and institutions.  We have and will continue to collaborate with leading surgeons and institutions such as Professor Macchiarini of the Karolinska Instituet, Dr. Harald Ott of Massachusetts General Hospital, and Dr. Robert Simari of the Mayo Clinic. We believe the use of our products by leading surgeons and institutions will increase the likelihood of broad adoption of our products.

Products

Hollow Organ Bioreactors

Our InBreath hollow organ bioreactor is a device that can be used by a surgeon to seed cells onto a scaffold. The InBreath bioreactor enables the surgeon to:

secure the scaffold to the bioreactor;
seed the patient’s cells on the scaffold under sterile conditions;
automatically rotate the scaffold to allow good cell distribution into the pores of the scaffold; and
remotely monitor the scaffold during the course of the two to three days incubation period before the transplant.

Our InBreath bioreactor has several novel features such as allowing for separate cell seeding conditions on the inside and outside of the scaffold and for pumping cell culture media through the inside of the scaffold without the need for an external pump and tubes. We believe our InBreath hollow organ bioreactor is the world’s first bioreactor that has been used to perform a human transplant of a regenerated organ.

Solid Organ Bioreactors

A solid organ bioreactor shares many of the features of a hollow organ bioreactor such as the ability to seed cells on an organ scaffold and keep them sterile and healthy during the growth phase prior to transplant. However, for solid organs like the heart and lungs, the bioreactor must also supply pulsatile blood flow and ventilation to mimic the natural action of the heart and lungs. In addition, the physiology of the heart and lungs is considerably more complex than that of the trachea and so the measuring, monitoring and control equipment needed is considerably more advanced. During the first half of 2010, one of our physician collaborators, Dr. Harald Ott at Massachusetts General Hospital, succeeded in regenerating a lung that was subsequently transplanted into the body of a rat. In collaboration with Dr. Ott and Massachusetts General Hospital, we designed and developed a novel bioreactor that was used to grow the rat lung used in this procedure.

Scaffolds

A scaffold is a natural or synthetic framework, shaped like the real organ, that is porous to allow cells to penetrate the scaffold, attach and start to grow. The scaffold used for the first regenerated trachea transplant in 2008 was a donated human trachea with its cells removed before being seeded with bone marrow cells taken from the patient. All subsequent trachea transplants using our products have utilized synthetic scaffolds. Because the synthetic scaffolds are manufactured, they can be made to the exact dimensions of the patient and in large quantities. While the synthetic scaffolds used in surgeries to date have been made by third parties, in order to improve the scaffolds, we are collaborating with Professor Macchiarini and others to develop our own scaffold product and manufacturing. We have recently established scaffold manufacturing in our Holliston, Massachusetts facility. Our scaffolds can be made from a variety of plastic polymers such as polyethelyne terephthalate, or PET, which is the same polymer used in the well-known brand of implantable materials

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known by the trade name Dacron. PET has a long history of safe use in long-term human implants. We have manufactured over 100 prototype scaffolds and we intend to provide our proprietary scaffolds to surgeons for use in future transplants. We believe that our scaffolds will be superior in quality compared to those used in prior surgeries.

Clinical Infusion Pump

We are also developing a clinical infusion pump that can be used by clinicians as a cell injection system. This product will allow clinicians to inject cells directly into damaged tissue. In addition to the cell injection applications, we expect our clinical pump will be used for infusing drugs in general hospital applications. This clinical pump is based on the technology underlying Harvard Bioscience Inc.’s market leading Harvard Apparatus research syringe pumps.

Relationship with Harvard Bioscience

We are a wholly-owned subsidiary of Harvard Bioscience. We were incorporated by Harvard Bioscience to provide a means for separating its regenerative medicine device business from its other businesses. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first explored the regenerative medicine market in 2007 and began focusing on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine device business initiative operated as a division of Harvard Bioscience. Harvard Bioscience decided to separate its regenerative medicine business into our company, a separate corporate entity, to authorize us to raise capital by selling equity and then to spin off its interest in our business to its stockholders. Prior to this offering, Harvard Bioscience will have contributed the assets of its regenerative medicine device business, and approximately $10 million in cash, to our company. We had no material assets or activities as a separate corporate entity until the contribution to us by Harvard Bioscience of those assets and that business. We will continue to pursue our business of developing and making devices for regenerative medicine researchers and clinicians.

Immediately following this offering, Harvard Bioscience will own at least 80% of our outstanding common stock. Harvard Bioscience will continue to control our operations through such ownership but will no longer fund our operations following the closing of this offering. Following the closing of this offering, we will use the net proceeds of this offering and the $10 million cash contribution from Harvard Bioscience to fund our operations. Harvard Bioscience plans to distribute all shares of our common stock it then owns to Harvard Bioscience’s stockholders, on or after the date that is four months after the completion of this offering by means of a spin-off, which is a pro rata distribution by Harvard Bioscience of the shares of our common stock it owns to holders of Harvard Bioscience’s common stock. At such point Harvard Bioscience will no longer be a stockholder of our common stock and will no longer control our operations. Harvard Bioscience has the right to terminate its plans to complete the distribution if, at any time, Harvard Bioscience’s board of directors determines, in its sole discretion, that the distribution is not in the best interests of Harvard Bioscience or its stockholders. Consequently, we cannot assure you as to when or whether the distribution will occur.

Any such distribution by Harvard Bioscience is also subject to several conditions that must be satisfied (or waived by Harvard Bioscience in its sole discretion), including, among others:

receipt of a private letter ruling from the IRS to the effect that, among other things, the spin-off will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect, and Harvard Bioscience’s receipt of an opinion from Burns & Levinson LLP, counsel to Harvard Bioscience, to the effect that the spin-off will qualify as a transaction that is described in Section 355 and 368(a)(1)(D) of the Internal Revenue Code;
that all actions and filings necessary or appropriate under applicable securities laws in connection with the distribution will have been taken or made, and, where applicable, become effective or been accepted by the applicable governmental authority;
the approval for listing on the NASDAQ Capital Market of the shares of our common stock to be distributed to the Harvard Bioscience stockholders in the distribution;

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that no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the spin-off or any of the related transactions are in effect; and
that no other events or developments have occurred subsequent to the completion of this offering that, in the judgment of the Harvard Bioscience board of directors, would result in the distribution not being in the best interest of Harvard Bioscience or its stockholders.

Risks Relating to Our Business

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described in “Risk Factors” beginning on page 8 of this prospectus before making a decision to invest in our common stock. If any of these risks actually occurs, our business financial condition and results of operations would likely be negatively affected. In such case, the trading price of our common stock would likely decline, and you may lose part, or all, of your investment. Below is a summary of some of the principal risks we believe we face:

We may be unsuccessful in obtaining on a timely basis or at all, the regulatory clearances and approvals needed to commercially market and distribute our products due to adverse outcomes of clinical trials and other reasons.
We may be unsuccessful in launching products or expanding product offerings in the field of regenerative medicine.
As long as Harvard Bioscience controls us, your ability to influence matters requiring stockholder approval will be extremely limited.
Our medical collaborators may fail in their efforts at researching and developing safe and effective regenerative medical protocols and therapies.
Our success will depend partly on our ability to operate without infringing on, or misappropriating, the intellectual property or confidentiality rights of others.
The regenerative medicine market may not expand, or may not expand in the areas targeted by our products.
Future regulatory changes may affect our business.
If we are unable to effectively protect our intellectual property, third parties may use our technology, which would impair our ability to compete in our markets.
Substantial sales of our common stock may occur following this offering, as well as following the planned distribution of our common stock by Harvard Bioscience, which could cause our stock price to decline.
We are currently experiencing operating losses because we have no revenues to offset our operating costs.
We may need to raise additional capital to fund our activities until we generate positive cash flows and may not be able to obtain such capital on favorable terms or at all.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
reduced disclosure about our executive compensation arrangements;
no non-binding advisory votes required on executive compensation or golden parachute arrangements; and

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exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or SEC. We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

Corporate Information

We were incorporated under the laws of the State of Delaware on May 3, 2012. Our principal executive offices are located at 84 October Hill Road, Holliston, Massachusetts. Our telephone number is (508) 893-8999. We maintain a web site at www.harvardapparatusregen.com. The reference to our web site is intended to be an inactive textual reference only. The information contained on, or that can be accessed through, our web site is not a part of this prospectus.

The name “Harvard Apparatus” is used under a license agreement between Harvard Bioscience and Harvard University. Harvard Bioscience has granted us a sublicense under this license agreement with respect to the name “Harvard Apparatus” for use in the name Harvard Apparatus Regenerative Technology. With respect to certain trademarks used in this prospectus, “DACRON” is owned by Invista North America S.A.R.L., “Apligraf” is owned by Novartis AG, and “Dermagraft” is owned by Advanced Biohealing, Inc. Other names used herein are for informational purposes only and may be trademarks of their respective owners.

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The Offering

Securities offered    
          shares of common stock
Common stock to be outstanding after the offering assuming the sale of all shares covered by this prospectus    
          shares
Common stock to be held by Harvard Bioscience immediately after this offering    
          shares
Over-allotment option    
    The underwriters have an option for a period of 30 days after the date of this prospectus to purchase up to       additional shares of our common stock solely to cover over-allotments.
Use of proceeds    
    We estimate that we will receive up to $      in net proceeds from the sale of the shares in this offering, based on a price of $      per share (which is the midpoint of the price range set forth on the cover page of this prospectus), and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We will use the proceeds from the sale of the shares for research and development, working capital needs, capital expenditures and other general corporate purposes. See “Use of Proceeds” for more information.
Risk factors    
    The shares of common stock offered hereby involve a high degree of risk. See “Risk Factors” beginning on page 8.
Dividend policy    
    We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends on our common stock.
Proposed NASDAQ trading symbol    
    “HART”

Immediately prior to the closing of the sale of the shares in this offering we will amend and restate our certificate of incorporation and effectuate a       for 1 stock split to ensure that our authorized and outstanding capital stock are sufficient to consummate this offering. Unless the context indicates otherwise, the number of shares of common stock to be outstanding after this offering:

assumes the completion of a          for 1 stock split;
excludes       shares of our common stock reserved for issuance under the 2013 Equity Incentive Plan, or 2013 Plan, upon the exercise of stock options, restricted stock units, or restricted stock that will be issued under our employee benefit plans, which will include:
     shares of our common stock reserved for issuance in connection with the initial grants to our executives and employees that will be granted following the determination of the initial public offering price per share of our common stock in this offering, as described in “Director and Executive Compensation — IPO Grants;”
shares of our common stock that may be issued in connection with compensation of our directors, as described in “Director and Executive Compensation — Board of Directors’ Compensation;” and
shares of our common stock that may be issued in connection with the exercise or vesting of options or restricted stock units we issue pertaining to the adjustment and conversion of outstanding Harvard Bioscience equity awards upon the effectiveness of the spin-off, as described in “Director and Executive Compensation — Treatment of Outstanding Harvard Bioscience Equity Awards;”
assumes the underwriters will not exercise their over-allotment option; and
assumes that the shares of our common stock to be sold in this offering are sold at $      per share, the midpoint of the price range set forth on the cover page of this prospectus.

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RISK FACTORS

If you purchase our securities, you will assume a high degree of risk. In deciding whether to invest, you should carefully consider the following risk factors, as well as the other information contained elsewhere in this prospectus. Any of the following risks could have a material adverse effect on our business, financial condition, results of operations or prospects and cause the value of our securities to decline, which could cause you to lose all or part of your investment. We may experience additional risks and uncertainties not currently known to us, or, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, cash flows and results of operations.

Risks Relating To Our Business

Risks Associated with Regulatory Clearances and Approvals

If we fail to obtain, or experience significant delays in obtaining, regulatory clearances or approvals in the U.S. and the EU for our products, or are unable to maintain such clearances or approvals for our products, our ability to commercially distribute and market these products would suffer.

We currently do not have regulatory approval to market any of our products. Our products are subject to rigorous regulation by the FDA, and numerous other federal and state governmental authorities in the U.S., as well as foreign governmental authorities. The process of obtaining regulatory clearances in the EU allowing us to affix the CE mark to market a medical device can be costly and time consuming, and we may not be able to obtain these clearances, or CE Certificates of Conformity, necessary to affix the CE mark on our medical devices on a timely basis, if at all. In the U.S., the FDA permits commercial distribution of a new medical device only after the device has received clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act, or is the subject of an approved premarket approval application, or PMA, unless the device is specifically exempt from those requirements. The FDA will clear marketing of a lower risk medical device through the 510(k) process if the manufacturer demonstrates that the new product is substantially equivalent to other 510(k)-cleared products. High risk devices deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices, or devices not deemed substantially equivalent to a previously cleared device, require the approval of a PMA. The PMA process is more costly, lengthy and uncertain than the 510(k) clearance process. A PMA must be supported by extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy of the device for its intended use.

We intend to seek approvals and clearances in the EU first, and our failure to receive or obtain such clearances or approvals on a timely basis or at all would have an adverse effect on our results of operations.

As further discussed below, there also is a risk that the FDA could seek to regulate the bioreactor and infusion products solely as more-highly regulated components of combination products, subject to potential regulation through the Biologics License Application, or BLA, process rather than as stand-alone medical devices.

It is possible that some of our products will be viewed by the FDA as combination products comprised of a biologic and medical device component. We cannot be sure how the FDA will regulate our products. The FDA may require us to obtain marketing clearance and approval from multiple FDA centers. The review of combination products is often more complex and more time consuming than the review of products under the jurisdiction of only one center within the FDA.

It is possible that some of our products, including our regenerative medicine products that have been studied clinically, may be regulated by the FDA as combination products. For a combination product, the FDA must determine which center or centers within the FDA will review the product and under what legal authority the product will be reviewed. We are currently developing our regulatory strategies with respect to which regulatory pathway will be necessary to obtain clearance or approval. We believe that the biologic component of our regenerative medicine products will be reviewed by the Center for Biologics Evaluation and Research, or CBER and that the scaffold and bioreactor devices used in these applications may be reviewed by the Center for Devices and Radiological Health, or CDRH either in consultation with CBER as part of the BLA or separately as a medical device. The process of obtaining FDA marketing clearance or approval is lengthy,

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expensive, and uncertain, and we cannot be sure that our biologic-device combination products, or any other products, will be cleared or approved in a timely fashion, or at all. In addition, the review of combination products is often more complex and more time consuming than the review of a product under the jurisdiction of only one center within the FDA. We cannot be sure that the FDA will not select to have our combination products reviewed and regulated by only one FDA center and/or different legal authority, in which case the path to regulatory approval would be different and could be more lengthy and costly. If the FDA does not approve or clear our products in a timely fashion, or at all, our business and financial condition will be adversely affected.

In the EU, our products may be viewed as advanced therapy medicinal products, which could delay approvals and clearances and increase costs of obtaining such approvals and clearances.

In the EU, we believe that some of our products may be regulated as medical devices and may, therefore, be required to be CE marked before being placed on the EU market or put into service. The extent of testing that is required as part of the conformity assessment process to demonstrate the effectiveness of the device will depend on the classification of the device and on the extent of existing relevant data available either in scientific literature or in relation to a predicate device. In the EU, our regenerative medicine products may also be viewed as advanced therapy medicinal products or combined advanced therapy medicinal products. In such circumstances, it would be necessary to seek a marketing authorization for these products granted by the European Commission before being marketed in the EU.

The regulatory procedures leading to marketing approval of our products vary among jurisdictions and can involve substantial additional testing. Compliance with the FDA requirements does not ensure clearance or approval in other jurisdictions, and the ability to legally market our products in any one foreign country does not ensure clearance, or approval by regulatory authorities or the agreement of a notified body in other foreign jurisdictions. The foreign regulatory process leading to the marketing of the products may include all of the risks associated with obtaining FDA approval in addition to other risks. In addition, the time required to comply with foreign regulations and market products may differ from that required to obtain FDA approval, and we may not obtain foreign approval or clearance on a timely basis, if at all. We may not be able to file for regulatory clearances, approvals, or to comply with the EU requirements necessary to affix the CE mark and may not receive necessary clearances or approvals to commercialize our products in any foreign market.

Risks Associated with Clinical Trials

Clinical trials necessary to support a PMA application, a BLA license, a marketing authorization, or a CE mark for our products will be expensive and will require the enrollment of sufficient patients to adequately demonstrate safety and effectiveness for the product’s target populations. Suitable patients may be difficult to identify and recruit. Delays or failures in our clinical trials will prevent us from commercializing any products and will adversely affect our business, operating results and prospects.

In the U.S., initiating and completing clinical trials necessary to support either PMA applications or BLA licenses, and additional safety and efficacy data beyond that typically required for a 510(k) clearance for a device, will be time consuming, expensive and the outcome uncertain. Moreover, the FDA may not agree that clinical trial results support an application for the indications sought in the application for the product. In other jurisdictions such as the EU, the conduct of extensive and expensive clinical trials may also be required in order to demonstrate the quality, safety and efficacy of our products, depending on each specific product, the claims being studied, and the target condition or disease. The outcome of these clinical trials, which can be expensive and are heavily regulated, will also be uncertain. Moreover, the results of early clinical trials are not necessarily predictive of future results, and any product we advance into clinical trials may not have favorable results in later clinical trials.

Conducting successful clinical trials will require the enrollment of a sufficient number of patients to support each trial’s claims, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials and completion of patient participation and follow-up depends on many factors, including the size of the patient population, the nature of the trial protocol, the attractiveness of, or the discomfort and risks associated with, the treatments received by enrolled subjects, the availability of appropriate clinical trial investigators, support staff, and proximity of patients to clinical sites and ability to comply with the eligibility and exclusion

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criteria for participation in the clinical trial and patient compliance. For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess the safety and effectiveness of our products, or if they determine that the treatments received under the trial protocols are not attractive or involve unacceptable risks or discomfort. Patients may also not participate in our clinical trials if they choose to participate in contemporaneous clinical trials of competitive products. In addition, patients participating in clinical trials may die before completion of the trial or suffer adverse medical events unrelated to investigational products.

Development of sufficient and appropriate clinical protocols to demonstrate safety and efficacy are required and we may not adequately develop such protocols to support clearance and approval. Further, the FDA and foreign regulatory authorities may require us to submit data on a greater number of patients than we originally anticipated and/or for a longer follow-up period or change the data collection requirements or data analysis applicable to our clinical trials. Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial. In addition, despite considerable time and expense invested in our clinical trials, the FDA and foreign regulatory authorities may not consider our data adequate to demonstrate safety and efficacy. Although FDA regulations allow submission of data from clinical trials outside the U.S., there can be no assurance that such data will be accepted or that the FDA will not apply closer scrutiny to such data. Increased costs and delays necessary to generate appropriate data, or failures in clinical trials could adversely affect our business, operating results and prospects. In the U.S., clinical studies for the company's products may be reviewed either under the Investigational Device Exemptions, or IDE pathway (for medical devices) or through the Investigational New Drug, or IND, pathway for biologics or combination products. The first regenerated trachea transplant approved in the U.S. using our bioreactor was approved under the IND pathway, but it has not yet been performed. Future FDA review under the IDE, IND, or both pathways, depending on the products, proposed study design, and study populations, is possible. In the EU, if the regulatory classification of our products is rejected by the ethics committee or competent authority reviewing our request for a positive opinion, we may be required to prepare a new study protocol reflecting a different classification. This process would be costly and time consuming.

If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory approval for or commercialize our products.

We do not have the ability to independently conduct our preclinical and clinical trials for our products and we must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to seek or obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all. Our business, operating results and prospects may also be adversely affected. Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.

The results of our clinical trials may not support our product claims or may result in the discovery of adverse side effects.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support our product claims or that the FDA, foreign competent authorities or notified bodies will agree with our conclusions regarding them. Although we have obtained some positive results from the use of our bioreactors for trachea transplants performed to date, we may not see positive results when the bioreactors, or our scaffolds or other technologies undergo clinical testing in humans in the future. Success in preclinical studies and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials and pre-clinical studies. The clinical trial process may fail to demonstrate that our products are safe and effective for the proposed indicated uses, which could cause us to abandon a product and may delay development of others. Any delay or termination of our clinical trials

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will delay the filing of our product submissions and, ultimately, our ability to commercialize our products and generate revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product’s profile. In addition, our current clinical experience and clinical trial for trachea transplant involves a small patient population. Because of the small sample size, the results may not be indicative of future results.

Risk Associated with Product Marketing

Even if our products are cleared or approved by regulatory authorities, if we or our suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.

Any product for which we obtain clearance or approval in the U.S. or the EU, and the manufacturing processes, reporting requirements, post-approval clinical data and promotional activities for such product, will be subject to continued regulatory review, oversight and periodic inspections by the FDA and other domestic and foreign regulatory authorities or notified bodies. In particular, we and our suppliers are required to comply with the FDA’s Quality System Regulations, or QSR, and Good Manufacturing Practices, or GMPs, for our medical device products, and International Standards Organization, or ISO, regulations for the manufacture of our products and other regulations which cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of any product for which we obtain clearance or approval. Manufacturing may also be subject to controls by the FDA for parts of the system or combination products that the FDA may find are controlled by the biologics regulations. Equivalent regulatory obligations apply in foreign jurisdictions. Regulatory authorities, such as the FDA, the competent authorities of the EU Member States, the European Medicines Agency and notified bodies, enforce the QSR, GMP and other applicable regulations in the U.S. and in foreign jurisdictions through periodic inspections. The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory authorities or notified bodies in the U.S. or in foreign jurisdictions, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
unanticipated expenditures to address or defend such actions;
customer notifications for repair, replacement, refunds;
recall, detention or seizure of our products;
operating restrictions or partial suspension or total shutdown of production;
refusing or delaying our requests for 510(k) clearance or premarket approval of products or modified products;
withdrawing 510(k) clearances, PMA approvals or BLAs that have already been granted;
withdrawal of the marketing authorization granted by the European Commission or delay in obtaining such marketing authorization;
withdrawal of the CE Certificates of Conformity granted by the notified body or delay in obtaining these certificates;
refusal to grant export approval for our products; and
criminal prosecution.

Postmarket enforcement actions can generate adverse commercial consequences.

Even if regulatory clearance or approval of a product is granted, such clearance or approval may be subject to limitations on the intended uses for which the product may be marketed and reduce our potential to successfully commercialize the product and generate revenue from the product. If the FDA or a foreign regulatory authority determines that our promotional materials, labeling, training or other marketing or educational activities constitute promotion of an unapproved use, it could request that we cease or modify our

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training or promotional materials or subject us to regulatory enforcement actions. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our training or other promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.

In addition, we may be required to conduct costly post-market testing and surveillance to monitor the safety or effectiveness of our products, and we must comply with medical device reporting requirements, including the reporting of adverse events and malfunctions related to our products. Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.

Extensive governmental regulations that affect our business are subject to change, and we could be subject to penalties and could be precluded from marketing our products and technologies if we fail to comply with new regulations and requirements.

As a manufacturer and marketer of medical devices, we are subject to extensive regulation that is subject to change. In March 2010, President Obama signed into law a legislative overhaul of the U.S. healthcare system, known as the Patient Protection and Affordable Care Act of 2010, as amended by the Healthcare and Education Affordability Reconciliation Act of 2010, or the PPACA, which may have far-reaching consequences for most healthcare companies, including medical device companies like us. The PPACA could substantially change the structure of the health insurance system and the methodology for reimbursing medical services, laboratory tests, drugs and devices. These structural changes, as well as those relating to proposals that may be made in the future to change the health care system, could entail modifications to the existing system of private payors and government programs, as well as implementation of measures to limit or eliminate payments for some medical procedures and treatments or subject the pricing of medical products to government control. Government and other third-party payors increasingly attempt to contain health care costs by limiting both coverage and the level of payments of newly approved health care products. In some cases, they may also refuse to provide any coverage of uses of approved products for disease indications other than those for which the regulatory authorities have granted marketing approval. Governments may adopt future legislative proposals and federal, state, foreign or private payors for healthcare goods and services may take action to limit their payments for goods and services.

In the EU, on September 26, 2012, the European Commission proposed a revision of the legislation currently governing medical devices. If adopted by the European Parliament and the Council in their present form, these proposals, which may apply from 2015 or 2016, will impose stricter requirements on medical device manufacturers. Moreover, the supervising competences of the competent authorities of the EU Member States and the notified bodies will be strengthened. The regulation of advanced therapy medicinal products is also in continued development in the EU, with the European Medicines Agency publishing new clinical or safety guidelines concerning advanced therapy medicinal products on a regular basis.

Any of these regulatory changes and events could limit our ability to form collaborations and our ability to commercialize our products, and if we fail to comply with any such new or modified regulations and requirements it could adversely affect our business, operating results and prospects.

If we fail to complete the required IRS forms for exemptions, make timely semi-monthly payments of collected excise taxes, or submit quarterly reports as required by the Medical Device Excise Tax, we may be subject to penalties, such as Section 6656 penalties for any failure to make timely deposits.

Section 4191 of the Internal Revenue Code, enacted by Section 1405 of the Health Care and Education Reconciliation Act of 2010, Public Law 111-152 (124 Stat. 1029 (2010)), in conjunction with the Patient Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)), imposed as of January 1, 2013, an excise tax on the sale of certain medical devices. The excise tax imposed by Section 4191 is 2.3% of the price for which a taxable medical device is sold within the U.S.

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The excise tax will apply to future sales of any company medical device listed with the FDA under Section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 C.F.R. Part 807, unless the device falls within an exemption from the tax, such as the exemption governing direct retail sale of devices to consumers or for foreign sales of these devices. We will need to assess to what extent this excise tax may impact the sales price and distribution agreements under which any of our devices are sold in the U.S. We also expect general and administrative expense to increase due to the medical device excise tax. We will need to submit IRS forms applicable to relevant exemptions, make semi-monthly payments of any collected excise taxes, and make timely (quarterly) reports to the IRS regarding the excise tax. To the extent we do not comply with the requirements of the Medical Device Excise Tax we may be subject to penalties.

Financial and Operating Risks

We have not generated any revenue to date and have a history of losses since inception. We anticipate that we will incur losses for the foreseeable future. We may never achieve or sustain profitability.

We have not generated any revenue to date and, from February 2009 through September 30, 2012, have incurred losses of approximately $10.4 million. We expect to continue to experience losses in the foreseeable future due to our limited anticipated revenues and significant anticipated expenses. We do not anticipate that we will achieve meaningful revenues for the foreseeable future. In addition, we expect that we will continue to incur significant operating expenses as we continue to focus on additional research and development, preclinical testing, clinical testing and regulatory review and/or approvals or clearances of our products and technologies. As a result, we cannot predict when, if ever, we might achieve profitability and cannot be certain that we will be able to sustain profitability, if achieved.

Our products are in an early stage of development. If we are unable to develop or market any of our products, our financial condition will be negatively affected, and we may have to curtail or cease our operations.

We are in the early stage of product development. You must evaluate us in light of the uncertainties and complexities affecting an early stage medical device company. Our products require additional research and development, preclinical testing, clinical testing and regulatory review and/or approvals or clearances before marketing. In addition, we may not succeed in developing new products as an alternative to our existing portfolio of products. If we fail to successfully develop and commercialize our products, including our bioreactor and scaffold system, our financial condition may be negatively affected, and we may have to curtail or cease our operations.

We have a limited operating history and it is difficult to predict our future growth and operating results.

We have a limited operating history and limited operations and assets. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties encountered by companies in the early stage of development. As a development stage company, our development timelines have been and may continue to be subject to delay that could negatively affect our cash flow and our ability to develop or bring products to market, if at all.

Our prospects must be considered in light of inherent risks, expenses and difficulties encountered by all early stage companies, particularly companies in new and evolving markets, such as regenerative medicine. These risks include, but are not limited to, unforeseen capital requirements, delays in obtaining regulatory approvals, failure to gain market acceptance and competition from foreseen and unforeseen sources.

Our operations could be adversely affected if we are unable to raise or obtain needed funding.

Substantial time, financial and other resources will be required to complete ongoing development and clinical testing of our products. Regulatory efforts and collaborative arrangements will also be necessary for our products that are currently under development and testing in order for them to be marketed. Our revenues from operations and cash may not be sufficient over the next several years for commercialization of all of the technologies and products we are currently developing. Consequently, we may seek strategic partners for various phases of development, marketing and commercialization of products employing our technologies. Further, we cannot assure you as to the sufficiency of our resources or the time required to complete any

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ongoing development and clinical testing, since the extent to which we conduct such testing is dependent on resource allocation decisions that we make from time to time based on numerous financial as well as operational conditions.

In addition to development and other costs, we expect to incur capital expenditures from time to time. These capital expenditures will be influenced by our regulatory compliance efforts, our success, if any, at developing collaborative arrangements with strategic partners, our needs for additional facilities and capital equipment and the growth, if any, of our business in general. We may seek to raise necessary funds through public or private equity offerings, debt financings or strategic collaborations and licensing arrangements. We may not be able to obtain additional financing on terms favorable to us, if at all. General market conditions may make it very difficult for us to seek financing from the capital markets. Additional equity financing could result in significant dilution to our stockholders. Debt financing, if available, could result in agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or paying dividends. In addition, in order to raise additional funds through strategic collaborations or licensing arrangements, we may be required to relinquish rights to our technologies or products. If we cannot raise funds or engage strategic partners on acceptable terms when needed, we may not be able to continue our research and development activities, develop or enhance our products, take advantage of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements.

If we fail to retain key personnel, we may not be able to compete effectively, which would have an adverse effect on our operations.

Our success is highly dependent on the continued services of key management, technical and scientific personnel and collaborators. Our management and other employees may voluntarily terminate their employment at any time upon short notice. The loss of the services of any member of our senior management team, including our Chief Executive Officer and President, David Green, our Chief Financial Officer, Thomas McNaughton, and our other key scientific, technical and management personnel, may significantly delay or prevent the achievement of product development and other business objectives.

If our collaborators do not devote sufficient time and resources to successfully carry out their duties or meet expected deadlines, we may not be able to advance our products in a timely manner or at all.

We are currently collaborating with multiple academic researchers and clinicians at a variety of research and clinical institutions. Our success depends in part on the performance of our collaborators. Some collaborators may not be successful in their research and clinical trials or may not perform their obligations in a timely fashion or in a manner satisfactory to us. Typically, we cannot control the amount of resources or time our collaborators may devote to our programs or potential products that may be developed in collaboration with us. Our collaborators frequently depend on outside sources of funding to conduct or complete research and development, such as grants or other awards. In addition, our academic collaborators may depend on graduate students, medical students, or research assistants to conduct certain work, and such individuals may not be fully trained or experienced in certain areas, or they may elect to discontinue their participation in a particular research program, creating an inability to complete ongoing research in a timely and efficient manner. As a result of these uncertainties, we are unable to control the precise timing and execution of any experiments that may be conducted.

We do not have formal agreements in place with most of our collaborators, who retain the ability to pursue other research, product development or commercial opportunities that may be directly competitive with our programs. If these collaborators elect to prioritize or pursue other programs in lieu of ours, we may not be able to advance product development programs in an efficient or effective manner, if at all. If a collaborator is pursuing a competitive program and encounters unexpected financial or capability limitations, they may be motivated to reduce the priority placed on our programs or delay certain activities related to our programs. Any of these developments could harm or slow our product and technology development efforts.

In particular, we depend upon Dr. Paolo Macchiarini, the surgeon who has led all of the clinical surgeries to date using our technology. Dr. Macchiarini’s team developed the initial version of our InBreath airway bioreactor, which we have licensed from the inventors. We continue to collaborate with Dr. Macchiarini on grant proposals and product development. If Dr. Macchiarini were not available to continue to collaborate with

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us or perform surgeries it would materially slow development of our products. On September 27, 2012, Dr. Macchiarini was arrested in Italy for attempted fraud and extortion for allegedly attempting to persuade severely ill patients to choose private hospitals in other countries over less expensive Italian public hospitals. He was temporarily placed under house arrest and on October 15, 2012 was released from house arrest and is free to travel internationally and to perform surgeries. The case is ongoing. Dr. Macchiarini believes these charges are without merit and has, and intends to continue to, vigorously defend these charges. These allegations do not relate to any surgeries involving our products and have not prevented Dr. Macchiarini from making preparations for further transplant surgeries using our products at the Karolinska Hospital, or in the U.S. or Russia. If Dr. Macchiarini decides to terminate his collaboration with us, if the case described above consumes a significant amount of his time, or if the case prevents him from performing surgeries, our product development efforts could be adversely affected and it could cause harm to our reputation or business.

Public perception of ethical and social issues surrounding the use of cell technology may limit or discourage the use of our technologies, which may reduce the demand for our products and technologies and reduce our revenues.

Our success will depend in part upon our collaborators’ ability to develop therapeutic approaches incorporating, or discovered through, the use of cells. If regenerative medicine technology is perceived negatively by the public for social, ethical, medical or other reasons, governmental authorities in the U.S. and other countries may call for prohibition of, or limits on, cell-based technologies and other approaches to regeneration. Although the surgeons using our products have not to date used the more controversial stem cells derived from human embryos or fetuses in the human transplant surgeries using our products, claims that human-derived stem cell technologies are ineffective or unethical may influence public attitudes. The subject of cell and stem cell technologies in general has received negative publicity and aroused public debate in the U.S. and some other countries. Ethical and other concerns about such cells could materially harm the market acceptance of our products.

Our products will subject us to liability exposure.

We face an inherent risk of product liability claims, especially with respect to our products that will be used within the human body, including the scaffolds we manufacture. Product liability coverage is expensive and sometimes difficult to obtain. We may not be able to obtain or maintain insurance at a reasonable cost. We may be subject to claims for liabilities for unsuccessful outcomes of surgeries involving our products, which may include claims relating to patient death. We may also be subject to claims for liabilities relating to patients that suffer serious complications or death during or following transplants involving our products. Our current product liability coverage is $15 million per occurrence and in the aggregate. We will need to increase our insurance coverage if and when we begin commercializing any of our products. There can be no assurance that existing insurance coverage will extend to other products in the future. Any product liability insurance coverage may not be sufficient to satisfy all liabilities resulting from product liability claims. A successful claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable items, if at all. If claims against us substantially exceed our coverage, then our business could be adversely impacted. Regardless of whether we are ultimately successful in any product liability litigation, such litigation could consume substantial amounts of our financial and managerial resources and could result in, among others:

significant awards against us;
substantial litigation costs;
injury to our reputation and the reputation of our products;
withdrawal of clinical trial participants; and
adverse regulatory action.

Any of these results would substantially harm our business.

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If restrictions on reimbursements or other conditions imposed by payors limit our customers’ actual or potential financial returns on our products, our customers may not purchase our products or may reduce their purchases.

Our customers’ willingness to use our products will depend in part on the extent to which coverage for these products is available from government payors, private health insurers and other third-party payors. These payors are increasingly challenging the price of medical products and services. Significant uncertainty exists as to the reimbursement status of newly approved treatments and products in the regenerative medicine field, and coverage and adequate payments may not be available for these treatments and products. In addition, third-party payors may require additional clinical trial data to establish or continue reimbursement coverage. These clinical trials, if required, could take years to complete and could be expensive. There can be no assurance that the payors will agree to continue reimbursement or provide additional coverage based upon these clinical trials. Failure to obtain adequate reimbursement would result in reduced sales of our products.

We depend upon a single-source supplier for the hardware and software used for our organ bioreactor control and acquisition system. The loss of this supplier, or future single-source suppliers we may rely on, or their failure to provide us with an adequate supply of their products or services on a timely basis, could adversely affect our business.

We currently have a single supplier for the hardware and software that we use for our organ bioreactor control and acquisition systems. We may also rely on other single-source suppliers for critical components of our products in the future. If we were unable to acquire hardware or software or other products or services from applicable single-source suppliers, we could experience a delay in developing and manufacturing our products.

We use and generate hazardous materials in our business and must comply with environmental laws and regulations, which can be expensive.

Our research, development and manufacturing involves the controlled use of hazardous chemicals, and we may incur significant costs as a result of the need to comply with numerous laws and regulations. For example, certain volatile organic laboratory chemicals we use, such as fluorinated hydrocarbons, must be disposed of as hazardous waste. We are subject to laws and regulations enforced by the FDA, foreign health authorities and other regulatory requirements, including the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act, and other current and potential federal, state, local and foreign laws and regulations governing the use, manufacture, storage, handling and disposal of our products, materials used to develop and manufacture our products, and resulting waste products. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our resources.

Our products are novel and will require market acceptance.

Even if we receive regulatory approvals for the commercial use of our products, their commercial success will depend upon acceptance by physicians, patients, third party payers such as health insurance companies and other members of the medical community. Market acceptance of our products is also dependent upon our ability to provide acceptable evidence and the perception of the positive characteristics of our products relative to existing or future treatment methods, including their safety, efficacy and/or other positive advantages. If our products fail to gain market acceptance, we may be unable to earn sufficient revenue to continue our business. Market acceptance of, and demand for, any product that we may develop and commercialize will depend on many factors, both within and outside of our control. If our products do not become widely accepted, our business, financial condition and results of operations would be materially and adversely affected.

Our long-term growth depends on our ability to develop products for other organs.

Our growth strategy includes expanding the use of our products in treatments pertaining to organs other than the trachea, such as lungs, gastrointestinal tract, heart valves and heart. These other organs are more complex than the trachea. There is no assurance that we will be able to successfully apply our technologies to these other more complex organs, which will limit our expected growth.

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Our success will depend partly on our ability to operate without infringing on, or misappropriating, the intellectual property or confidentiality rights of others.

We may be sued for infringing on the intellectual property or confidentiality rights of others, including the patent rights, trademarks and trade names and confidential information of third parties. For example, we have sublicensed certain rights pertaining to our use of the mark Harvard Apparatus from Harvard Bioscience, including the use in our corporate name. Harvard Bioscience has licensed the rights to such mark from Harvard University. If the license to Harvard Bioscience or our sublicense were terminated, it could have an adverse effect on us. We have also received correspondence from legal counsel to Nanofiber Solutions, Inc., or NFS, claiming that in developing our scaffold product and related intellectual property, we may have committed misappropriation, unauthorized use and disclosure of confidential information, and possible infringement of intellectual property rights of NFS. Intellectual property and related litigation is costly and the outcome is uncertain. If we do not prevail in any such intellectual property or related litigation, in addition to any damages we might have to pay, we could be required to stop the infringing activity, or obtain a license to or design around the intellectual property or confidential information in question. If we are unable to obtain a required license on acceptable terms, or are unable to design around any third party patent, we may be unable to sell some of our products and services, which could result in reduced revenue.

We may be involved in lawsuits to protect or enforce our patents that would be expensive and time consuming.

In order to protect or enforce our patent rights, we may initiate patent litigation against third parties. We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions. The defense and prosecution, if necessary, of intellectual property suits, interference proceedings and related legal and administrative proceedings would be costly and divert our technical and management personnel from their normal responsibilities. We may not prevail in any of these suits should they occur. An adverse determination of any litigation or defense proceedings could put our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of being rejected and patents not being issued.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. For example, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. Securities analysts or investors may perceive these announcements to be negative, which could cause the market price of our stock to decline.

If we are unable to effectively protect our intellectual property, third parties may use our technology, which would impair our ability to compete in our markets.

Our continued success will depend significantly on our ability to obtain and maintain meaningful patent protection for certain of our products throughout the world. Patent law relating to the scope of claims in the regenerative medicine and medical device fields in which we operate is still evolving. The degree of future protection for our proprietary rights is uncertain. We rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may not be accepted and patents might not be issued, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented. Furthermore, the claims in patents which have been issued or which may be issued to us in the future may not be sufficiently broad to prevent third parties from producing competing products similar to our products. We also rely on trademarks and trade names in our business. The laws of various foreign countries in which we compete may not protect our intellectual property to the same extent as do the laws of the U.S. If we fail to obtain adequate patent protection for our proprietary technology, our ability to be commercially competitive could be materially impaired.

In addition to patent protection, we also rely on protection of trade secrets, know-how and confidential and proprietary information. To maintain the confidentiality of trade-secrets and proprietary information, we generally seek to enter into confidentiality agreements with our employees, consultants and strategic partners upon the commencement of a relationship. However, we may not be able to obtain these agreements in all

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circumstances in part due to local regulations. In the event of unauthorized use or disclosure of this information, these agreements, even if obtained, may not provide meaningful protection for our trade-secrets or other confidential information. In addition, adequate remedies may not exist in the event of unauthorized use or disclosure of this information. The loss or exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse effect on our operating results, financial condition and future growth prospects.

Our competitors and potential competitors may have greater resources than we have and may develop products and technologies that are more effective or commercially attractive than our products and technologies or may develop competing relationships with our key collaborators.

We expect to compete with multiple pharmaceutical, biotechnology, medical device and scientific research product companies. Companies working in competing areas include, among others, Aastrom Biosciences, Aldagen, BioTime, Baxter International, Inc., Bose Corporation, Celgene, Cytori Therapeutics, E. I. du Pont de Nemours and Company, Genzyme (acquired by Sanofi-aventis), Harvest Technologies, Mesoblast, Nanofiber Solutions, Organovo, Osiris Therapeutics, Smiths Medical, Tengion, Tissue Genesis, Inc., Tissue Growth Technologies, Transmedics, United Therapeutics and W.L. Gore and Associates. Many of our competitors and potential competitors have substantially greater financial, technological, research and development, marketing, and personnel resources than we do. We cannot, with any accuracy, forecast when or if these companies are likely to bring regenerative medicine medical devices to market for indications that we are also pursuing. Many of these potential competitors may be further along in the process of product development and also operate large, company-funded research and development programs. It is also possible that some of our potential customers could engineer their own solutions to the problem of accurate injections.

We expect that other products will compete with our current and future products based on efficacy, safety, cost, and intellectual property positions. While we believe that these will be the primary competitive factors, other factors include obtaining marketing exclusivity under certain regulations, including the Orphan Drug Act, availability of supply, manufacturing, marketing and sales expertise and capability, and reimbursement coverage. Our competitors may develop or market products that are more effective or commercially attractive than our current or future products and may also develop competing relationships with our key collaborators. In addition, we may face competition from new entrants into the field. We may not have the financial resources, technical expertise or marketing, distribution or support capabilities to compete successfully in the future. The effects of any such actions of our competitors may have a material adverse effect on our business, operating results and financial condition.

If we do not successfully manage our growth, our business goals may not be achieved.

To manage growth, we will be required to continue to improve existing, and implement additional, operational and financial systems, procedures and controls, and hire, train and manage additional employees. Our current and planned personnel, systems, procedures and controls may not be adequate to support our anticipated growth and we may not be able to hire, train, retain, motivate and manage required personnel. Competition for qualified personnel in the technology and regenerative medicine area is intense, and we operate in several geographic locations where labor markets are particularly competitive, including Boston, Massachusetts, where demand for personnel with these skills is extremely high and is likely to remain high. As a result, competition for qualified personnel is intense and the process of hiring suitably qualified personnel is often lengthy and expensive, and may become more expensive in the future. If we are unable to hire and retain a sufficient number of qualified employees or otherwise manage our growth effectively, our ability to conduct and expand our business could be seriously reduced.

We are exposed to a variety of risks relating to our international sales and operations, including fluctuations in exchange rates, local economic conditions and delays in collection of accounts receivable.

We intend to generate significant revenues outside the U.S. in multiple foreign currencies including Euros, British pounds, and in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar. For those foreign customers who purchase our products in U.S. dollars, currency fluctuations between the U.S. dollar and the currencies in which those customers do business may have a negative impact on the demand for our products in foreign countries where the U.S. dollar has increased in value compared to the local currency.

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Since we have operations based outside the U.S. and we generate revenues and incur operating expenses in multiple foreign currencies, we experience currency exchange risk with respect to those foreign currency-denominated revenues and expenses.

We cannot predict the consolidated effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposure and the potential volatility of currency exchange rates. Our international operations subject us to laws regarding sanctioned countries, entities and persons, customs, import-export, laws regarding transactions in foreign countries, the U.S. Foreign Corrupt Practices Act and local anti-bribery and other laws regarding interactions with healthcare professionals. Among other things, these laws restrict, and in some cases prohibit, U.S. companies from directly or indirectly selling goods, technology or services to people or entities in certain countries. In addition, these laws require that we exercise care in structuring our sales and marketing practices in foreign countries.

Local economic conditions, legal, regulatory or political considerations, disruptions from strikes, the effectiveness of our sales representatives and distributors, local competition and changes in local medical practice could also affect our sales to foreign markets. Relationships with customers and effective terms of sale frequently vary by country, often with longer-term receivables than are typical in the U.S.

Risks Related To Separation

As long as Harvard Bioscience controls us, your ability to influence matters requiring stockholder approval will be extremely limited.

Harvard Bioscience currently owns 100% of our issued and outstanding common stock. After this offering, Harvard Bioscience will continue to own at least 80% of our issued and outstanding common stock. As long as Harvard Bioscience owns a majority of our outstanding common stock, Harvard Bioscience will have the ability to take stockholder action without the vote of any other stockholder, and investors in this offering will not be able to affect the outcome of any stockholder vote during this period. As a result, Harvard Bioscience will have the ability to control all matters affecting us, including:

the composition of our board of directors and, through our board of directors, any determination with respect to our business plans and policies, including the appointment and removal of our officers;
any determinations with respect to mergers and other business combinations;
our acquisition or disposition of assets;
our financing activities;
changes to, and waivers of Harvard Bioscience’s obligations under, the agreements providing for our separation from Harvard Bioscience;
the allocation of business opportunities that may be suitable for us and Harvard Bioscience;
the payment of dividends on our common stock;
certain determinations with respect to our tax returns; and
the number of shares of our common stock available for issuance under our equity plans.

Harvard Bioscience’s voting control may discourage transactions involving a change of control of us, including transactions in which you as a holder of our common stock might otherwise receive a premium for your shares over the then-current market price. Harvard Bioscience is not prohibited from selling a controlling interest in us to a third party and may do so without your approval and without providing for a purchase of your common stock. Accordingly, your shares of our common stock may be worth less than they would be if Harvard Bioscience did not maintain voting control over us.

This effective control on all matters relating to our business and operations could also eliminate the possibility of stockholders changing management in the event that stockholders did not agree with the conduct of officers and directors. Additionally, stockholders would potentially not be able to obtain the necessary stockholder vote

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to affect any change in the course of our business. This lack of stockholder control could prevent the stockholders from removing any of our directors who are not managing our company with sufficient skill to make it profitable, which could prevent us from becoming profitable, and in turn cause investors to lose all or part of their investment.

We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from Harvard Bioscience.

As a stand-alone, independent public company, we believe that our business will benefit from, among other things, allowing our management to design and implement corporate policies and strategies that are based primarily on the characteristics of our business, allowing us to focus our financial resources wholly on our own operations and implement and maintain a capital structure designed to meet our own specific needs. By separating from Harvard Bioscience there is a risk that our company may be more susceptible to market fluctuations and other adverse events than we would have been were we still a part of Harvard Bioscience. We may not be able to achieve some or all of the benefits that we expect to achieve as a stand-alone, independent regenerative medicine company or such benefits may be delayed or may not occur at all. For example, there can be no assurance that analysts and investors will place a greater value on our company as a stand-alone regenerative medicine company than on our business as a part of Harvard Bioscience.

We have no operating history as an independent company, and we may be unable to make the changes necessary to operate as an independent public company.

Prior to the separation, our business was operated by Harvard Bioscience as part of its broader corporate organization rather than as a stand-alone company. Harvard Bioscience assisted us by providing financing and certain corporate functions. Following the separation, Harvard Bioscience will have no obligation to provide assistance to us other than the interim transitional services which will be provided by Harvard Bioscience. These transitional services include, among other things, financial and managerial services. Because our business has not been operated as an independent company, we cannot assure you that we will be able to successfully implement the changes necessary to operate independently or that we will not incur additional costs operating independently that would have a negative effect on our business, results of operations or financial condition.

Your investment in our common stock may be adversely affected if Harvard Bioscience does not spin off the shares of our common stock owned by Harvard Bioscience.

Harvard Bioscience has advised us that following the completion of this offering and the expiration or waiver of the applicable lock-up period, it intends to spin off all of the remaining shares of our common stock that it owns to its stockholders as soon as practicable. Harvard Bioscience expects that the spin-off will occur on or after the date that is four months following completion of this offering. The spin-off will be subject to the satisfaction or waiver of certain conditions. Harvard Bioscience may decide not to complete the spin-off if, at any time, Harvard Bioscience’s board of directors determines, in its sole discretion, that the spin-off is not in the best interests of Harvard Bioscience or its stockholders. Unless and until the spin-off occurs, we will face the risks discussed in this prospectus relating to Harvard Bioscience, including its control of us and potential conflicts of interest between Harvard Bioscience and us. In addition, if a spin-off does not occur, the liquidity of the market for our common stock may be constrained for as long as Harvard Bioscience continues to hold a significant position in our common stock. A lack of liquidity in the market for our common stock may adversely affect our stock price.

If the separation and distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Harvard Bioscience could be subject to significant tax liability and, in certain circumstances, we could be required to indemnify Harvard Bioscience for material taxes pursuant to indemnification obligations under the tax sharing agreement.

Harvard Bioscience has applied for a private letter ruling from the IRS substantially to the effect that, among other things, the separation and distribution, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Harvard Bioscience has advised us that it does not currently intend to complete the distribution if

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it has not obtained the IRS private letter ruling substantially to the effect that the separation and distribution, together with certain related transactions, will so qualify. The private letter ruling and the tax opinion that Harvard Bioscience expects to receive from Burns & Levinson LLP, special counsel to Harvard Bioscience, will rely on certain representations, assumptions and undertakings, including those relating to the past and future conduct of our business, and neither the private letter ruling nor the opinion would be valid if such representations, assumptions and undertakings were incorrect. Moreover, the private letter ruling does not address all the issues that are relevant to determining whether the distribution will qualify for tax-free treatment. Notwithstanding the private letter ruling and opinion, the IRS could determine the distribution should be treated as a taxable transaction for U.S. federal income tax purposes if, among other reasons, it determines any of the representations, assumptions or undertakings that were included in the request for the private letter ruling are false or have been violated or if it disagrees with the conclusions in the opinion that are not covered by the IRS ruling.

If the distribution fails to qualify for tax-free treatment, in general, Harvard Bioscience would be subject to tax as if it had sold our common stock in a taxable sale for its fair market value, and Harvard Bioscience stockholders who receive shares of our common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.

Under the tax sharing agreement between Harvard Bioscience and us, we would generally be required to indemnify Harvard Bioscience against any tax resulting from the distribution to the extent that such tax resulted from (i) an acquisition of all or a portion of our stock or assets, whether by merger or otherwise, (ii) other actions or failures to act by us, or (iii) any of our representations or undertakings being incorrect or violated. For a more detailed discussion, see “Certain Relationships and Related Transactions — Agreements with Harvard Bioscience — Tax Sharing Agreement.” Our indemnification obligations to Harvard Bioscience and its subsidiaries, officers and directors are not limited by any maximum amount. If we are required to indemnify Harvard Bioscience or such other persons under the circumstances set forth in the tax sharing agreement, we may be subject to substantial liabilities.

We may not be able to engage in desirable strategic or capital-raising transactions following the distribution. In addition, under some circumstances, we could be liable for adverse tax consequences resulting from engaging in significant strategic or capital-raising transactions.

To preserve the tax-free treatment to Harvard Bioscience of the separation and distribution, for the two-year period following the distribution we may be limited, except in specified circumstances, from:

entering into any transaction pursuant to which all or a portion of our stock would be acquired, whether by merger or otherwise;
issuing equity securities beyond certain thresholds;
repurchasing our common stock;
ceasing to actively conduct our regenerative medicine business; and
taking or failing to take any other action that prevents the separation and distribution and related transactions from being tax-free.

These restrictions may limit our ability to pursue strategic transactions or engage in new business or other transactions that may maximize the value of our business.

We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company, and we may experience increased costs after the separation or as a result of the separation.

Following the completion of our separation, Harvard Bioscience will be contractually obligated to provide to us only those services specified in the transition services agreement and the other agreements we enter into with Harvard Bioscience in preparation for the separation. The transition services agreement provides for services to be provided for various time frames of limited length, ranging from six to 12 months from the date of our separation. We may be unable to replace in a timely manner or on comparable terms the services or other benefits that Harvard Bioscience previously provided to us that are not specified in the transition

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services agreement or the other agreements. Also, upon the expiration of the terms of the required services under the transition services agreement or other agreements, such services will be provided internally or by unaffiliated third parties, and we expect that in some instances, we will incur higher costs to obtain such services than we incurred under the terms of such agreements. We anticipate that we will incur additional incremental expenses associated with being an independent, public company. These additional pretax expenses are estimated to be $     million for the year ending December 31, 2013. In addition, if Harvard Bioscience does not continue to perform effectively the transition services and the other services that are called for under the transition services agreement and other agreements, we may not be able to operate our business effectively and our operating results could be adversely affected. Furthermore, after the expiration of the terms of the required services under transition services agreement and the other agreements, we may be unable to replace in a timely manner or on comparable terms the services specified in such agreements.

Prior to our separation, we have utilized the executive management team and administrative resources of Harvard Bioscience. Many daily functions have been performed by Harvard Bioscience, including those related to SEC filings and auditing and review by accountants of required financial statements, which will become our responsibility after the separation. In addition, there will be a time period during which such new personnel will have to learn the required systems for these functions. The lack of these relationships and resources may harm our operating results, financial condition and our ability to raise any required debt or equity funding.

Our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a separate publicly traded company and may not be a reliable indicator of our future results.

The historical financial and pro forma financial information we have included in this prospectus may not reflect what our results of operations, financial position and cash flows would have been had we been an independent publicly traded company during the periods presented or what our results of operations, financial position and cash flows will be in the future when we are an independent company. This is primarily because:

our historical and financial information reflects allocations for services historically provided to us by Harvard Bioscience, which allocations may not reflect the costs we will incur for similar services in the future as an independent company; and
our historical and financial information does not reflect changes that we expect to incur in the future as a result of our separation from Harvard Bioscience, including changes in the cost structure, personnel needs, financing and operations of the contributed business as a result of the separation from Harvard Bioscience and from reduced economies of scale.

Following the separation and distribution, we also will be responsible for the additional costs associated with being an independent public company, including costs related to corporate governance and listed and registered securities. Therefore, our financial statements may not be indicative of our future performance as an independent company. For additional information about our past financial performance and the basis of presentation of our financial statements, please see “Selected Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes thereto included elsewhere in this prospectus.

We may have received better terms from unaffiliated third parties than the terms we received in our agreements with Harvard Bioscience.

The agreements related to our separation from Harvard Bioscience, including the separation and distribution agreement, tax sharing agreement, transition services agreement and the other agreements, were negotiated in the context of our separation from Harvard Bioscience while we were still part of Harvard Bioscience and, accordingly, may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties. The terms of the agreements we negotiated in the context of our separation related to, among other things, allocation of assets, liabilities, rights, indemnifications and other obligations among Harvard Bioscience and us. We may have received better terms from third parties because third parties may have competed with each other to win our business. Some of our board members are also members of the Harvard Bioscience board. See “Certain Relationships and Related Party Transactions.”

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The ownership by our executive officers and some of our directors of shares of common stock, options, or other equity awards of Harvard Bioscience, as well as the continued roles of our executive officers and certain directors with Harvard Bioscience prior to and after the planned distribution of our common stock by Harvard Bioscience, may create, or may create the appearance of, conflicts of interest.

The ownership by our executive officers and some of our directors of shares of common stock, options, or other equity awards of Harvard Bioscience may create, or may create the appearance of, conflicts of interest. Because of their current or former positions with Harvard Bioscience, certain of our executive officers, and some of our directors, own shares of Harvard Bioscience common stock, options to purchase shares of Harvard Bioscience common stock or other equity awards. The individual holdings of common stock, options to purchase common stock of Harvard Bioscience or our company or other equity awards, may be significant for some of these persons compared to such persons’ total assets. Ownership by our directors and officers, after our separation, of common stock or options to purchase common stock of Harvard Bioscience, or any other equity awards, creates, or, may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for Harvard Bioscience than the decisions have for us. In addition, certain of our directors and executive officers will remain in service for or employed by both our company as well as Harvard Bioscience following any consummation of this offering. Our executive officers will remain employed by Harvard Bioscience until Harvard Bioscience completes its planned distribution of our common stock to its stockholders and certain of our directors are expected to remain on the board of directors of Harvard Bioscience following the planned distribution. The continued service or employment relationships at both companies creates, or, may create the appearance of, conflicts of interest when these directors or executive officers are faced with decisions that could have different implications for Harvard Bioscience than the decisions have for us.

Third parties may seek to hold us responsible for liabilities of Harvard Bioscience that we did not assume in our agreements.

In connection with our separation from Harvard Bioscience, Harvard Bioscience has generally agreed to retain all liabilities that did not historically arise from our business. Third parties may seek to hold us responsible for Harvard Bioscience’s retained liabilities. Under our agreements with Harvard Bioscience, Harvard Bioscience has agreed to indemnify us for claims and losses relating to these retained liabilities. However, if those liabilities are significant and we are ultimately liable for them, we cannot assure you that we will be able to recover the full amount of our losses from Harvard Bioscience.

Any disputes that arise between us and Harvard Bioscience with respect to our past and ongoing relationships could harm our business operations.

Disputes may arise between Harvard Bioscience and us in a number of areas relating to our past and ongoing relationships, including:

intellectual property, technology and business matters, including failure to make required technology transfers and failure to comply with non-compete provisions applicable to Harvard Bioscience and us;
labor, tax, employee benefit, indemnification and other matters arising from our separation from Harvard Bioscience;
distribution and supply obligations;
employee retention and recruiting;
business combinations involving us;
sales or distributions by Harvard Bioscience of all or any portion of its ownership interest in us;
the nature, quality and pricing of transitional services Harvard Bioscience has agreed to provide us; and
business opportunities that may be attractive to both Harvard Bioscience and us.

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We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

The agreements we have entered into with Harvard Bioscience may be amended upon agreement between the parties. While we are controlled by Harvard Bioscience, Harvard Bioscience may be able to require us to agree to amendments to these agreements that may be less favorable to us than the original terms of the agreements.

Risks Relating To Our Common Stock

There is no existing market for our common stock and a trading market that will provide you with adequate liquidity may not develop for our common stock.

There is currently no public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market in our common stock, or how liquid that market might be. If an active market does not develop, you may have difficulty selling your shares of our common stock. The initial public offering price of our common stock will be determined by the negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following the completion of this offering.

Our revenues, operating results and cash flows may fluctuate in future periods and we may fail to meet investor expectations, which may cause the price of our common stock to decline.

Variations in our quarterly and year-end operating results are difficult to predict and may fluctuate significantly from period to period. If our sales or operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. In addition to the other factors discussed under these “Risk Factors,” specific factors that may cause fluctuations in our operating results include:

demand and pricing for our products;
government or private healthcare reimbursement policies;
physician and patient acceptance of any of our current or future products;
manufacturing stoppages or delays;
introduction of competing products;
our operating expenses which fluctuate due to growth of our business; and
timing and size of any new product or technology acquisitions we may complete.

Once our common stock begins trading, the market price of our shares may fluctuate widely.

We cannot predict the prices at which our common stock may trade after this offering or after the planned distribution of our common stock by Harvard Bioscience. The market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:

the potential spin-off by Harvard Bioscience of shares of our common stock, including that our business profile and market capitalization may not fit the investment objectives of Harvard Bioscience stockholders, and as a result, Harvard Bioscience stockholders may sell our shares after the distribution;
the success or failure of surgeries and procedures involving the use our products;
the success and costs of preclinical and clinical testing and obtaining regulatory approvals or clearances for our products;
a shift in our investor base;
our quarterly or annual results of operations, or those of other companies in our industry;
actual or anticipated fluctuations in our operating results due to factors related to our business;

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changes in accounting standards, policies, guidance, interpretations or principles;
announcements by us or our competitors of significant acquisitions, dispositions or intellectual property developments or issuances;
the failure to maintain our NASDAQ listing or failure of securities analysts to cover our common stock after the distribution;
changes in earnings estimates by securities analysts or our ability to meet those estimates;
the operating and stock price performance of other comparable companies;
overall market fluctuations; and
general economic conditions.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

Substantial sales of common stock may occur following the planned distribution by Harvard Bioscience, which could cause our stock price to decline.

The shares of our common stock that Harvard Bioscience distributes to its stockholders generally will be able to be sold immediately in the public market following the planned distribution. Some Harvard Bioscience stockholders, including possibly some of its large stockholders, may sell our common stock received in the distribution for reasons such as that our business profile or market capitalization as an independent company does not fit their investment objectives. The sales of significant amounts of our common stock, or the perception in the market that this will occur, may result in a decline in the price of our common stock.

Your percentage ownership will be diluted in the future.

Your percentage ownership will be diluted in the future because of equity awards that we expect will be granted to our directors, officers and employees and the accelerated vesting of other equity awards. Prior to the completion of this offering, our board of directors and Harvard Bioscience will have approved our 2013 Equity Incentive Plan, which provides for the grant of equity-based awards, including restricted stock, restricted stock units, stock options, stock appreciation rights and other equity-based awards to our directors, officers and other employees, advisors and consultants. In addition, your percentage ownership will be diluted by our issuance of common stock following the exercise of options, or vesting of restricted stock units, we expect to issue pertaining to the adjustment and conversion of outstanding Harvard Bioscience equity awards upon the effectiveness of the spin-off of our company.

Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

We have historically operated our business as a division of a public company. As a public company with separate SEC reporting, regulatory, and stock exchange listing requirements, we will incur additional legal, accounting, compliance, and other expenses that we have not incurred historically. After completion of this offering, we will be obligated to file with the SEC annual and quarterly information and other reports that are specified in Section 13 and other sections of the Securities Exchange Act of 1934, as amended, and therefore will need to have the ability to prepare financial statements that are compliant with all SEC reporting requirements on a timely basis. In addition, we will be subject to other reporting and corporate governance requirements, including certain requirements of the NASDAQ Stock Market and certain provisions of the Sarbanes-Oxley Act and its associated regulations, which will impose significant compliance obligations upon us.

Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and the Consumer Protection Act of 2010, as well as new rules subsequently implemented by the SEC and the NASDAQ Stock Market, have increased regulation of, and imposed enhanced disclosure and corporate governance requirements on, public companies. Our efforts to comply with evolving laws, regulations, and standards in this regard are likely to result in increased

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marketing, selling, and administrative expenses, as well as a diversion of management’s time and attention from revenue-generating activities to compliance activities. These changes will require a significant commitment of additional resources. We may not be successful in implementing these requirements, and implementing them could materially adversely affect our business, results of operations, and financial condition. We also expect these recent regulations to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time-consuming, and costly. In addition, if we fail to implement the required controls with respect to our internal accounting and audit functions, our ability to report our results of operations on a timely and accurate basis could be impaired. If we do not implement such required controls in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NASDAQ Stock Market. Any such action could harm our reputation and the confidence of investors and clients in our company and could negatively affect our business and cause the price of our common stock to decline.

Provisions of Delaware law, of our amended and restated charter and amended and restated bylaws and our Shareholder Rights Plan may make a takeover more difficult, which could cause our stock price to decline.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and in the Delaware corporate law may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt, which is opposed by management and the board of directors. Public stockholders who might desire to participate in such a transaction may not have an opportunity to do so. In            , 2013, our board of directors adopted a Shareholder Rights Plan that could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, our company or a large block of our common stock. A third party that acquires 20% or more of our common stock could suffer substantial dilution of its ownership interest under the terms of the Shareholder Rights Plan through the issuance of common stock to all stockholders other than the acquiring person. We also have a staggered board of directors that makes it difficult for stockholders to change the composition of the board of directors in any one year. After the planned distribution by Harvard Bioscience, any removal of directors will require a super-majority vote of the holders of at least 75% of the outstanding shares entitled to be cast on the election of directors which may discourage a third party from making a tender offer or otherwise attempting to obtain control of us. These anti-takeover provisions could substantially impede the ability of public stockholders to change our management and board of directors. Such provisions may also limit the price that investors might be willing to pay for shares of our common stock in the future.

Any issuance of preferred stock in the future may dilute the rights of our common stockholders.

Our board of directors has the authority to issue up to      shares of preferred stock and to determine the price, privileges and other terms of these shares. Our board of directors may exercise this authority without any further approval of stockholders. The rights of the holders of common stock may be adversely affected by the rights of future holders of preferred stock.

We do not intend to pay cash dividends on our common stock.

Currently, we do not anticipate paying any cash dividends to holders of our common stock. As a result, capital appreciation, if any, of our common stock will be a stockholder’s sole source of gain.

The recently enacted JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information provided in reports filed with the SEC. We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are and we will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of this offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt, or (iv) the date on which we are deemed a “large accelerated filer” under the Securities and Exchange Act of

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1934, as amended, or the Exchange Act. For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.

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MARKET DATA

Unless otherwise indicated, statements in this prospectus concerning our market and the segments in which we operate, including our general expectations and competitive position, business opportunity, and category size, growth, and share, are based on information from independent industry organizations and other third-party sources (including industry publications, surveys, and forecasts), government publications, data from our internal research, and management estimates. Management estimates are derived from the information and data referred to above, and are based on assumptions and calculations made by us based upon our interpretation of such information and data, and our knowledge of our industry and the categories in which we operate, which we believe to be reasonable. We have not independently verified any third-party information, and our internal data have not been verified by any independent source. Furthermore, the information and data referred to above are imprecise. Projections, assumptions, expectations, and estimates regarding our industry and the categories in which we operate and our future performance are also necessarily subject to risk.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking statements within the meaning of the federal securities laws. These statements relate to anticipated future events, future results of operations or future financial performance. These forward-looking statements include, but are not limited to, statements relating to our ability to raise sufficient capital to finance our planned operations, market acceptance of our technology and product offerings, our ability to attract and retain key personnel, our ability to protect our intellectual property, and estimates of our cash expenditures for the next 12 to 24 months. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology.

These forward-looking statements are only predictions, are uncertain and involve substantial known and unknown risks, uncertainties and other factors which may cause our (or our industry’s) actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. The “Risk Factors” section of this prospectus sets forth detailed risks, uncertainties and cautionary statements regarding our business and these forward-looking statements.

We cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the U.S., we do not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances or to reflect the occurrence of unanticipated events.

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OUR SEPARATION FROM HARVARD BIOSCIENCE

Our Relationship with Harvard Bioscience

Harvard Apparatus Regenerative Technology, Inc. was incorporated in May 2012. We are currently a wholly- owned subsidiary of Harvard Bioscience. Harvard Bioscience will not sell any of its shares of our common stock as part of this offering. We will issue new, incremental shares of common stock in this offering. After the completion of this offering, Harvard Bioscience will own at least 80% of our outstanding common stock. At that point, Harvard Bioscience, as majority owner, will still control our company.

We were incorporated by Harvard Bioscience to provide a means for separating its regenerative medicine device business from Harvard Bioscience’s life science research tools businesses. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first focused on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine device business initiative operated as a part of Harvard Bioscience. Most of our products began as products made and sold by the Harvard Apparatus division of Harvard Bioscience. Harvard Apparatus began at Harvard Medical School in 1901 and is one of the best known and most respected brand names in physiology research. We believe this expertise and reputation are major advantages in attracting leading physicians as collaborators and will ultimately be valuable in selling our products to hospitals and clinicians. We will continue to pursue our business of developing and making devices for regenerative medicine researchers and clinicians.

Prior to this offering, Harvard Bioscience will have contributed to us the assets of its regenerative medicine device business and cash in an amount equal to approximately $10 million. We had no material assets or activities as a separate corporate entity until the contribution to us by Harvard Bioscience of the businesses described in this prospectus.

For several reasons enumerated in “Benefits of Separation” below, Harvard Bioscience decided to separate its regenerative medicine device business into a separate corporate entity, authorize such entity to sell equity to raise capital and then spin-off its interest in our company to the Harvard Bioscience stockholders. Prior to the completion of this offering, we will enter into agreements with Harvard Bioscience that will govern the separation of our businesses from Harvard Bioscience and various interim and ongoing relationships. These agreements will be in effect as of the completion of this offering. These agreements will provide for, among other things, the transfer from Harvard Bioscience to us of assets and the assumption by us of liabilities comprising our businesses, employee and tax-related matters, intellectual property cross licenses, product distribution agreements, non-competition agreements and the transitional services Harvard Bioscience will provide to us. All of the agreements relating to our separation from Harvard Bioscience will be made in the context of a parent-subsidiary relationship and will be entered into in the overall context of our separation from Harvard Bioscience. See “Certain Relationships and Related Transactions — Agreements with Harvard Bioscience” for a more detailed discussion of these agreements. For more information regarding the assets and liabilities to be transferred to us, see financial statements and accompanying notes included elsewhere in this prospectus. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. See “Risk Factors — Risks Related To Separation — We may have received better terms from unaffiliated third parties than the terms we received in our agreements with Harvard Bioscience.”

We intend to establish two wholly owned foreign subsidiaries, one in Germany and the other in Sweden that, in accordance with certain transition agreements between us and Harvard Bioscience, will be provided with services from certain subsidiaries of Harvard Bioscience.

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Benefits of Separation

We believe that the business benefits that will occur as a result of this offering, and be more fully realized upon a later spin-off, include:

Market recognition of the value of our business.  As we will be a separate public company after this offering, potential investors will be able to invest directly in our regenerative medicine business.
Focused management attention.  Our management will be better able to focus its attention on our business. As a company dedicated to the regenerative medicine industry, capitalizing on emerging trends, and introducing new products and product extensions of our existing products, we expect to be in a better position to grow our business and to serve our customers more effectively through more efficient deployment of resources, increased operational flexibility, and enhanced responsiveness to customers.
Improved access to capital.  As a separate public company, we will avoid conflicts in the allocation of capital between us and other Harvard Bioscience businesses. Rather, we will have direct access to the capital markets to issue equity or debt securities, which we expect will improve our access to capital and increase our flexibility to invest in innovation, product development, marketing, and production capacity, as well as to pursue strategic acquisitions.
Incentives for employees more directly linked to our performance.  We expect to enhance employee motivation and to strengthen our management’s focus on our business through incentive compensation programs specifically tied to the results of our business operations and the market performance of our common stock. We believe that these incentives will enhance our ability to attract and retain qualified personnel.

Distribution by Harvard Bioscience of Our Shares

Harvard Bioscience plans to distribute all of the shares of our common stock it owns to Harvard Bioscience’s stockholders on or shortly after the date that is four months after the completion of this offering by means of a spin-off, which is a pro rata distribution by Harvard Bioscience of the shares of our common stock it owns to holders of Harvard Bioscience’s common stock. Harvard Bioscience’s agreement to complete the distribution is contingent on the satisfaction or waiver of a variety of conditions, including the receipt by Harvard Bioscience of a private letter ruling from the IRS substantially to the effect that, among other things, the distribution, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of Internal Revenue Code, or the Code. In addition, Harvard Bioscience has the right to terminate its obligations to complete the distribution if, at any time, Harvard Bioscience’s board of directors determines, in its sole discretion, that the distribution is not in the best interests of Harvard Bioscience or its stockholders. As a result, the distribution may not occur by the contemplated time or at all. Following the distribution, Harvard Bioscience will no longer own any of our outstanding common stock and we will thus be a separate corporate entity.

Registrar and Transfer Company, which currently serves as the transfer agent and registrar for Harvard Bioscience’s common stock, will serve as transfer agent and registrar for our common stock and as distribution agent in connection with the distribution.

Dilution Related to the Distribution by Harvard Bioscience of Our Shares

At the time of Harvard Bioscience’s distribution of our common stock it then owns, holders of Harvard Bioscience stock options and restricted stock units issued previously to employees and directors as part of Harvard Bioscience’s equity compensation plans, including our executive officers and certain of our directors, will receive an adjustment to their stock options and restricted stock units because those securities will not participate in the distribution. Such adjustment is required under Harvard Bioscience’s employee benefit plans. The adjustments will be based on the estimated value of the entire distribution, as measured by the relationship between Harvard Bioscience’s common stock price just prior to and after the distribution. We expect that Harvard Bioscience’s common stock price will decrease due to Harvard Bioscience’s distribution of our shares, which would cause an adjustment to the quantity of outstanding Harvard Bioscience stock options and restricted stock units and to the exercise price of outstanding Harvard Bioscience options. It is

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currently anticipated that Black-Scholes valuation modeling will be used to determine the value that each Harvard Bioscience option has lost at the time of the distribution. We expect that, for adjustments to the quantity of outstanding stock options and restricted stock units, Harvard Bioscience will provide 80% of the value of the adjustment by issuing the holder additional Harvard Bioscience restricted stock units and options for shares of Harvard Bioscience common stock and 20% of the value of the adjustment will be provided by us issuing restricted stock units and options for shares of our common stock. The share amounts and exercise prices of the adjusted Harvard Bioscience awards and our awards would be adjusted in a manner to ensure the intrinsic value held by the holder pertaining to the existing Harvard Bioscience award is maintained immediately following the distribution and shall be determined in a manner designed to result in no tax being triggered under Section 409A of the Internal Revenue Code. The exercise price of our common stock options to be issued as part of the distribution adjustment described above will equal the closing price of our common stock on the grant date.

The total value of the adjustments to be granted to holders of Harvard Bioscience options and restricted stock units due to Harvard Bioscience’s distribution of its shares of our common stock will depend on Harvard Bioscience’s common stock price just prior to and after the distribution. Many factors may influence Harvard Bioscience’s common stock price just before and after the distribution, including, but not limited, to the value of our company reflected in Harvard Bioscience’s common stock price just prior to the distribution, the liquidity and trading volumes in Harvard Bioscience’s common stock, conditions in Harvard Bioscience’s other businesses, general economic conditions, events outside of Harvard Bioscience’s business that may affect Harvard Bioscience’s stock price and activities in stock markets at large. The total value of the adjustments will also depend on other estimates, including those involved in valuing options. As a result, the number of options for our common stock and the quantity of our restricted stock units to be issued at the time of the distribution is not known at this time. Subject to the above qualifications, assuming that the market price of Harvard Bioscience’s common stock was $     per share immediately prior to the distribution and $     per share immediately after the distribution, and the market price of our common stock was $     per share immediately after the distribution, we expect that we would issue approximately       options to acquire shares of our common stock and approximately       restricted stock units as a part of the required adjustment to the outstanding Harvard Bioscience stock options and restricted stock units described above.

Our stock options and restricted stock units issued at the distribution to holders of Harvard Bioscience stock options and restricted stock units issued previously to employees and directors as part of Harvard Bioscience’s equity compensation plans will vest in tandem with the originally-issued stock options and restricted stock units for the remaining life of the originally-issued stock options and restricted stock units. The continued vesting and exercisability of the stock options and restricted stock units will be conditioned on the recipient’s continued service to or employment with Harvard Bioscience or our company.

Separately, certain of our employees and directors, including our executive officers, are holders of vested and unvested options to buy Harvard Bioscience common stock and unvested restricted stock units pertaining to Harvard Bioscience’s common stock. Vesting and exercisability of such options and restricted stock units will continue through their original expiration dates so long as the individual holder is employed or providing service to us or Harvard Bioscience.

With respect to individual owners of both options and/or restricted stock units issued by our company and those issued by Harvard Bioscience, the compensation expense for such options and restricted stock units will be recognized by the company receiving the individual’s services. However, cash proceeds from the future option exercises will be realized by the company that issued the respective option.

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USE OF PROCEEDS

The net proceeds from the sale of common stock by us in this offering will be approximately $     million, based on the initial public offering price of $     per share (which is the midpoint of the price range set forth on the cover page of this prospectus), and after deducting underwriting discounts and commissions. A $1.00 increase (decrease) in the assumed initial public price per share of     , the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately     , assuming the number of shares offered by us, set forth on the cover page of this prospectus, remains the same after deducting underwriting discounts and estimated offering price by us. If the underwriters exercise in full their option to purchase additional shares, we expect to receive approximately $     million of additional net proceeds. In addition, Harvard Bioscience has agreed to contribute cash to us upon the closing of this offering in an amount equal to approximately $10 million.

The principal purposes of this offering are to obtain additional capital and to create a public market for our common stock. We expect to use the net proceeds of this offering for general corporate purposes, including spending for research and development, business development, sales and marketing, capital expenditures and working capital.

Pending such uses, we plan to invest the net proceeds from this offering in bank deposit accounts, short-term, interest-bearing obligations, certificates of deposit or direct or guaranteed obligations of the U.S. government.

DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated among us and the underwriters. Among the factors to be considered in determining the initial public offering price of our common stock, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses. We offer no assurances that the initial public offering price will correspond to the price at which our common stock will trade in the public market subsequent to this offering or that an active trading market for our common stock will develop and continue after this offering.

DIVIDEND POLICY

We have never declared or paid cash dividends. We do not intend to pay cash dividends on our common stock for the foreseeable future, but currently intend to retain any future earnings to fund the development and growth of our business. The payment of cash dividends, if any, on the common stock will rest solely within the discretion of our board of directors and will depend, among other things, upon our earnings, capital requirements, financial condition, legal requirements, and other relevant factors as determined by our board of directors. There can be no assurance that we will continue to pay any dividends if we do commence the payment of dividends.

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2012:

on an actual basis; and
on a pro forma “as adjusted” basis to reflect the pro forma transactions, which are comprised of:
the receipt of approximately $     million in net proceeds from the sale of shares of our common stock in this offering at an assumed initial offering price of $     per share (which is the midpoint of the price range set forth on the cover page of this prospectus), after deducting the underwriting discount and estimated offering expenses payable by us; and
the receipt of approximately $10 million in cash from Harvard Bioscience;
assumes the completion of a     for 1 stock split;
excludes       shares of our common stock reserved for issuance under the 2013 Equity Incentive Plan, or 2013 Plan, upon the exercise of stock options, restricted stock units, or restricted stock that will be issued under our employee benefit plans, which will include:
      shares of our common stock reserved for issuance in connection with the initial grants to our executives and employees that will be granted following the determination of the initial public offering price per share of our common stock in this offering, as described in “Director and Executive Compensation — IPO Grants;”
shares of our common stock that may be issued in connection with compensation of our directors, as described in “Director and Executive Compensation — Board of Directors’ Compensation;” and
shares of our common stock that may be issued in connection with the exercise or vesting of options or restricted stock units we issue pertaining to the adjustment and conversion of outstanding Harvard Bioscience equity awards upon the effectiveness of the spin-off, as described in “Director and Executive Compensation — Treatment of Outstanding Harvard Bioscience Equity Awards;” and
assumes the underwriters will not exercise their over-allotment option.

You should read the information in the following table together with “Use of Proceeds,” “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited and unaudited financial statements and the related notes included elsewhere in this prospectus.

   
  As of September 30, 2012
     Historical   Pro forma as adjusted
     (Unaudited)
(in thousands)
Long-term debt   $     $  
Total invested equity   $ 140     $  
Stockholders’ equity:
                 
Preferred stock, $0.01 par value; no shares authorized; no shares issued and outstanding               
Common stock, $0.01 par value;       shares authorized;       shares issued and outstanding as adjusted               
Additional paid-in capital               
Total stockholders’ equity                   
Total capitalization   $ 140     $         

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Assuming the receipt of approximately $10 million in cash from Harvard Bioscience and no change in the number of shares offered by us as set forth on the cover page of this prospectus, a $1.00 increase (decrease) in the assumed initial public offering price of $     per share (which is the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) each of cash and cash equivalents, additional paid-in capital, and total stockholders’ equity by $    , and would increase (decrease) total capitalization by $    , after deducting the underwriting discount and estimated offering expenses payable by us.

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DILUTION

Dilution represents the difference between the initial offering price and the net tangible book value per share immediately after completion of this offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution of the value of the shares you purchase is a result of the lower book value of the shares held by our existing stockholder, Harvard Bioscience.

At            , 2012, the net tangible book value of our shares of common stock was $     or approximately $     per share based upon       shares outstanding. After giving effect to our sale of       shares of common stock at an initial public offering price of $     per share (which is the midpoint of the price range set forth on the cover page of this prospectus), and after deducting underwriting discounts and commissions and estimated offering expenses, our pro forma net tangible book value as of            , 2012 would have been $    , or $     per share. This represents an immediate increase in net tangible book value of $     per share to our existing stockholder, Harvard Bioscience, and an immediate dilution in net tangible book value of $     per share to purchasers of securities in this offering, as illustrated in the following table:

   
Assumed initial public offering price per share            $  
Pro forma net tangible book value per share
as of            , 2012
  $                  
Increase per share attributable to new investors                   
Pro forma as adjusted net tangible book value per share
after this offering
                  
Dilution per share to new investors in this offering         $         

If the underwriters exercise their option to purchase additional shares in full, the pro forma as adjusted net tangible book value per share after giving effect to the offering would be $    per share. This represents an increase in pro forma as adjusted net tangible book value of $    per share to existing stockholders and dilution in pro forma as adjusted net tangible book value of $    per share to new investors.

A $1.00 increase (decrease) in the assumed initial public offering price of $    , the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value after this offering by $    million and the pro forma as adjusted net tangible book value per share after this offering by $    per share and would increase (decrease) the dilution per share to new investors in this offering by $    per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. The information discussed above is illustrative only and may change based on the actual initial public offering price and other terms of this offering determined at pricing.

The above discussion does not include the shares of common stock reserved for future issuance under our equity incentive plans and:

assumes the completion of a          for 1 stock split;
excludes       shares of our common stock reserved for issuance under the 2013 Equity Incentive Plan, or 2013 Plan, upon the exercise of stock options, restricted stock units, or restricted stock that will be issued under our employee benefit plans, which will include:
     shares of our common stock reserved for issuance in connection with the initial grants to our executives and employees that will be granted following the determination of the initial public offering price per share of our common stock in this offering, as described in “Director and Executive Compensation — IPO Grants;”
shares of our common stock that may be issued in connection with compensation of our directors, as described in “Director and Executive Compensation — Board of Directors’ Compensation;” and

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shares of our common stock that may be issued in connection with the exercise or vesting of options or restricted stock units we issue pertaining to the adjustment and conversion of outstanding Harvard Bioscience equity awards upon the effectiveness of the spin-off, as described in “Director and Executive Compensation — Treatment of Outstanding Harvard Bioscience Equity Awards;”
assumes the underwriters will not exercise their over-allotment option; and
assumes that the shares of our common stock to be sold in this offering are sold at $      per share, the midpoint of the price range set forth on the cover page of this prospectus.

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SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth our selected financial data for the periods and as of the dates indicated. You should read the following selected financial data in conjunction with our audited and unaudited financial statements and the related notes thereto included elsewhere in this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this prospectus.

Our historical results are not necessarily indicative of the results that may be expected in the future and interim results are not necessarily indicative of results to be expected for any other period or the full year.

           
  Period from February 24, 2009 (inception) to December 31, 2009   Years ended   Nine months ended   Period from February 24, 2009 (inception) to September 30, 2012
     December 31,   September 30,
     2010   2011   2011   2012
(in thousands)             (unaudited)   (unaudited)   (unaudited)
Statement of Operations Data:
                                                     
Net Revenue   $     $     $     $     $     $  
Cost of product revenues                                    
Gross Profit                                    
Operating Expenses:
                                                     
Selling and marketing expenses           53       215       68       91       359  
General and administrative expenses     188       572       1,251       753       1,631       3,642  
Research and development expenses     394       727       2,285       1,679       3,025       6,431  
Total operating expenses     582       1,352       3,751       2,500       4,747       10,432  
Operating Loss     (582 )      (1,352 )      (3,751 )      (2,500 )      (4,747 )      (10,432 ) 
Loss before income taxes     (582 )      (1,352 )      (3,751 )      (2,500 )      (4,747 )      (10,432 ) 
Net loss   $ (582 )    $ (1,352 )    $ (3,751 )    $ (2,500 )    $ (4,747 )    $ (10,432 ) 

       
  As of December 31,   As of
September 30,
2012
  2009   2010   2011
(in thousands)               (unaudited)
Balance Sheet Data:
                                   
Total Assets   $     $ 1     $ 187     $ 295  
Total Liabilities     70       269       165       155  
Harvard Bioscience, Inc.
invested equity (deficit)
  $ (70 )    $ (268 )    $ 22     $ 140  

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following management’s discussion and analysis should be read in conjunction with our historical financial statements and the related notes included in this prospectus. The management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties, including those we detail under “Risk Factors,” “Special Note Regarding Forward-Looking Statements” and elsewhere in this prospectus, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this prospectus. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this prospectus.

Overview

Relationship with Harvard Bioscience

Harvard Apparatus Regenerative Technology, Inc. is a wholly-owned subsidiary of Harvard Bioscience, Inc. We were incorporated on May 3, 2012 by Harvard Bioscience to provide a means for separating its regenerative medicine device business from its other businesses. Harvard Bioscience has been designing and manufacturing devices for life science researchers for over 100 years. Harvard Bioscience first focused on providing devices to scientists involved in regenerative medicine research in 2008. Since early 2009, Harvard Bioscience’s regenerative medicine device business initiative has been operated as a division of Harvard Bioscience. Harvard Bioscience decided to separate its regenerative medicine business into our company, a separate corporate entity, to authorize us to raise capital by selling equity and then to spin off its interest in our business to its stockholders. Prior to this offering, Harvard Bioscience will have contributed the assets of its regenerative medicine device business and approximately $10 million in cash to us. We had no material assets or activities as a separate corporate entity until the contribution to us by Harvard Bioscience of those assets and that business. We will continue to pursue our business of developing and making devices for regenerative medicine researchers and clinicians.

Our Business

We are a clinical-stage regenerative medicine company developing life-saving medical devices. Our first products are a bioreactor and a synthetic scaffold that can be used by surgeons to create a replacement trachea, or airway, for patients who need an airway transplant. Our bioreactor technology has been used in six successful human airway transplant surgeries, including what we believe to be the world’s first transplant of a regenerated airway. In addition, we believe the second surgery using our technology was the world’s first transplant of a regenerated airway using a synthetic scaffold. We use our depth of knowledge, our existing technologies and products and continued research and development to develop and provide devices to be used by physicians for growing organs outside the body for transplant. We are also developing a clinical infusion pump based on Harvard Apparatus’s market-leading research syringe pump technology for use by clinicians.

Business Drivers/Factors Affecting Results of Operations

To date, our business efforts have been focused on developing and providing new bioreactor products to regenerative medicine researchers and practitioners and on developing a clinical infusion pump. We have not generated revenues to date. Going forward, we intend to generate revenues from the sale of our synthetic scaffolds and bioreactors, some of which will be given to certain key researcher collaborators to accelerate development of new bioreactor technologies and some of which will generate revenues. Until we receive regulatory agency approvals to market one or more bioreactor systems for clinical use we expect our costs to exceed our revenues. Over the next few years we also expect to generate revenues from sales of clinical infusion pumps. However, we expect our initial sales will be of research-only infusion pumps, and until we

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receive regulatory agency approval to market infusion pumps for clinical use we expect the addressable market opportunity and sales of infusion pumps will be modest.

Once we receive regulatory agency approvals to market our bioreactor and synthetic scaffold for surgeons to use in human transplant procedures, especially for trachea transplants, we expect to generate meaningful revenues. At that time we anticipate that we will be paid on a per-procedure basis for the use of our bioreactor and scaffold products. Although we hope to receive regulatory approvals to market our bioreactors and synthetic scaffolds for use by surgeons to perform transplants of additional organs, we expect that approval for our trachea transplant products alone will lead to sufficient sales for us to achieve profitability. In addition, we may seek approval under the orphan biologics pathway for the use of our scaffold and bioreactor system, including cells, for regenerated trachea transplant, which could provide market exclusivity for up to seven years.

Basis of Presentation

Historically, we have operated as part of Harvard Bioscience, and not as a stand-alone company. Financial statements were not previously prepared for us since we did not operate as a separate legal entity prior to our separation from Harvard Bioscience. The discussion and analysis of our financial condition and results of operations are based on the historical Harvard Bioscience regenerative medicine device business, which we prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements required that we make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the expenses during the reporting periods presented. Assets and liabilities have been presented at Harvard Bioscience’s book values for those items at the dates of the financial statements. Certain of the expenses were allocated based on estimates of costs incurred by Harvard Bioscience on behalf of the regenerative medicine business or services provided by Harvard Bioscience personnel who were not wholly engaged in the regenerative medicine device business but who supported that business directly or indirectly during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.

Related Party Relationship with Harvard Bioscience

Harvard Bioscience will not sell any of its shares of our common stock as part of this offering. We will issue new, incremental shares of common stock in this offering. After the completion of this offering, Harvard Bioscience will own a majority of our outstanding common stock and, as majority owner, will still control us.

Harvard Bioscience plans to distribute all of the shares of our common stock it then owns to Harvard Bioscience’s stockholders on or after the date that is four months after the completion of this offering by means of a spin-off, which is a pro rata distribution by Harvard Bioscience of the shares of our common stock it owns to holders of Harvard Bioscience’s common stock. Harvard Bioscience’s agreement to complete the distribution is contingent on the satisfaction or waiver of a variety of conditions. In addition, Harvard Bioscience has the right to terminate its obligations to complete the distribution if, at any time, Harvard Bioscience’s board of directors determines, in its sole discretion, that the distribution is not in the best interests of Harvard Bioscience or its stockholders. As a result, the distribution may not occur by the contemplated time or at all.

Prior to the completion of this offering, we will enter into agreements with Harvard Bioscience that will govern the separation of our businesses from Harvard Bioscience and various interim and ongoing relationships. These agreements will be in effect as of the completion of this offering. They will provide for, among other things, the transfer from Harvard Bioscience to us of assets and the assumption by us of liabilities comprising our businesses. In accordance with such agreements, we expect to pay Harvard Bioscience to provide continued services in the areas of accounting, payroll, benefits administration, information services and technology, engineering and marketing communications for periods ranging from six months to one year. All of the agreements relating to our separation from Harvard Bioscience will be made in the context of a parent-subsidiary relationship and will be entered into in the overall context of our separation from Harvard Bioscience. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties.

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Results of Operations

Components of Operating Loss

Research and development expense.  Research and development expense consists primarily of salaries and related expenses for personnel and contracted consultants to develop our new products. Other research and development expenses include the costs of outside service providers and material costs for prototype and test units. We expense research and development costs as incurred.

General and administrative expense.  General and administrative expense consists primarily of salaries and other related costs for personnel in executive, accounting, information technology and human resources roles. Other costs include professional fees for legal and accounting services, insurance, investor relations and facility costs.

Sales and marketing expense.  Sales and marketing expense consists primarily of salaries and related expenses for personnel performing sales, marketing, and business development roles, and costs associated with their travel and participation in trade shows and conferences. It also includes the costs of catalogs, marketing communications and web site development and maintenance.

Comparison of Nine Months Ended September 30, 2012 and 2011

Research and Development Expense

Research and development expense increased $1.3 million, or 80%, to $3.0 million for the nine months ended September 30, 2012 compared with $1.7 million for the nine months ended September 30, 2011. Of the $1.3 million increase, approximately $0.9 million related to a substantial increase in our activities in organ bioreactor research and development and $0.4 million represented increased efforts in the clinical infusion pump. The increased bioreactor development costs in 2012 included additional engineering and technical resources. These increases were made to support a greater number of regenerative medicine collaborators and to accelerate the development of several new bioreactors to help further their research efforts. The increased activities related to organ bioreactor also included the costs related to three trachea transplant procedures, compared with one such procedure in the nine months ended September 30, 2011.

General and Administrative Expense

General and administrative expense increased $0.9 million, or 117%, to $1.6 million for the nine months ended September 30, 2012 compared with $0.8 million for the nine months ended September 30, 2011. Of the $0.9 million increase, $0.2 million was due to greater legal fees associated with the organization and operation of the business. Approximately $0.4 million of the year-to-year increase related to increased management focus from Harvard Bioscience’s senior executives which increased our allocated expense. Payroll-related costs for such individuals were allocated to our business based on the percentage of their time spent managing or supporting our business. Also, we established a quality assurance and regulatory compliance function during 2011 which accounted for approximately $0.1 million of the year-to-year general and administrative expense increase, audit costs increased by $0.1 million and various other costs increased by a combined $0.1 million year-to-year.

Sales and Marketing Expense

Sales and marketing expense increased approximately $23,000, or 32%, to $91,000 for the nine months ended September 30, 2012 compared with $68,000 for the nine months ended September 30, 2011. The increase was primarily due to greater market development costs related to our bioreactor products.

Comparison of the Years Ended December 31, 2011 and 2010

Research and Development Expense

Research and development expense increased $1.6 million, or 214%, to $2.3 million for the year ended December 31, 2011 compared with $0.7 million for the year ended December 31, 2010. Of the $1.6 million increase, approximately $1.2 million related to a substantial increase in resources devoted to our development of a clinical infusion pump product and $0.4 million reflected increased efforts in our organ bioreactor development program, including the costs related to our support of two human trachea transplants during

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2011. Approximately $1.1 million of the year-to-year cost increase in the clinical infusion pump project represented additional engineering headcount and consulting costs related to design and engineering services. The increased bioreactor-related research and development costs in 2011 included the effects of three of our scientists devoting a much greater percentage of their time to the regenerative medicine device business in that year compared with the prior year, and the payroll-related costs of one scientist hired during 2011.

General and Administrative Expense

General and administrative expense increased approximately $0.7 million, or 119%, to $1.3 million for the year ended December 31, 2011 compared with $0.6 million for the year ended December 31, 2010. Of the $0.7 million increase, approximately $0.3 million of the year-to-year increase related to increased management focus from Harvard Bioscience’s senior executives which increased our allocated expense. Payroll-related costs for such individuals were allocated to our business based on the percentage of their time spent managing or supporting our business. Of the $0.7 million year-to-year increase in general and administrative expense, $0.2 million represented other Harvard Bioscience costs allocated to our business and $0.1 million represented an increase in professional fees.

Sales and Marketing Expense

Sales and marketing expense increased approximately $0.2 million, or 303%, to $0.2 million for the year ended December 31, 2011 compared with $53,000 for the year ended December 31, 2010. The increase was primarily due to the costs to publish a catalog, brochures and marketing literature, greater tradeshow participation and web site content development.

Comparison of the Year Ended December 31, 2010 and the Period from February 24, 2009 (Inception) to December 31, 2009

Research and Development Expense

Research and development expense increased $0.3 million, or 85%, to $0.7 million for the year ended December 31, 2010 compared with $0.4 million for the period ended December 31, 2009. The increase was primarily due to greater payroll-related costs and consulting fees incurred for our clinical infusion pump development project in 2010.

General and Administrative Expense

General and administrative expense increased approximately $0.4 million, or 202%, to $0.6 million for the year ended December 31, 2010 compared with $0.2 million for the period ended December 31, 2009. The increase was primarily related to increased management focus from Harvard Bioscience’s senior executives, which increased our allocated expense. Payroll-related costs for such individuals were allocated to our business based on the percentage of their time spent managing or supporting our business.

Sales and Marketing Expense

Sales and marketing expense was approximately $0.1 million for the year ended December 31, 2010. No sales and marketing expense was incurred during the period ended December 31, 2009. The 2010 sales and marketing expenses were primarily payroll-related costs allocated to our business by Harvard Bioscience for employees who supported our market development efforts that year.

Financial Condition, Liquidity and Capital Resources

Sources of liquidity.  We have incurred operating losses and negative operating cash flow since inception, and we had an accumulated deficit of $10.4 million as of September 30, 2012. Since inception, our operations have been funded by contributions from Harvard Bioscience. We are currently investing significant resources in the development and commercialization of our products for use by clinicians and researchers in the field of regenerative medicine. As a result, we expect to incur operating losses and negative operating cash flow for the foreseeable future.

We will raise approximately $     million from the issuance and sale of shares of our common stock in this offering. In addition, concurrent with the completion of this offering, Harvard Bioscience will contribute approximately $10 million in cash to us.

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Operating activities.  Net cash used in operating activities of $4.4 million for the nine months ended September 30, 2012 was primarily a result of our $4.7 million net loss, offset by the add-back of non-cash expenses of $0.3 million of stock-based compensation and $38,000 of depreciation. Net cash used in operating activities of $2.3 million for the nine months ended September 30, 2011 was primarily a result of our $2.5 million net loss, offset by the add-back of non-cash expenses of $0.2 million of stock-based compensation.

Net cash used in operating activities of $3.6 million for the year ended December 31, 2011 was primarily a result of our $3.8 million net loss and a $0.1 million unfavorable effect from the change in working capital, partially offset by a $0.3 million add-back of non-cash expenses.

Net cash used in operating activities of $1.0 million for the year ended December 31, 2010 was primarily a result of our $1.4 million net loss, partially offset by a $0.1 million add-back of non-cash stock-based compensation expense and a $0.2 million favorable effect from the change in working capital.

Net cash used in operating activities of $0.5 million for the period from February 24, 2009 (inception) to December 31, 2009 was a result of our $0.6 million net loss, partially offset by a $0.1 million favorable effect from the change in working capital.

Investing activities.  Net cash used in investing activities during the nine month periods ended September 30, 2012 and 2011 and the year ended December 31, 2011 reflected additions to property, plant and equipment.

Financing activities.  Cash generated from financing activities in all periods presented represented Harvard Bioscience’s funding of our business activities.

Tax Attributes Relating to Historical Operating Losses

All tax attributes, including net operating losses and tax credits, related to our operating losses through the date of our separation from Harvard Bioscience will remain with Harvard Bioscience following the separation.

Option Vesting, Compensation Expense and Exercise Proceeds

In connection with the planned distribution of our common stock by Harvard Bioscience, we expect to issue options to purchase our common stock and restricted stock units to Harvard Bioscience employees and directors who hold options and restricted stock units issued by Harvard Bioscience prior to the distribution. Such stock options and restricted stock units that we issue at the distribution will vest in tandem with the stock options and restricted stock units originally-issued by Harvard Bioscience for the remaining life of such stock options and restricted stock units. The continued vesting and exercisability of the stock options and restricted stock units we issue will be conditional on the recipient’s continued service to or employment with Harvard Bioscience or our company.

Separately, certain of our employees and directors, including our executive officers, are holders of vested and unvested options to buy Harvard Bioscience common stock and unvested restricted stock units pertaining to Harvard Bioscience’s common stock. Vesting and exercisability of such options and restricted stock units will continue through their original expiration dates so long as the individual holder is employed or providing service to us or Harvard Bioscience.

With respect to individual owners of both options and/or restricted stock units issued by our company and those issued by Harvard Bioscience, the compensation expense for such options and restricted stock units will be recognized by the company receiving the individual’s services. However, cash proceeds from the future option exercises will be realized by the company that issued the respective option.

Future Funding Requirements

We have generated operating losses each year to date. We do not expect to generate sufficient revenues to achieve annual earnings or positive cash flows until we obtain regulatory approval and commercialize one of our organ bioreactors and synthetic scaffolds. Until that time, we expect to maintain or increase our ongoing development activities. Also, upon the closing of this offering, we expect to incur additional costs associated with operating as a publicly-traded company.

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Harvard Bioscience will no longer fund our operations following the closing of this offering. Based on our current operating plan, we believe that the net proceeds from this offering and the approximately $10 million cash contribution from Harvard Bioscience will be sufficient to fund our operating expenses, working capital needs and capital expenditures for at least the next 24 months following the completion of this offering. We have based our estimates on assumptions that may prove wrong, and we may use our available capital resources sooner than we expect. Further, our strategy or business plan may change in the future, possibly changing the rate of our spending or need for additional capital. We may need to secure future funding through equity offerings, debt financings, government funding, marketing and distribution arrangements and other collaborations or strategic alliances. Equity offerings would dilute the ownership interests of existing stockholders. Debt financing, if available, could result in agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or paying dividends. If we raise additional funds through government funding, marketing and distribution arrangements or other collaborations or strategic alliances we may have to relinquish rights to our technologies or future revenue streams, or grant licenses on terms that may not be favorable to us. We cannot assure you that we will be successful in raising additional capital on favorable terms or at all. In addition, to preserve the tax-free treatment to Harvard Bioscience of the distribution, for the two-year period following the distribution we will be limited in issuing equity securities beyond certain thresholds which will may limit our ability to raise additional capital.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Effect of Inflation and Changes in Prices

We do not expect inflation and changes in price to have a material effect on our operations in the next year.

Recent Authoritative Accounting Guidance

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

Critical Accounting Policies and Estimates

Our financial statements, which appear at page F-1, have been prepared in accordance with accounting principles generally accepted in the U.S., which require that we make certain assumptions and estimates and, in connection therewith, adopt certain accounting policies. Our significant accounting policies are set forth in Note 2 to our financial statements included in this prospectus. Of those policies, we believe that the policies discussed below may involve a higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations.

Stock-Based Compensation

We account for stock-based payment awards in accordance with the provisions of FASB ASC 718, Compensation — Stock Compensation, which requires us to recognize compensation expense for all stock-based payment awards, including stock options and restricted stock units, made to employees and directors. All amounts shown in the financial statements presented in this prospectus related to stock-based compensation pertain to Harvard Bioscience employees who were participants in the Harvard Bioscience stock option plans and/or the Harvard Bioscience Employee Stock Purchase Plan and were directly involved in the regenerative medicine device business and were allocated based upon each participant’s time spent on our business.

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We value stock-based payment awards, except restricted stock awards, at grant date using the Black-Scholes option-pricing model. Our determination of fair value of stock-based payment awards has been affected by the Harvard Bioscience common stock price as well as assumptions regarding a number of complex and subjective variables, such as expected stock price volatility and employee forfeitures over the terms of the awards.

Stock-based compensation expense recognized under FASB ASC 718 for the years ended December 31, 2011, 2010 and 2009 was $0.3 million, $0.1 million and $31,000, respectively, which consisted of stock-based compensation expense related to employee stock options, the Harvard Bioscience Employee Stock Purchase Plan and restricted stock units. We record stock compensation expense on a straight-line basis over the requisite service period for all awards granted.

Also, we expect to grant to certain of our executives, employees and our directors, upon determination of the initial offering price, grants of options for shares of our common stock in order to, among other things, provide executives, employees and directors with a stock-based incentive and align their interests with those of our stockholders. The value of the stock option grants will be expensed ratably over a four-year vesting term. We expect some of these grants to be performance-based options which will be earned upon achievement of certain milestones.

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BUSINESS

We are a clinical-stage regenerative medicine company developing life-saving medical devices.

Our first products are a bioreactor and a synthetic scaffold that can be used by surgeons to create a replacement trachea, or airway, for patients who need an airway transplant. We believe our products are the first to enable the application of regenerative medicine techniques to the production and transplant of complex, three-dimensional human organs like the trachea. Our bioreactor technology has been used in six successful human airway transplant surgeries, including what we believe to be the world’s first transplant of a regenerated airway. In addition, we believe the second surgery using our technology was the world’s first transplant of a regenerated airway using a synthetic scaffold. The patients who received these two airway transplants are alive more than four years and 20 months, respectively, following their surgeries, and each of these surgeries were published in The Lancet, one of the world’s most respected peer-reviewed medical journals. The six human airway transplants to date have been led by Dr. Paolo Macchiarini, a world-renowned thoracic surgeon of the Karolinska Instituet, one of Europe’s leading research hospitals.

We believe our technology could enable surgeons to cure nearly all primary trachea cancers. Our products addresses the critical challenges to trachea transplant: the shortage of suitable donor tracheas and the risk and expense of lifelong anti-rejection drug therapy. Because the scaffolds are synthetic, our technology will eliminate the need to wait for suitable donor tracheas. Our technology also obviates the need for anti-rejection drug therapy because the surgeon uses the patient’s own bone marrow cells to seed the scaffold. In addition, patients with trachea cancer treated using our products have not required either chemotherapy or radiation therapy after the transplant, thus potentially eliminating the significant side effects and expense of such therapies. Because these substantial costs and risks can be reduced or even eliminated with our technology, we believe our products can both help save lives and reduce overall healthcare costs. None of the surgeries using our products have involved human embryonic stem cells and we do not currently expect surgeons to use such cells with our products.

In addition to the trachea, we believe that our products are applicable to the regeneration of other organs. Our collaborators are working on regenerating the lungs, gastrointestinal tract, heart valves and heart using our products. For instance, a collaborator of ours, Dr. Harald Ott of Massachusetts General Hospital, has succeeded in using one of our solid organ bioreactors to regenerate and transplant a whole lung in a rat. In addition to Dr. Ott, we are collaborating with several other research groups in the U.S. and Europe on lung regeneration. Two collaborators of ours, one at a major U.S. pediatric hospital and one at a major European teaching hospital, have used our bioreactors in research on the regeneration of an esophagus. Another collaborator of ours, Dr. Robert Simari of the Mayo Clinic, has used one of our bioreactors in his research on the regeneration and transplant of human heart valves. In addition to Dr. Simari’s work on heart valve regeneration, we are collaborating with three additional research groups in the U.S. and in Europe on heart regeneration.

The first six airway transplant surgeries took place in Spain, Sweden and Russia under compassionate-use regulations on patients who had exhausted alternative treatment options. One of our collaborators, Dr. Mark Holterman, Professor of Surgery and Pediatrics at the Children’s Hospital of Illinois in Peoria, has received FDA approval under an investigator-led IND application allowing the first use of our products in a trachea transplant in the U.S.

We intend to seek separate, independent 510(k) clearances or exemptions in the U.S., and CE marking in the EU, to allow us to market our trachea scaffolds, bioreactors and clinical infusion pumps for medical device uses, where such pathways are appropriate and as discussed in greater detail below. In addition, we may seek approval under the orphan biologics pathway for the use of our scaffold and bioreactor system, including cells, for regenerated trachea transplant, which could provide market exclusivity for up to seven years. We believe that this orphan drug pathway may be feasible for our trachea transplant products based the severity of the disease being treated, the number of patients impacted with conditions that can be treated using the seeded trachea scaffold product, and the lack of approved treatment methodologies for these patients. Based on initial review of FDA and EU regulatory precedent, and our understanding of the status of ongoing clinical investigation of the trachea scaffold products, we expect to receive regulatory approval to market our regenerated trachea transplant products in the EU by the end of 2015 and, assuming our trachea transplant products qualify for accelerated review, we expect to receive FDA approval to market our trachea transplant products in the U.S. by the end of 2016.

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Industry Overview

The first human organ transplant was a kidney transplant performed in 1954. The donor of the kidney was the identical twin of the recipient and therefore there was no immune rejection of the organ. The recipient lived for eight years following the transplant and the surgeon who performed the transplant, Dr. Joseph Murray, went on to win the Nobel Prize for this work. The recipient of the first heart transplant, performed in 1967 by Dr. Christiaan Barnard, lived only 18 days. The patient did not die because the new heart failed, but because of pneumonia that the patient acquired due to the patient’s immune system being compromised by the anti-rejection drugs that the patient had to take. These two cases illustrate both the promise and the challenges of organ transplantation: donor organs can greatly extend life, but there is a critical shortage of donors and, unless the donor is the identical twin of the recipient, the recipient’s body will always reject the donor organ. In order to combat this rejection, the patient must take lifelong anti-rejection drugs which compromise the immune system and greatly increase the risk of the patient dying from infections.

In the 1960s, anti-rejection drugs were very poor and hence very few organ transplants took place. In the 1970s, better anti-rejection drugs, particularly cyclosporine, were developed and by the late 1970s many heart transplant patients were living up to five years with their donor hearts. In 1983, the FDA approved cyclosporine for use in organ transplantation, and the first lung transplant patient survived more than six years. Although the improved anti-rejection drugs increased the life expectancy for patients receiving organ transplants, they came with harmful side effects that shortened the recipient’s natural life span. In addition to the side effects, the anti-rejection drugs are also very expensive and can cost $20,000 to $30,000 per year and must be taken for as long as the patient lives. Despite the side effects and costs, organ transplants have become common enough that the shortage of donors is now the key constraint to organ transplants. To increase the number of organ transplants the U.S. government made a huge effort to increase organ donation. This included Congress passing seven separate pieces of legislation, Medicare paying for donor transplants, several Surgeons General making personal appeals for more organ donors and the U.S. Department of Health and Human Services making the Emmy award-winning documentary No Greater Love on the benefits of organ donation. Despite all these efforts, waiting lists for organ transplants continued to grow and by 2011 there were over 100,000 Americans waiting for a donor organ.

In the late 1980s, the field of regenerative medicine emerged as scientists began to apply principles of engineering and life sciences to develop techniques that could restore, maintain or improve body function. Regenerative medicine now includes products that use cells to repair damaged organs and to grow organs outside the body for transplant into the patient. Early successes in regenerative medicine included the skin grafting products Apligraf and Dermagraft, which were approved by the FDA in 1998 and 2001, respectively. Apligraf has since been used to treat over 200,000 patients. However, the regeneration of more complex three-dimensional structures like the trachea proved much harder than two-dimensional structures like the skin. Additional progress came with using regenerated tissue grafts to increase urinary bladder capacity and with regenerating blood vessels for grafting between veins and arteries.

In 2008, a milestone was reached when the two fields of organ transplant and regenerative medicine were combined with the world’s first transplant of a regenerated airway. Even though the airway scaffold came from a donor, because the patient’s own bone marrow cells were used to seed the scaffold after the cells from the donor had been removed, the patient did not require anti-rejection drugs. Other than the transplant of organs between genetically identical twins, such as the first kidney described above, we believe this regenerated airway transplant was the world’s first organ transplant that has not required anti-rejection drugs. In 2011, another milestone was reached with the world’s first transplant of a regenerated airway using a synthetic scaffold. This patient has also not needed to take anti-rejection drugs, and because the scaffold was made in a laboratory, the patient did not have to wait for a donor organ to become available. This breakthrough opens the possibility that the waiting lists for organ transplants can be reduced or even eliminated.

Overview of the Trachea Transplant Market

Trachea cancer is a devastating and almost always fatal disease. Current treatments such as radiation therapy, chemotherapy and surgery have poor outcomes, resulting in median survival of only 10 months and a five-year survival rate of only 15%. According to an article published in The Lancet Oncology, the incidence of trachea cancer is 2.6 per one million of population, reflecting an addressable market of approximately 2,400

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trachea cancer patients per year worldwide. In addition to trachea cancer, certain types of trachea damage can be treated by transplanting a trachea. In particular, patients may receive a tracheotomy, or surgically created hole in their throat, to allow them to breathe. When the tracheotomies are in place for more than a few days, patients are at increased risk of dying from pneumonia caused by aspiration of foreign material into the lungs. We estimate that there are approximately 3,900 trachea damage patients per year worldwide. In addition, there are approximately 250 patients in the developed world who are born without a trachea, a condition called tracheal agenesis, who may be treatable with a trachea transplant.

Combining patients with trachea cancer, trachea trauma and tracheal agenesis, we estimate the total addressable patient population for trachea transplants using our products is approximately 6,500 per year. While we cannot predict what the total potential market will be when and if we obtain regulatory approval to market our trachea products, based solely on there being at least 6,500 patients per year at the time of such approval, we estimate the total potential market for trachea transplants that use our products could exceed $300 million per year if we were able to charge at least $50,000 per procedure for our trachea products. While these estimates capture the number of new patients annually that are candidates for transplants using our products, they exclude what we believe to be a much larger pool of existing potential patients.

Patients with trachea cancer typically are treated with radiation therapy, chemotherapy or a combination of both. There are a number of common significant side effects of radiation therapy and chemotherapy, including pain, fatigue, hair loss and kidney and bladder problems. Such therapies are also expensive, with chemotherapy alone typically costing $24,000 per patient annually.

While surgery is a preferred treatment option for trachea cancer, it is rarely performed because most trachea cancers are not diagnosed until it is too late for surgery to be a viable option. A trachea transplant has also not been a viable option to date due to the difficulties of finding an anatomical match between the donor and the patient. Even if a donor trachea were available, the patient would require anti-rejection drugs for the remainder of his or her life to prevent rejection of the donor trachea. This therapy is expensive, typically costing $20,000 to $30,000 per patient annually. There is also a risk to the patient as anti-rejection drugs suppress the immune system causing even a mild infection to become potentially life threatening.

Previous attempts to implant a tracheal prosthetic have been unsuccessful as they have been unable to create a functional lining of the trachea which is essential to the clearance of mucus. Without the clearance of mucus, patients have poor prognosis and typically die from pneumonia or respiratory failure shortly after transplant.

Patients that contract aspiration pneumonia caused by tracheotomies are treated with antibiotics that often fail, leading to the death of the patient. Trachea transplant is almost never used to treat these patients today due to the lack of suitable donor tracheas.

Nearly all patients that are born without a trachea die within a few minutes of birth due to lack of oxygen. On rare occasions a hole forms between the patient’s esophagus and lungs that can allow a surgeon to insert a breathing tube to connect the lungs with the mouth. However, we know of no patient born with tracheal agenesis who has survived more than six years.

Our Solution

We believe the use of the medical device products we are currently developing, together with the patient’s own cells, will provide a system for surgeons that is a major advance over the current therapeutic options for treating trachea cancer and trachea trauma and may be applicable to other medical conditions requiring organ transplants. We believe our products are the first to enable the application of regenerative medicine techniques to the production and transplant of complex, three-dimensional organs like the trachea. With continued development, we believe that our technologies will be applicable to the repair or transplant of other important human organs such as the lungs, gastrointestinal tract, heart valves, and heart. Our bioreactor technology was used in both the world’s first transplant of a regenerated airway in 2008 and in the world’s first transplant of a synthetic regenerated airway in 2011.

We believe our products will overcome the major challenges in trachea and other organ transplantation. Unlike traditional organ transplants, our products will eliminate the need for a donor because the scaffold will be manufactured in a factory. In addition, for hollow organs, such as the trachea, our technology enables the production of a transplant that precisely matches the patient’s anatomy. Because the surgeon uses the patient’s

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own bone marrow cells to seed the scaffold, our technology also eliminates the risk and expense of lifelong anti-rejection drug therapy. In addition, patients with trachea cancer treated using our products have not required either chemotherapy or radiation therapy after the transplant, thus eliminating the significant side effects and expense of such therapies. Because these substantial costs can be reduced or even eliminated with our technology, we believe our products can both help save lives and reduce overall healthcare costs.

Further, human embryonic stem cells have not been used in any of the procedures involving our trachea transplant products. This eliminates both the medical risks and ethical controversy associated with regenerative medicine approaches using human embryonic stem cells and other controversial sources of cells.

We believe the use of our products together with the patient’s own bone marrow cells solves both the major challenges facing organ transplant: a synthetic scaffold avoids the need to wait for a donor and the use of the patient’s own cells avoids the risk and costs of anti-rejection drug therapy. The first application of our products is in treating trachea cancer but we believe the technology can be developed to apply to other important human organ transplants as well.

While these regenerative medicine technologies are being studied clinically and refined, our products will have defined uses that should allow their independent marketing as medical devices, subject to regulatory clearance, approval, and marketing authorization.

Our Strategy

Our objective is to be the leading regenerative medicine device company focused on helping save human lives. Our business strategy to accomplish this objective includes:

Target life-threatening medical conditions.  We are focused on creating products to help surgeons treat serious conditions like trachea cancer, and diseases requiring GI tract, heart or lung transplant. We are not targeting relatively low-severity conditions that have reasonable alternative treatment options like damage to the skin, bones, muscles, ears or nose. By targeting life-threatening conditions, we believe it is easier to get patient informed consent for treatment, hospital ethics committee or Institutional Review Board approval and government regulatory authority approval as the patients often have poor or no treatment alternatives. We believe it will also be easier for our customers to get reimbursement for treatments for life-threatening conditions that have poor and/or more expensive alternative treatments. To further the development of these technologies, while also generating revenues, we are developing and intend to market components of the regenerative medicine applications that have medical device uses for such independent uses.

Focus on medical devices rather than cells.  Medical devices generally have easier and lower cost clinical trial requirements than cellular-based therapies, provided that the FDA agrees that the scaffold, clinical infusion pump, and bioreactor products we are developing are separate medical devices, and not part of an overall biological seeded scaffold. We do not intend to sell cells or tissue. Our business model is to sell medical devices that could be used by a surgeon for a range of clinical applications and protocols. We leave the choice of cell type, cell seeding conditions and surgical approach up to the surgeon. It is possible that in some applications the surgeon may use no cells at all on the scaffold. In this sense our scaffold products are more like stents or prosthetic devices than cells or tissue.

Develop products that have a relatively short time to market.  Since the number of patients with trachea cancer is relatively small, we expect the number of patients that we would likely need to enroll in a clinical trial would be relatively small. A small number of patients implies a relatively fast and inexpensive clinical trial. In addition, since survival is likely to be a key endpoint in any trachea transplant trial and median survival in trachea cancer is only 10 months we expect we would be able to conduct a clinical trial in a relatively short period of time compared to clinical trials in indications with higher survival rates and longer survival periods. We intend to work closely with regulatory agencies and clinical experts to design and size the clinical studies appropriately based on the specific conditions our products are intended to treat.

Use trachea transplant as a platform to address other organs.  We believe our experience in developing proprietary scaffolds and bioreactors for trachea transplant gives us substantial expertise and intellectual property for developing products addressing diseases impacting other organs like the lungs, gastrointestinal tract, heart valves, and heart. We intend to use such expertise and intellectual property to develop medical devices to help treat other serious medical conditions requiring organ transplants.

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Supply the complete bioreactor and scaffold system.  Our technology includes the bioreactor and scaffold which are used by the surgeon to create the synthetic organ. We believe there is considerable value in supplying the complete bioreactor and scaffold system.

Collaborate with leading surgeons and institutions.  We have and will continue to collaborate with leading surgeons and institutions. For example, we have collaborated with Professor Macchiarini of the Karolinska Instituet to improve our bioreactors and to create our scaffolds for use in trachea transplant; we have collaborated with Dr. Harald Ott of Massachusetts General Hospital to develop our lung bioreactor system, and we have collaborated with Dr. Robert Simari of the Mayo Clinic to develop our heart valve bioreactor. It is these collaborators who have developed the cell seeding and surgical techniques for use with our products. We believe the use of our products by leading surgeons and institutions will increase the likelihood that other surgeons and institutions will use our products.

Our Products

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Bioreactors

Hollow Organ Bioreactor

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  InBreath hollow organ bioreactor in use during the Krasnodar surgeries, June 2012.

Equipment and materials used as general cell culture equipment and instruments, including bioreactors, are regulated as Class I medical devices pursuant to 21 C.F.R. § 864.2240. These devices are exempt from FDA’s premarket notification or approval requirements, and may be marketed for general research uses consistent with in vitro culture of cells.

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Our InBreath hollow organ bioreactor is a device that can be used by a surgeon to seed cells onto a scaffold. The InBreath bioreactor enables the surgeon to:

secure the scaffold to the bioreactor;
seed the patient’s cells on the scaffold under sterile conditions;
automatically rotate the scaffold to allow good cell distribution into the pores of the scaffold; and
remotely monitor the scaffold during the course of the two to three days of incubation before the transplant.

The InBreath bioreactor has several novel features such as allowing for separate cell seeding conditions on the inside and outside of the scaffold and for pumping cell culture media through the inside of the scaffold without the need for an external pump and tubes. We have rights to an issued patent and pending patent applications directed to various features of the bioreactors. We believe the InBreath bioreactor is the world’s first bioreactor that has been used to perform a human transplant of a regenerated organ.

The cell seeding and incubation are performed by the surgeons or other hospital staff at the hospital according to their own procedures which can vary from patient to patient and hospital to hospital. Our employees are not involved in obtaining the cells, seeding the cells or performing the transplant.

We expect that bioreactors to be used in regenerating sections of the GI tract and other hollow organs will likely share much of the technology of the InBreath bioreactor.

Solid Organ Bioreactor

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  Automated Solid Organ Bioreactor

A solid organ bioreactor shares many of the features of a hollow organ bioreactor such as the ability to seed cells on an organ scaffold and keep them sterile and healthy during the growth phase prior to transplant. However, for solid organs like the heart and lungs, the bioreactor must also supply pulsatile blood flow and ventilation to mimic the natural action of the heart and lungs. In addition, the physiology of the heart and lung is considerably more complex than that of the trachea and so the measuring, monitoring and control equipment needed is considerably more advanced. During the first half of 2010, one of our physician collaborators, Dr. Harald Ott at Massachusetts General Hospital, succeeded in regenerating a lung that was subsequently transplanted into the body of a rat showing near normal lung function. In collaboration with Dr. Ott and Massachusetts General Hospital, we designed and developed a novel bioreactor that was used to grow the rat lung used in this procedure. The work was published in Nature Medicine in July 2010.

We have collaborated with Dr. Ott since 2008 and continue to develop organ bioreactor technologies for his use. The current generation bioreactor, pictured above, is considerably more advanced as it is capable of controlled decellularization and recellularization of an organ, including an organ as large as a human lung. We

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intend to continue developing bioreactors in collaboration with Dr. Ott and other leading researchers with the goal of eventually using our products to perform a first-in-human transplant of a regenerated lung.

In addition to our human lung bioreactor we also make a similar system for the human heart. This system was also developed in collaboration with Dr. Ott and others. We are also collaborating with leading clinical researchers to develop bioreactors for esophagus, heart valve, liver and kidney regeneration. The heart valve bioreactor is still in development. It is being developed in conjunction with Dr. Robert Simari at the Mayo Clinic. The other collaborations are currently confidential, but are all with physicians at well-respected academic medical centers. None of these technologies has yet to be extensively tested in animals.

Scaffolds (Trachea Prostheses)

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  A scaffold (trachea prosthesis) we manufactured

A tracheal prosthesis is defined by the FDA as “a rigid, flexible, or expandable tubular device made of a silicone, metal, or polymeric material that are intended to be implanted to restore the structure and/or function of the trachea or tracheal bronchial tree” (21 C.F.R. 878.3720). These products are commercially marketed in the U.S. as Class II medical devices for which Section 510(k) premarket notification is required.

A scaffold is a natural or synthetic framework, shaped like the real organ, that is porous to allow cells to penetrate the scaffold, attach and start to grow. The scaffold used for the first regenerated trachea transplant in 2008 was a donated human trachea with its cells removed using a chemical solution before being seeded with bone marrow cells taken from the recipient. All subsequent trachea transplants using our products have utilized synthetic scaffolds. Because the synthetic scaffolds are manufactured, they can be made to the exact dimensions of the patient and in large quantities. The scaffold dimensions are determined using CT scans interpreted by the surgeon. The synthetic scaffolds used in surgeries to date have been made by third parties, including NFS as well as Dr. Alex Seifalian and other scientists at University College London. The scaffold used in the first surgery using a synthetic scaffold was made in collaboration with University college London and Dr. Macchiarini. The NFS scaffolds were made in collaboration with our Company and Dr. Macchiarini. In order to improve the scaffolds we are collaborating with Professor Macchiarini and others to develop our own scaffold product and manufacturing. We have recently established scaffold manufacturing in our Holliston, Massachusetts facility. Our scaffolds can be made from a variety of plastic polymers such as polyethelyne terephthalate, or PET, which is the same polymer used in the well-known brand of implantable materials known by the trade name Dacron. PET has a long history of safe use in long-term human implants. We have manufactured over 100 prototype scaffolds and we intend to provide our proprietary scaffolds to surgeons for use in future transplants. We believe that our scaffolds will be superior in quality compared to those used in prior surgeries.

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Clinical Infusion Pump

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  Prototype of our clinical infusion pump

Clinical infusion pumps intended to deliver small volumes of fluids to patients also are medical devices in the U.S. pursuant to 21 C.F.R. 880.5725. These products are commercially marketed in the U.S. as Class II medical devices for which section 510(k) premarket notification is required.

We are developing a clinical infusion pump that can be used by clinicians as a cell injection system. This product will allow clinicians to inject cells directly into damaged tissue. In addition to the cell injection applications, we expect our clinical pump will be used for infusing drugs in general hospital applications. This clinical pump is based on the technology underlying Harvard Bioscience’s market leading Harvard Apparatus research syringe pumps.

A typical cell injection is of 50 microliters total volume spread over several individual injections of 5 – 10 microliters each. Because current clinical infusion pumps do not have the accuracy to deliver these tiny volumes, surgeons typically do not use an automated injection system but rather attempt to inject the cells manually. Injecting manually is inferior to using a clinical infusion pump system as it is hard to achieve consistent injections and hence hard to establish a robust clinical protocol. While injecting manually is acceptable in small scale clinical trials, it is a drawback when trying to establish a robust clinical protocol that could be used on large numbers of patients by many different physicians. To address this need in cell injection, we have developed a clinical infusion pump that can deliver these tiny quantities accurately and reproducibly. In addition, our clinical infusion pump can operate a pre-programmed injection protocol by footswitch control which allows the surgeon to focus exclusively on the placement of the needle in the tissue and to not get distracted by trying to do the injection slowly or by looking at the graduations on the syringe to see how much has been injected.

Many companies have been formed to exploit the potential of cell therapy. We believe there are over 30 cell therapy companies or products that are in human clinical trials for either cardiovascular or neurological applications. Almost all these cell therapies for cardiovascular or neurological applications require the cells to be injected into the tissue of the heart or the spine. We are not developing cell therapies ourselves but are developing clinical infusion pump technology that can be used with all cell types and for many purposes in addition to cell therapy. We expect to receive regulatory approval to market our cell therapy infusion system in the EU by the end of 2013 and in the U.S. by the end 2014. While we cannot predict what the total potential market will be when and if we obtain regulatory approval to market our cell therapy infusion system, we believe the opportunity for our cell therapy infusion system may ultimately be in excess of $20 million per year.

We believe our pump can also address segments within the current clinical syringe pump market where the most common application is infusing drugs into the patient’s bloodstream.

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Clinical Experience

World’s First Human Transplant of a Regenerated Airway

In 2008, our InBreath airway bioreactor technology was used to perform the world’s first human transplant of a regenerated airway. The surgery was conducted by Dr. Macchiarini and his team of surgeons in Barcelona, Spain. The patient had suffered a collapse of her airway following a severe tuberculosis infection. To create the regenerated airway, a donor trachea was obtained and stripped of its cells, and then the patient’s own bone marrow cells were used to seed the donor trachea and prepare it for implantation. Following such regeneration, the regenerated airway was then implanted into the patient. The patient is alive and breathing normally more than four years after the transplant surgery. In addition to improving her breathing, because the cells used in the transplant were her own cells taken from her own bone marrow, she has not had to take anti-rejection drugs after the surgery. This surgery was published in The Lancet in November 2008.

World’s First Successful Transplantation of a Synthetic Tissue Engineered Trachea

In June 2011, our InBreath bioreactor was used for the world’s first successful transplantation of a synthetic tissue engineered trachea. For the first time in history, a patient was given a new trachea made from a synthetic scaffold seeded with his own cells and grown in our bioreactor. The operation was performed in 2011 at the Karolinska University Hospital in Stockholm, Sweden by Dr. Paolo Macchiarini and his team of surgeons. The patient had been suffering from late-stage trachea cancer, which before the surgery would have been inoperable. He was given only a few weeks to live and as such the transplant surgery using our product was a last-resort measure to save the patient’s life. The patient required a tracheo-bronchial scaffold transplant, whereby the scaffold mimics the branched shape of the airway. To create the new synthetic trachea, Dr. Alex Seifalian and other scientists at University College London developed a plastic scaffold shaped like the patient’s natural airway and Dr. Macchiarini seeded it with the patient’s own bone marrow cells. This seeding process prepared the synthetic trachea for implantation and thereafter the regenerated synthetic trachea was implanted into the patient. Because the cells used to regenerate the trachea were the patient’s own, there has been no rejection of the transplant, and, like the first patient described above, this patient is not taking anti-rejection drugs. Because of the regenerated trachea transplant, the patient was alive as of February 9, 2013, over 20 months after the surgery. This surgery was published in The Lancet on November 24, 2011.

World’s Second Successful Transplantation of a Synthetic Tissue Engineered Trachea

In November 2011, our InBreath bioreactor was again used by Dr. Macchiarini to create the implant to treat a patient who was suffering from late-stage trachea cancer and required a tracheo-bronchial transplant. The operation was performed at the Karolinska University Hospital by Dr. Macchiarini and his team of surgeons. The procedure was similar to the world’s first successful transplantation of a synthetic tissue engineered trachea done in June 2011, with the exception that the plastic scaffolding material was changed to a fiber construction rather than a porous solid construction. The fibrous scaffold seeded in our bioreactor for this November 2011 procedure was manufactured by NFS and was made in a different laboratory than the one made for the June 2011 patient. The patient recovered well from the transplant surgery and was discharged home from the hospital. Approximately four months after the surgery, the patient passed away from pneumonia secondary to a tracheal tumor. There is no indication that our bioreactor or the third-party scaffold played any role in his death. This patient, like the June 2011 patient, had undergone extensive radiation and chemotherapy treatment prior to the transplant, and his tumor was not responsive to these forms of treatment.

June 2012 Russian Transplants

In June 2012, our InBreath bioreactors were used for the world’s first two successful laryngo-trachea transplants, using synthetic laryngo-trachea scaffolds seeded with cells taken from the patients’ bone marrow. The surgeries took place at the Krasnodar Regional Hospital in Krasnodar, Russia and were performed by Professors Porhanov and Macchiarini and their team. These two surgeries differed from those for the June and November 2011 procedures described above in that the patients in those prior surgeries both had late stage trachea cancer and both required a tracheo-bronchial scaffold. These Russian patients each had trachea trauma caused by automobile accidents. Both of the Russian patients required laryngo-trachea transplants, whereby the scaffold mimics the shape of the windpipe from the larynx to the point where the trachea branches into the two bronchi which lead to the lungs. Both patients had difficulties breathing and talking and had suffered

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repeated infections prior to the surgeries. The scaffolds in these two cases were fibrous scaffolds manufactured by NFS and similar to the one used in the November 2011 surgery, but were made with a different fiber formulation. Since the transplants, both patients have been released from the hospital and were alive as of December 7, 2012. They are both able to breathe and talk normally.

August 2012

In August 2012 a sixth patient received a trachea transplant created using our InBreath bioreactor. The surgery took place at the Karolinksa Hospital and was performed by Dr. Macchiarini and his team of surgeons. The patient was in critical condition and the trachea transplant was performed in an emergency procedure in an attempt to save the patient’s life. While the patient was alive as of December 7, 2012, she had not been released from the hospital as of such date.

Prospective Patient — U.S.

In February 2012, the FDA approved the first U.S. surgery under an IND application made by Dr. Mark Holterman Professor of Surgery and Pediatrics at the Children’s Hospital of Illinois in Peoria. Dr. Macchiarini is expected to collaborate with Dr. Holterman in performing this surgery. The prospective patient for this surgery is a two-year old girl who was born with trachea agenesis (i.e., without a trachea). She currently breathes through a tube in her esophagus that connects to her lungs. In the opinion of Dr. Holterman, the regenerated trachea transplant is the only option for the patient’s long-term survival. No person born with trachea agenesis has ever survived beyond six years. Since this would be the world’s first regenerated transplant in a child so young there are additional risks above those of the adults treated so far because no one has ever made a scaffold or bioreactor for a patient so small or with the need to grow. In addition, the patient is located in Seoul, South Korea which adds considerable logistical and clinical difficulties in preparing for the surgery in the U.S. For these reasons, this surgery has not yet taken place, however we anticipate that it will in the near future.

All these patients have been treated under compassionate-use protocols meaning their prognosis was very poor. Typically, their bodies are very weak as a result of extensive treatments that often include radiation and chemotherapy. We believe that patients that undergo such extensive treatments are inherently susceptible to serious medical complications following the transplants. These transplant surgeries are typically the last-resort measure to save the patient’s life. We expect that some transplant patients are likely to suffer serious complications or death following the transplants due to issues that are not directly related to the use of our products.

Clinical Trials

Overview

For use as stand-alone medical devices (i.e., for uses other than the preparation of regenerative organs or tissues), we believe our bioreactor is exempt from 510(k) clearance to market and our scaffold and clinical infusion pump are eligible for 510(k) clearance to market in the U.S. In the EU, we believe that our bioreactor, scaffold and clinical infusion pump would be CE marked in accordance with Council Directive 93/42/EEC concerning medical devices. The U.S. clearances to market these specific medical devices are not likely to require clinical studies (based on the current exempt status and/or 510(k) clearance of similar products relying solely on laboratory and/or preclinical testing), and CE marking our products in the EU may not necessarily require the conduct of clinical trials (based on CE marking of similar devices without controlled clinical investigations). Clinical data may, however, be required in the EU to demonstrate conformity with applicable requirements. It is our belief that clearances to market these devices are not likely to require clinical trials. As noted elsewhere in this prospectus, however, the company anticipates that the trachea scaffold product will require completion of ongoing clinical evaluation.

However, in order to market our regenerated trachea products widely, we anticipate that we will need to successfully complete clinical trials. The first indication for which we intend to seek approval that we believe will require clinical trials is treating trachea cancer with a regenerated trachea using a synthetic scaffold. Because trachea cancer is a relatively rare disease, it affects only approximately 800 patients per year in the U.S., but is quickly fatal, median survival is only 10 months, we anticipate that our clinical trials will involve

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relatively few patients and will have a relatively short follow up period. This is true whether the products are regulated in either a medical device or biological product pathway. In the U.S., if this pathway is the medical device pathway then we will seek approval under the FDA’s Humanitarian Device Exemption, or HDE, pathway. This pathway can be used if the patient population is less than 4,000 per year. This pathway is advantageous because the efficacy standard for approval is lower than in the normal device approval pathway. There can be no assurance that the FDA would find the device qualifies for HDE status, or if that status were granted that an HDE application would be approved. If, in the U.S., this pathway is instead the biologics pathway, then we will seek approval under the Orphan Drug pathway. The Orphan Drug pathway can be used if the disease or condition for which the regenerated trachea is intended affects fewer than 200,000 people in the U.S. This pathway is advantageous because, although the safety and efficacy standards for orphan drug products are the same as for all biologics, approval under this pathway could grant the company a seven year exclusivity on marketing the product for that indication in the U.S. There is no equivalent in the EU to HDE pathway. As regenerated trachea products are implantable products, if they were classified as medical devices in the EU, we would need to conduct related clinical studies, unless we can justify relying on already-existing clinical data. If, in the EU, the regenerated trachea products are classified as medicinal products, it would be possible to seek orphan medicinal product classification if we can demonstrate that the products are intended to treat a condition affecting no more than five per 10,000 persons in the EU, or that they are intended for treating a serious or debilitating disease and it is unlikely that without incentives marketing the products would generate sufficient return to justify the necessary related investment. If the regenerated trachea products were classified as orphan medicinal products, they could be entitled to market exclusivity for ten years. The trachea product’s marketing authorization as a medicinal product would, however, be the same as for any medicinal product in the EU.

Russian and EU Clinical Trials

The two Russian transplants, both performed in June 2012, began a clinical trial of trachea transplants for patients with either trachea cancer or trachea damage. The Russian clinical trial is funded by a $5 million grant from the Russian government to the Krasnodar Regional Hospital, one of Russia’s leading transplant centers. The EU has also approved a separate $5 million grant with Dr. Macchiarini as the principal investigator to fund two clinical trials in trachea transplant, using our products. We expect the first of these two EU trials to begin in 2014. We intend to use the results of these trials, together with the data collected on the compassionate-use patients both in the U.S. and overseas to help support the applications for approval to market our trachea transplant products in the U.S. and worldwide.

Research and Development

Our primary research and development activities are in engineering and testing electromechanical devices like our bioreactors and infusion pumps and in designing and making scaffolds. As of November 1, 2012, we employed 11 full-time engineers and scientists and we also hire other consultants and part-time employees from time to time.

In addition to our in-house engineering and scientific development team, we collaborate with leaders in the field of regenerative medicine who are performing the fundamental research and surgeries in this field to develop and test new products that will advance and improve the procedures being performed. As these procedures become more common, we will work our collaborators to further enhance our products to make them more efficient and easier to use by surgeons. In addition to Drs. Macchiarini, Holterman, Porhanov and Ott we collaborate with a small number of other leaders in the field of regenerative medicine. Collaboration typically involves us developing new technologies specifically to address issues these researchers and clinicians face. In certain instances, we have entered into agreements that govern the ownership of the technologies developed in connection with these collaborations. These agreements are discussed below in “— Intellectual Property and Related Agreements.” We do not have a collaboration agreement with Dr. Ott. Sometimes we are paid for our products directly, sometimes we are partners on grants and sometimes we give away or loan our technologies to the researchers or clinicians in return for feedback to improve the designs and/or license rights to intellectual property. We are not currently party to any other collaboration agreements with the entities or individuals with whom we collaborate. We are named in the $5 million EU grant for which Dr. Macchiarini is the principal investigator. We have and will continue to work with Dr. Macchiarini with respect to the two clinical trials in trachea transplant using our products funded by such EU grant.

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In addition to our human lung bioreactor we also make a similar system for the human heart. This system was also developed in collaboration with Dr. Ott and others. We are also collaborating with leading clinical researchers to develop bioreactors for esophagus, heart valve, liver and kidney regeneration. The heart valve bioreactor is still in development. It is being developed in conjunction with Dr. Robert Simari at the Mayo Clinic. The other collaborations are currently confidential, but are all with physicians at well-respected academic medical centers. None of these technologies has yet to be extensively tested in animals.

Manufacturing

For our electromechanical devices like our bioreactors and infusion pumps we perform final assembly and test components we buy from third parties like machine shops, parts distributors, molding facilities and printed circuit board manufacturers. These operations are performed primarily at our Holliston, MA headquarters.

For our scaffolds we use a process called electrospinning to create the fabric part of the scaffold. The rings that mimic the natural rings of the trachea are fabricated separately and the fabric and rings are combined. Electrospinning is a well-known fabrication process invented in 1934. It is useful for cell culture applications as it can create extremely thin fibers (much thinner than a human hair) that can make a fabric with pores approximately the same size as a cell. The electrospinning process parameters can be tuned to create a structure that is very reminiscent of the natural structure of the collagen fibers in a decellularized human trachea. Our scaffolds are made from a polymer that does not dissolve in the human body, in other words our scaffolds are intended to be permanent. We believe permanent scaffolds are a better approach than using resorbable materials as it is hard to control the strength of the scaffold as the polymer resorbs.

Sales and Marketing

We expect that most transplants with our trachea transplant products will be performed by a relatively small number of major hospitals in the U.S., EU and other developed countries. As a result we expect to need only a fairly small field sales force. We expect to price the system commensurate with the medical value created for the patient and the high costs avoided with the use of our products. We expect to be paid by the hospital that buys the products from us. We expect that the hospital would seek reimbursement from payors for the entire transplant procedure, including the use of our products.

We intend to use OEMs and distributors to reach the general hospital market for clinical infusion pumps as this is a faster and less investment intensive approach for us to market our clinical infusion pump compared to establishing a field sales force of our own. Since clinical infusion pumps are already a well-established product category there are many existing medical device distributors selling similar products that we expect to be able to work with.

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In addition to the general hospital market for clinical infusion pumps we intend to sell on an OEM basis to companies developing cell therapies. Today there are approximately 30 such companies, though this number is expected to grow. We expect to work with these companies to adapt our clinical infusion pump to their exact injection protocol needs. Sale to the hospital or doctor will be by the OEM not by us directly. As a result we expect to need only a small number of sales and technical support people.

Harvard Bioscience is the exclusive distributor for the research version of our clinical pump and research versions of our clinical products. Harvard Bioscience can only sell the products to the research markets in accordance with the terms of our distribution agreement. We retain all rights to manufacture and sell all our products for clinical use.

Intellectual Property and Related Agreements

We actively seek to protect our products and proprietary information by means of U.S. and foreign patents, trademarks and contractual arrangements. Our success will depend in part on our ability to obtain and enforce patents on our products, processes and technologies to preserve our trade secrets and other proprietary information and to avoid infringing on the patents or proprietary rights of others.

We have rights in the patent and the patent applications listed below. The patent or patents that may issue based on the patent applications are scheduled to expire as provided below:

   
Patent/Technology   Jurisdiction   Expiration
Patent application covering aspects of syringe devices and methods for delivering cells to tissues   Europe, U.S.   2030
Patent application covering aspects of clinical scale bioreactors and tissue engineering   Australia, Europe,
Japan, Russia, U.S.
  2030
Issued Patent covering aspects of liquid distribution in a rotating bioreactor   Germany   2031
Patent application covering aspects of liquid distribution in a rotating bioreactor   PCT — international stage   2032
Patent application covering aspects of synthetic scaffolds and organ and tissue transplantation   PCT — international stage   2032
Patent application covering aspects of synthetic scaffolds and organ and tissue transplantation   U.S.   2032
Patent applications relating to infrared-based methods for evaluating tissue health including methods for evaluating burns   PCT — international stage   2033
Provisional patent applications relating to methods and compositions for producing elastic scaffolds for use in tissue engineering   U.S.   N/A
Provisional patent applications relating to support configurations for tubular tissue scaffolds, and airway scaffold configurations   U.S.   N/A
Provisional patent application relating to methods and compositions for promoting the structural integrity of nanofiber-based scaffolds for tissue engineering   U.S.   N/A
Provisional patent application relating to synthetic airways   U.S.   N/A
Provisional patent application relating to engineered hybrid organs   U.S.   N/A

We also rely on unpatented proprietary technologies in the development and commercialization of our products. We also depend upon the skills, knowledge and experience of our scientific and technical personnel, as well as those of our advisors, consultants and other contractors. To help protect our proprietary know-how that may not be patentable, and our inventions for which patents may be difficult to enforce, we rely on trade secret protection and confidentiality agreements to protect our interests. To this end, we require employees, consultants and advisors to enter into agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and

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inventions that arise from their activities for us. Additionally, these confidentiality agreements require that our employees, consultants and advisors do not bring to us, or use without proper authorization, any third party’s proprietary technology.

Patent Rights Assignment - Dr. Macchiarini

We have entered into a patent rights assignment with Dr. Macchiarini pursuant to which he has assigned to us all of his rights to inventions associated with scaffold design and the clinical protocol used in the world’s first transplant of a synthetic regenerated trachea.

Novel Surgery Agreements

We have entered into novel surgery agreements with each of the State Budget Institution of Public Health Department Regional Clinical Hospital #1 in Krasnodar, Russia, or the Krasnodar Hospital, the employer of Dr. Porhanov, and OSF Healthcare System and Children’s Hospital of Illinois, the employer of Dr. Holterman, pertaining to trachea transplant surgical procedures conducted at such facilities. Such agreements require us to provide our InBreath bioreactors for the procedures and the hospitals to provide all other equipment and services. Such agreements also provide that we will own all inventions arising from the use of our InBreath bioreactor in connection with such procedures, and each hospital has granted us an option to license all inventions independently developed by the hospital in connection with such procedures.

Exclusive License Agreement and Sponsored Research Agreement - InBreath Bioreactor

We have an exclusive license agreement with Sara Mantero and Maria Adelaide Asnaghi to intellectual property rights relating to our InBreath Bioreactor. Under this agreement, we have worldwide rights to intellectual property (including patents, data, and know-how) relating to the hollow organ bioreactor, related techniques, and improvements thereof. We have exclusive worldwide rights to make, use and sell the hollow organ bioreactor, and the right to grant sublicenses and distribution rights. This agreement terminates on the expiration date of the last to expire patent rights that may exist pertaining to inventions of Dr. Mantero or Ms. Asnaghi relating to the hollow organ bioreactor technology or improvements, or August 6, 2016 if on such date no such patent rights exist.

We have entered into a sponsored research agreement with Sara Mantero, Maria Adelaide Asnaghi, and the Department of Bioengineering of the Politecnico Di Milano, or PDM. Under the terms of this agreement, PDM is required to use its facilities and best efforts to conduct a research program relating to the development of bioreactors, clinical applications, and automated seeding processes. We are required to provide engineering support to PDM with respect to bioreactor designs. Intellectual property developed by PDM or its employees, including Dr. Mantero or Ms. Asnaghi, under this sponsored research agreement will be owned by Dr. Mantero or Ms. Asnaghi and covered by our exclusive license agreement described above. In addition, we have an option to an exclusive license for intellectual property relating to new technology that may not be covered by the exclusive license agreement. We will own any inventions and discoveries that we solely develop in connection with the research program and any inventions and discoveries that are jointly developed in connection with the research program will be owned jointly by the parties. The sponsored research agreement will continue until terminated by a party thereto upon 90 days prior written notice.

Sublicense Agreement with Harvard Bioscience

We have entered into a sublicense agreement with Harvard Bioscience pursuant to which Harvard Bioscience has granted us a perpetual, worldwide, royalty-free, exclusive, except as to Harvard Bioscience and its subsidiaries, license to use the mark “Harvard Apparatus” in the name Harvard Apparatus Regenerative Technology. The mark “Harvard Apparatus” is used under a license agreement between Harvard Bioscience and Harvard University, and we have agreed to be bound by such license agreement in accordance with our sublicense agreement. We currently have no affiliation with Harvard University.

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Government Regulation — Medical Device Products

Our products are medical devices subject to extensive regulation by the FDA and other U.S. federal and state regulatory bodies and comparable authorities in other countries. To ensure that medical products distributed domestically and internationally are safe and effective for their intended use, the FDA and comparable authorities in other countries have imposed regulations that govern, among other things, the following activities that we or our partners perform and will continue to perform:

product design and development;
product testing;
product manufacturing;
product labeling;
product storage;
premarket clearance, approval or CE marking of products;
advertising and promotion;
product marketing, sales and distribution; and
post-market surveillance reporting, including reporting of death or serious injuries.

Medical Device Excise Tax

Section 4191 of the Internal Revenue Code, enacted by Section 1405 of the Health Care and Education Reconciliation Act of 2010, Public Law 111-152 (124 Stat. 1029 (2010)), in conjunction with the Patient Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)), imposed as of January 1, 2013, an excise tax on the sale of certain medical devices. The excise tax imposed by Section 4191 is 2.3% of the price for which a taxable medical device is sold within the U.S.

The excise tax will apply to future sales of any company medical device listed with the FDA under Section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 C.F.R. Part 807, unless the device falls within an exemption from the tax, such as the exemption governing direct retail sale of devices to consumers or for foreign sales of these devices. We will need to assess to what extent this excise tax may impact the sales price and distribution agreements under which any of our devices are sold in the U.S. We also expect general and administrative expense to increase due to the medical device excise tax. We will need to submit IRS forms applicable to relevant exemptions, make semi-monthly payments of any collected excise taxes, and make timely (quarterly) reports to the IRS regarding the excise tax.

FDA’s Premarket Clearance and Approval Requirements

Unless an exemption applies, each medical device we wish to commercially distribute in the U.S. will require either prior 510(k) clearance or prior premarket approval from the FDA. The FDA classifies medical devices into one of three classes. Devices deemed to pose lower risk are placed in either class I or II, which requires the manufacturer to submit to the FDA a premarket notification requesting permission for commercial distribution. This process is known as 510(k) clearance. Some low risk devices are exempt from this requirement. Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously cleared 510(k) device, are placed in class III, requiring premarket approval. We believe our InBreath bioreactor is a class I medical device, exempt from FDA’s premarket notification or approval requirements, and may be marketed for general research uses consistent with in vitro culture of cells.

A trachea prosthesis is defined by the FDA as a rigid, flexible, or expandable tubular device made of a silicone, metal, or polymeric material that is intended to be implanted to restore the structure and/or function of the trachea or tracheal bronchial tree. These products are commercially marketed in the U.S. as class II medical devices for which section 510(k) premarket notification is required. Clinical infusion pumps intended to deliver small volumes of fluids to patients are also class II medical devices for which section 510(k) premarket notification is required. Both premarket clearance and premarket approval, or PMA, applications are subject to the payment of user fees, paid at the time of submission for FDA review.

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510(k) Clearance Pathway

To obtain 510(k) clearance, we must submit a premarket notification demonstrating that the proposed device is substantially equivalent to a previously cleared 510(k) device or a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of premarket approval applications. The FDA’s 510(k) clearance pathway usually takes from three to 12 months, but it can take significantly longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, require premarket approval. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), or a premarket approval, but the FDA can review any such decision and can disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or premarket approval is obtained. If the FDA requires us to seek 510(k) clearance or premarket approval for any modifications to a previously cleared product, we may be required to cease marketing or recall the modified device until we obtain this clearance or approval. Also, in these circumstances, we may be subject to significant regulatory fines or penalties.

Premarket Approval, or PMA, Pathway

A premarket approval application must be submitted if the device cannot be cleared through the 510(k) process. The premarket approval application process is generally more costly and time consuming than the 510(k) process. A premarket approval application must be supported by extensive data including, but not limited to, technical, preclinical, clinical trials, manufacturing and labeling to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device for its intended use.

After a premarket approval application is sufficiently complete, the FDA will accept the application and begin an in-depth review of the submitted information. By statute, the FDA has 180 days to review the “accepted application,” although, generally, review of the application can take between one and three years, but it may take significantly longer. During this review period, the FDA may request additional information or clarification of information already provided. Also during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. In addition, the FDA will conduct a preapproval inspection of the manufacturing facility to ensure compliance with quality system regulations. New premarket approval applications or premarket approval application supplements are required for modifications that affect the safety or effectiveness of the device, including, for example, certain types of modifications to the device’s indication for use, manufacturing process, labeling and design. Premarket approval supplements often require submission of the same type of information as a premarket approval application, except that the supplement is limited to information needed to support any changes from the device covered by the original premarket approval application, and may not require as extensive clinical data or the convening of an advisory panel. None of our products are currently approved under a premarket approval. In the event that our products are not approved through the 510(k) process, we will be required to seek a PMA.

Clinical Trials

Clinical trials are almost always required to support a premarket approval application and are sometimes required for a 510(k) premarket notification. If the device presents a “significant risk,” as defined by the FDA, to human health, the FDA requires the device sponsor to file an investigational device exemption, or IDE, application with the FDA and obtain IDE approval prior to commencing the human clinical trials. The investigational device exemption application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The investigational device exemption application must be approved in advance by the FDA for a specified number of patients, unless the product is deemed a “non-significant risk” device and eligible for more abbreviated investigational device exemption requirements. Clinical trials for a significant risk device may begin once the investigational device exemption application is approved by the FDA and the appropriate institutional review boards at the clinical trial sites. Future clinical trials may require that we

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obtain an investigational device exemption from the FDA prior to commencing clinical trials and that the trial be conducted under the oversight of an institutional review board at the clinical trial site. Our clinical trials must be conducted in accordance with FDA regulations and federal and state regulations concerning human subject protection, including informed consent and healthcare privacy. A clinical trial may be suspended by the FDA or the investigational review board at any time for various reasons, including a belief that the risks to the study participants outweigh the benefits of participation in the study. Even if a study is completed, the results of our clinical testing may not demonstrate the safety and efficacy of the device, or may be equivocal or otherwise not be sufficient to obtain approval of our product. Similarly, in Europe the clinical study must be approved by the local ethics committee and in some cases, including studies of high-risk devices, by the Ministry of Health in the applicable country.

Pervasive and Continuing FDA Regulation

After a device is placed on the market, numerous regulatory requirements continue to apply. These include:

product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;
Quality System Regulation, or QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process;
labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication;
clearance of product modifications that could significantly affect safety or efficacy or that would constitute a major change in intended use of one of our cleared devices;
approval of product modifications that affect the safety or effectiveness of one of our approved devices;
medical device reporting regulations, which require that manufacturers comply with FDA requirements to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur;
post-approval restrictions or conditions, including post-approval study commitments;
post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device;
the FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations;
regulations pertaining to voluntary recalls; and
notices of corrections or removals.

We and our third-party manufacturers must register with the FDA as medical device manufacturers and must obtain all necessary state permits or licenses to operate our business. As manufacturers, we and our third-party manufacturers are subject to announced and unannounced inspections by the FDA to determine our compliance with quality system regulation and other regulations. We have not yet been inspected by the FDA.

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
unanticipated expenditures to address or defend such actions
customer notifications for repair, replacement, refunds;
recall, detention or seizure of our products;

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operating restrictions or partial suspension or total shutdown of production;
refusing or delaying our requests for 510(k) clearance or premarket approval of new products or modified products;
operating restrictions;
withdrawing 510(k) clearances on PMA approvals that have already been granted;
refusal to grant export approval for our products; or
criminal prosecution.

Further, we are subject to various federal and state laws concerning health care fraud and abuse, including false claims laws, anti-kickback laws and physician self-referral laws. Violations of these laws can result in criminal and/or civil punishment, including fines, imprisonment and, in the U.S., exclusion from participation in government health care programs. The scope of these laws and related regulations is expanding and their interpretation is evolving. There is very little precedent related to these laws and regulations. Increased funding for enforcement of these laws and regulations has resulted in greater scrutiny of marketing practices in our industry and resulted in several investigations by various government authorities. If a governmental authority were to determine that we do not comply with these laws and regulations, then we and our officers and employees could be subject to criminal and civil sanctions, including exclusion from participation in federal health care reimbursement programs.

Combination Product/Biologic

Government Regulation Combination Products/Biologics

We believe that some of our products may be defined as combination products consisting of two or more regulated components, a biologic and a medical device. In the U.S., a combination product usually is assigned by the FDA to one of the agency’s centers, such as the CBER or the CDRH with the chosen center to take the lead in pre-marketing review and approval of the combination product. Other FDA centers also may review the product in regard to matters that are within their expertise. The FDA selects the lead center based on an assessment of the combination product’s “primary mode of action.” Some products also may require approval or clearance from more than one FDA center.

To determine which FDA center or centers will review a combination product submission, companies may submit a request for assignment to the FDA. Those requests may be handled formally or informally. In some cases, jurisdiction may be determined informally based on FDA experience with similar products. However, informal jurisdictional determinations are not binding on the FDA. Companies also may submit a formal Request for Designation to the FDA Office of Combination Products. The Office of Combination Products will review the request and make its jurisdictional determination within 60 days of receiving a Request for Designation. We believe that regenerative medicine products containing cells will likely be reviewed by CBER, while the unseeded scaffolds and bioreactor products used to aid in the generation of regenerative medicine products may be reviewed by the CDRH either in consultation with CBER as part of the BLA or separately as a medical device.

Domestic Regulation of Our Products and Business

The testing, manufacturing, and potential labeling, advertising, promotion, distribution, import and marketing of our products are subject to extensive regulation by governmental authorities in the U.S. and in other countries. In the U.S., the FDA, under the Public Health Service Act, the Federal Food, Drug and Cosmetic Act, and its implementing regulations, regulates biologics and medical device products.

The labeling, advertising, promotion, marketing and distribution of biopharmaceuticals, or biologics and medical devices also must be in compliance with the FDA and U.S. Federal Trade Commission, or FTC, requirements which include, among others, standards and regulations for off-label promotion, industry sponsored scientific and educational activities, promotional activities involving the internet, and direct-to-consumer advertising. The FDA and FTC have very broad enforcement authority, and failure to abide by these regulations can result in penalties, including the issuance of a warning letter directing us to correct

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deviations from regulatory standards and enforcement actions that can include seizures, injunctions and criminal prosecution. Recently, promotional activities for FDA-regulated products of other companies have been the subject of enforcement action brought under healthcare reimbursement laws and consumer protection statutes. In addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising claims. In addition, we are required to meet regulatory requirements in countries outside the U.S., which can change rapidly with relatively short notice.

The FDA has broad post-market and regulatory enforcement powers. Manufacturers of biologics and medical devices are subject to unannounced inspections by the FDA to determine compliance with applicable regulations, and these inspections may include the manufacturing facilities of some of our subcontractors. Failure by manufacturers or their suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other regulatory authorities. Potential FDA enforcement actions include:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
unanticipated expenditures to address or defend such actions;
customer notifications for repair, replacement, refunds;
recall, detention or seizure of our products;
operating restrictions or partial suspension or total shutdown of production;
refusing or delaying our requests for 510(k) clearance or premarket approval of new products or modified products;
operating restrictions;
withdrawing 510(k) clearances on PMA approvals that have already been granted;
refusal to grant export approval for our products; or
criminal prosecution.

In addition, other government authorities influence the success of our business, including the availability of adequate reimbursement from third party payors, including government programs such as Medicare and Medicaid. Medicare and Medicaid reimbursement policies can also influence corresponding policies of private insurers and managed care providers, which can further affect our business.

Biologics Regulation

Biological products must satisfy the requirements of the Public Health Services Act and its implementing regulations. In order for a biologic product to be legally marketed in the U.S., the product must have a BLA approved by the FDA.

The BLA Approval Process

The steps for obtaining FDA approval of a BLA to market a biopharmaceutical, or biologic product in the U.S. include:

completion of preclinical laboratory tests, animal studies and formulation studies under the FDA’s GLP regulations;
submission to the FDA of an IND application, for human clinical testing, which must become effective before human clinical trials may begin and which must include Institutional Review Board, or IRB, approval at each clinical site before the trials may be initiated;
performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices, or GCP, to establish the safety, purity, and potency of the product for each indication;
submission to the FDA of a BLA, which contains detailed information about the chemistry, manufacturing and controls for the product, reports of the outcomes of the clinical trials, and proposed labeling and packaging for the product;
the FDA’s acceptance of the BLA for filing;

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for any biological product containing an active ingredient not previously approved, automatic referral to an appropriate advisory committee for review prior to approval, unless the FDA decides otherwise;
satisfactory review of the contents of the BLA by the FDA, including the satisfactory resolution of any questions raised during the review or by the advisory committee, if applicable;
satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP regulations, to assure that the facilities, methods and controls are adequate to ensure the product’s identity, strength, quality and purity; and
FDA approval of the BLA.

Preclinical studies include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies.

An IND will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the IND. In that case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed.

Clinical trials are subject to extensive monitoring, recordkeeping and reporting requirements. Clinical trials must be conducted under the oversight of an IRB for the relevant clinical trial sites and must comply with FDA regulations, including but not limited to those relating to GCP. Adverse events must be reported and investigated timely. To conduct a clinical trial, a company is also required to obtain the patients’ informed consent in form and substance that complies with both FDA requirements and state and federal privacy and human subject protection regulations. The sponsor, the FDA or the IRB could suspend a clinical trial at any time for various reasons, including a belief that the risks to trial subjects outweigh the anticipated benefits. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each site at which the trial is conducted must approve the protocol and any amendments. Foreign studies performed under an IND must meet the same requirements that apply to U.S. studies. The FDA will accept a foreign clinical trial not conducted under an IND only if the trial is well-designed, well-conducted, performed by qualified investigators in accordance with international principles for GCP, and conforms to the ethical principles contained in the Declaration of Helsinki, or with the laws and regulations of the country in which the research was conducted, whichever provides greater protection of the human subjects. The FDA, however, has substantial discretion in deciding whether to accept data from foreign non-IND clinical trials.

Clinical trials involving biopharmaceutical products are typically conducted in three sequential phases. The phases may overlap or be combined. A fourth, or post-approval, phase may include additional clinical trials. These phases are described generally below. We note, however, that the exact number of study subjects required for each specific intended use, and our intent to combine or “telescope” various study phases together, are both areas where we will actively seek FDA feedback to streamline the clinical evaluation process. Briefly, the phases of clinical development generally include the following:

Phase I.  Phase I clinical trials involve the initial introduction of the product into human subjects to determine the adverse effects associated with increasing doses. Such Phase I studies frequently are highly abbreviated or combined with Phase II studies (as outlined below), when the product involves the patient’s own cells.
Phase II.  Phase II clinical trials usually involve studies in a limited patient population to evaluate the efficacy of the product for specific, targeted indications, to determine dosage tolerance and optimal dosage, and to identify possible adverse effects and safety risks. Products that contain the patient’s own cells frequently are studied for initial safety and effectiveness determinations in combined or “telescoped” Phase I/II clinical studies.
Phase III.  If the product is found to be potentially effective and to have an acceptable safety profile in Phase II (or sometimes Phase I) trials, the clinical trial program will be expanded to further demonstrate clinical efficacy, optimal dosage and safety within an expanded patient population at

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geographically dispersed clinical trial sites. As noted, the exact number of subjects needed, the duration of clinical follow-up, and the endpoints by which safety and efficacy are demonstrated are based on the condition being treated.
Post-Approval (Phase IV).  Post-approval clinical trials are required of or agreed to by a sponsor as a condition of, or subsequent to marketing approval. Further, if the FDA becomes aware of new safety information about an approved product, it is authorized to require post approval trials of the biological product. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved under accelerated approval regulations. If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any Phase IV clinical trial requirement. These clinical trials are often referred to as Phase III/IV post approval clinical trials. Failure to promptly conduct Phase IV clinical trials could result in withdrawal of approval for products approved under accelerated approval regulations.

Clinical testing may not be completed successfully within any specified time period, if at all. The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted under an IND and may, at its discretion, reevaluate, alter, suspend, or terminate the testing based upon the data accumulated to that point and the FDA’s assessment of the risk/benefit ratio to the patient. The FDA or the sponsor may suspend or terminate clinical trials at any time for various reasons, including a finding that the subjects or patients are being exposed to an unacceptable health risk. The FDA can also request that additional pre-clinical studies or clinical trials be conducted as a condition to product approval. Additionally, new government requirements may be established that could delay or prevent regulatory approval of our products under development. Furthermore, IRBs have the authority to suspend clinical trials in their respective institutions at any time for a variety of reasons, including safety issues.

Certain information about clinical trials, including a description of the trial, participation criteria, location of trial sites, and contact information, is required to be sent to the NIH for inclusion in a publicly-assessable database. Sponsors also are subject to certain state laws imposing requirements to make publicly available certain information on clinical trial results. In addition, the FDA Amendments Act of 2007 directs the FDA to issue regulations that will require sponsors to submit to the NIH the results of certain controlled clinical trials, other than Phase I studies.

Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical trials, together with other detailed information, including information on the chemistry, manufacture and composition of the product, are submitted to the FDA in the form of a BLA requesting approval to market the product for one or more indications. In most cases, the BLA must be accompanied by a substantial user fee. The FDA will initially review the BLA for completeness before it accepts the BLA for filing. There can be no assurance that the submission will be accepted for filing or that the FDA may not issue a refusal-to-file, or RTF. If a RTF is issued, there is opportunity for dialogue between the sponsor and the FDA in an effort to resolve all concerns. If the BLA submission is accepted for filing, the FDA will begin an in-depth review of the BLA to determine, among other things, whether a product is safe and effective for its intended use and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. If the biological product contains a new active ingredient not previously approved, the BLA automatically will be referred to an appropriate advisory committee for review prior to approval of the biological product, unless the FDA decides otherwise and specifies such reasons in a complete response letter to the sponsor. The FDA, however, is not bound by the opinion of the advisory committee.

Companies also may seek fast track designation for their products. Fast track products are those that are intended for the treatment of a serious or life-threatening condition and that demonstrate the potential to address unmet medical needs for such a condition. If awarded, the fast track designation applies to the product only for the indication for which the designation was received. Fast track products are eligible for two means of potentially expediting product development and FDA review of BLAs. First, a fast track product may be approved on the basis of either a clinical endpoint or a surrogate endpoint that is reasonably likely to predict

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clinical benefit. Approvals of this kind may be subject to requirements for appropriate post-approval studies to validate the surrogate endpoint or otherwise confirm the effect on the clinical endpoint, and to certain other conditions. Second, if the FDA determines after review of preliminary clinical data submitted by the sponsor that a fast track product may be effective, it may begin review of portions of a BLA before the sponsor submits the complete BLA, thereby accelerating the date on which review of a portion of the BLA can begin. There can be no assurance that any of our other products will receive designation as fast track products. And even if they are designated as fast track products, we cannot assure you that our products will be reviewed or approved more expeditiously for their fast track indications than would otherwise have been the case or will be approved promptly, or at all. Furthermore, the FDA can revoke fast track status at any time.

In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a product receiving accelerated approval perform adequate and well-controlled post-approval clinical trials to verify and further define the product’s clinical benefit and safety profile. There can be no assurance that any of our products will receive accelerated approval. Even if accelerated approval is granted, the FDA may withdraw such approval if the sponsor fails to conduct the required post-approval clinical trials, or if the post-approval clinical trials fail to confirm the early benefits seen during the accelerated approval process.

Fast track designation and accelerated approval should be distinguished from priority review although products awarded fast track status may also be eligible for priority review. Products regulated by the CBER may receive priority review if they provide significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious or life-threatening disease. Products awarded priority review are given abbreviated review goals by the agency. Under the Prescription Drug User Fee Act of 2007, the agency has agreed to the performance goal of reviewing products awarded priority review within six months, whereas products under standard review receive a ten-month target. The review process, however, is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. Priority review is requested at the time the BLA is submitted, and the FDA makes a decision as part of the agency’s review of the application for filing. We plan to seek priority review for our trachea transplant products but cannot guarantee that the FDA will grant the designation and cannot predict if awarded, what impact, if any, it will have on the review time for approval of our product.

If granted, fast track designation, accelerated approval, and priority review may expedite the approval process, but they do not change the standards for approval.

Before approving a BLA, the FDA will generally inspect the facility or the facilities at which the finished product and its components are manufactured to ensure compliance with cGMP. If the FDA determines the application, manufacturing process or manufacturing facilities are not acceptable, it will either issue “not approvable” letter or an “approvable” letter. A “not approvable” letter means that the FDA refuses to approve the application because the BLA or manufacturing facilities do not satisfy the regulatory criteria for approval. An “approvable” letter means that the FDA considers the BLA and manufacturing facilities to be favorable, but the letter will outline the deficiencies and provide the applicant with an opportunity to submit additional information or data to address the deficiencies. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. Separate approval is required for each proposed indication. If we want to expand the use of an approved product, we will have to design additional clinical trials, submit the trial designs to the FDA for review and complete those trials successfully.

The testing and approval process requires substantial time, effort and financial resources, and each may take several years to complete. Data obtained from clinical activities are not always conclusive, which could delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which

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could delay or preclude us from marketing our products. The FDA may limit the indications for use or place other conditions, such as post approval studies, on any approvals that could restrict the commercial application of the products. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Post-Approval Requirements

After regulatory approval of a product is obtained, companies are required to comply with a number of post-approval requirements relating to manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distribution and recordkeeping. For example, as a condition of approval of a BLA, the FDA may require post-approval testing and surveillance to monitor the product’s safety or efficacy. In addition, holders of an approved BLA are required to keep extensive records, to report certain adverse reactions and production deviations and problems to the FDA, to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products. If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, or previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions or other setbacks. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

Specifically, our products could be subject to voluntary recall if we or the FDA determine, for any reason, that our products pose a risk of injury or are otherwise defective. Moreover, the FDA can order a mandatory recall if there is a reasonable probability that our device would cause serious adverse health consequences or death. In addition, the FDA could suspend the marketing of or withdraw a previously approved product from the market upon receipt of newly discovered information regarding the product’s safety or effectiveness.

Orphan Drug Designations

The Orphan Drug Act provides incentives to manufacturers to develop and market drugs and biologics for rare diseases and conditions affecting fewer than 200,000 persons in the U.S. at the time of application for orphan drug designation, or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making a drug or biological product available in the U.S. for this type of disease or condition will be recovered from sales of the product. Orphan product designation must be requested before submitting a new drug application, or NDA, or BLA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. The first developer to receive FDA marketing approval for an orphan biologic is entitled to a seven year exclusive marketing period in the U.S. for that product as well as a waiver of the BLA user fee. The exclusivity prevents FDA approval of another application for the same product for the same indication for a period of seven years, except in limited circumstances where there is a change in formulation in the original product and the second product has been proven to be clinically superior to the first.

Humanitarian Device Exemption

An HDE is a device that is intended to benefit patients by treating or diagnosing a disease or condition that affects fewer than 4,000 individuals in the U.S. per year. HDEs are exempt from requirements to demonstrate effectiveness. Still, they must pose no unreasonable risks, or at least the probable benefits should outweigh the risks. And the device must be used at a facility with an IRB. HDEs provide a powerful incentive for device manufacturers to develop devices that help diagnose or treat patients with rare conditions. Otherwise, a company’s research and development costs would likely exceed the market returns for serving such small patient populations.

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International

We expect to start the regulatory work necessary for the EU submission of our clinical pump in 2013. In addition, we plan to seek required regulatory approvals and comply with extensive regulations governing product safety, quality, manufacturing and reimbursement processes in order to market our products in other major foreign markets. The regulation of our products in the EU and in other foreign markets varies significantly from one jurisdiction to another. The classification of the particular products and related approval or CE marking procedures can involve additional product testing and additional administrative review periods. The time required to obtain these foreign approvals or to CE mark our products may be longer or shorter than that required in the U.S., and requirements for approval may differ from the FDA requirements. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. To date, we have not initiated any discussions with any foreign regulatory authorities with respect to seeking regulatory approval of our products.

In the EU, the Directive 93/42/EEC provides the basic definition of a medical device and lays down the technical and procedural obligations which must be followed by the manufacturer of a medical device prior to affixing a CE mark to the product. Products falling within the scope of the Directive 93/42/EEC are subject to a conformity assessment procedure which often includes the intervention of a notified body. Medical devices must comply with the Essential Requirements laid down in Annex I to the Directive. Directive 93/42/EEC requires that manufacturers maintain a Technical File related to their products and to have clinical data supporting the safety and performance of the products during normal conditions of use. Manufacturers must also comply with quality system requirements which can be met by, among other things, demonstration of compliance with the ISO 13485:2003 standard. If the outcome of the conformity assessment conducted by the notified body is positive, the manufacturer will be issued a related CE Certificate of Conformity by its notified body and will be entitled to affix the CE mark to its medical devices after having signed a related Declaration of Conformity.

The marketing authorization of products containing viable human tissues or cells in the EU is governed by Regulation 1394/2007/EC on advanced therapy medicinal products, read in combination with Directive 2001/83/EC of the European parliament and of the Council, commonly known and the Community code on medicinal products. Regulation 1394/2007/EC lays down specific rules concerning the authorization, supervision and pharmacovigilance of medicinal products, cell therapy medicinal products and tissue engineered products. Manufacturers of advanced therapy medicinal products must demonstrate the quality, safety and efficacy of their products to the European Medicines Agency which is required to provide an opinion regarding the application for marketing authorization. The European Commission grants or refuses marketing authorization in light of the opinion delivered by the European Medicines Agency. Regulation 1394/2007/EC also applies to combination products which consist of medical devices and advanced therapy medicinal products. In light of Regulation 1394/2007/EC, a medical device which forms part of a combined advanced therapy medicinal product must meet the Essential Requirements laid down in Annex I to Directive 93/42/EEC. The manufacturer of the combination product must include evidence of such compliance in its marketing authorization application. The application for a marketing authorization for a combined advanced therapy medicinal product must also, where available, include the results of the assessment of the medical device part by a notified body in accordance with Directive 93/42/EEC.

Legislation similar to the Orphan Drug Act has been enacted in other jurisdictions, including the EU. The orphan legislation in the EU is available for therapies addressing conditions that affect five or fewer out of 10,000 persons. The marketing exclusivity period is for ten years, although that period can be reduced to six years if, at the end of the fifth year, available evidence establishes that the product is sufficiently profitable not to justify maintenance of market exclusivity.

Employees

At December 31, 2012, Harvard Bioscience had     employees working in our business, of whom     are based in the U.S.,     are in Germany and     are in Sweden. Approximately     percent of these employees are principally engaged in research, development, clinical and regulatory activities. None of our employees are unionized. In general, we consider our relations with our employees to be good.

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Properties

Following the separation, we will sublease approximately 10,000 square feet of mixed use space of the facility located at 84 October Hill Road, Holliston, Massachusetts from Harvard Bioscience, which will be our corporate headquarters. Our principal facilities incorporate manufacturing, laboratory, development, sales and marketing, and administration functions. We believe our current facilities are adequate for our needs for the foreseeable future.

Competition

We are not aware of any companies whose products are directly competitive with our bioreactor and scaffold system. However, in our key markets we may in the future compete with multiple pharmaceutical, biotechnology, medical device and scientific research instrument companies, including, among others, Aastrom Biosciences, Aldagen, BioTime, Baxter International, Inc., Bose Corporation, Celgene, Cytori Therapeutics, E. I. du Pont de Nemours and Company, Genzyme (acquired by Sanofi-aventis), Harvest Technologies, Mesoblast, Nanofiber Solutions, Organovo, Osiris Therapeutics, Tengion, Tissue Genesis, Inc., Tissue Growth Technologies, Transmedics, United Therapeutics and W.L. Gore and Associates.

We are not aware of any companies whose products are directly competitive with our clinical infusion pumps for cell injection. However, with respect to our clinical infusion pump for hospital drug infusion applications, we will compete with Baxter International, Inc., Fresenius Medical Care, Smiths Medical, and B. Braun Melsungen, among others.

Many of our potential competitors have substantially greater financial, technological, research and development, marketing, and personnel resources than we do. We cannot forecast if or when these or other companies may develop competitive products.

We expect that other products will compete with products and potential products based on efficacy, safety, cost, and intellectual property positions. While we believe that these will be the primary competitive factors, other factors include, in certain instances, obtaining marketing exclusivity under the Orphan Drug Act, availability of supply, manufacturing, marketing and sales expertise and capability, and reimbursement coverage.

Legal Proceedings

On December 17, 2012, we received correspondence from legal counsel to NFS claiming that in developing our scaffold product and related intellectual property, we may have committed misappropriation, unauthorized use and disclosure of confidential information, and possible infringement of intellectual property rights of NFS. NFS’ legal counsel has also threatened us with legal action, including seeking an injunction, if we are unable to respond in a satisfactory manner to NFS’ claims. We believe that these claims are without merit, and we will vigorously seek to protect our rights regarding such claims. Until we are able to resolve this matter with NFS, we believe it is likely that NFS will continue to pursue this matter against us. Our legal counsel has corresponded with NFS’ counsel since our receipt of the initial letter. While we are still investigating the matter, we do not believe that the matter will have a material adverse effect on our business, financial position or results of operations.

While we are not currently a party to any legal proceedings, from time to time we may be a party to a variety of legal proceedings that arise in the normal course of our business.

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MANAGEMENT
 
Our Directors and Executive Officers Following the Separation

The following table sets forth information as of December 11, 2012, regarding individuals who serve as our directors and/or executive officers.

   
Name   Age   Position(s)
David Green   48   President, Chief Executive Officer
and Chairman of the Board of Directors
Thomas McNaughton   52   Chief Financial Officer
Chane Graziano   74   Director
John F. Kennedy   64   Director
Thomas Robinson   53   Director

David Green — President, Chief Executive Officer, and Chairman

Mr. Green has served as our President, Chief Executive Officer, and Chairman of our board of directors since May 3, 2012. Mr. Green has also been the President and a member of the board of directors of Harvard Bioscience since March 1996. Upon completion of the planned distribution of our common stock by Harvard Bioscience, Mr. Green will no longer be the President of Harvard Bioscience but will remain a director. Mr. Green’s previous experiences include working as a strategy consultant with Monitor Company, a strategy consulting company, in Cambridge, Massachusetts and Johannesburg, South Africa from June 1991 until September 1995 and a brand manager for household products with Unilever PLC, a packaged consumer goods company, in London from September 1985 to February 1989. Mr. Green currently sits on the Advisory Board of the Harvard Business School Healthcare Initiative and on the Executive Advisory Board of The University of Massachusetts Lowell Nanomanufacturing Center. Mr. Green graduated from Oxford University with a B.A. Honors degree in physics and holds a M.B.A. degree with distinction from Harvard Business School.

We believe Mr. Green’s qualifications to sit on our board of directors include his executive leadership experience, his experience founding the regenerative medicine business at Harvard Bioscience, his significant operating and management expertise and the knowledge and understanding of our company that he has acquired over 16 years of service as the President and director of Harvard Bioscience.

During the time period following the consummation of this offering and the planned distribution of our common stock by Harvard Bioscience, Mr. Green will remain employed at both our company and Harvard Bioscience but will devote substantially all his time to our company’s day to day operations.

Thomas McNaughton — Chief Financial Officer

Mr. McNaughton has served as our Chief Financial Officer since May 3, 2012. Mr. McNaughton has also been the Chief Financial Officer of Harvard Bioscience since November 2008. Upon completion of the planned distribution of our common stock by Harvard Bioscience, Mr. McNaughton will no longer be the Chief Financial Officer of Harvard Bioscience. From 2007 to 2008, Mr. McNaughton was a consultant providing services primarily to an angel-investing group and a silicon manufacturing start-up. From 2005 to 2007, Mr. McNaughton served as Vice President of Finance and Chief Financial Officer for Tivoli Audio, LLC, a venture capital-backed global manufacturer of premium audio systems. Prior to joining Tivoli Audio, LLC, from 1990 to 2005, Mr. McNaughton served in various managerial positions in the areas of financial reporting, treasury, investor relations, and acquisitions within Cabot Corporation, a global manufacturer of fine particulate products, and served from 2002 to 2005 as Finance Director, Chief Financial Officer of Cabot Supermetals, a $350 million Cabot division that provides high purity tantalum and niobium products to the electronics and semiconductor industries. Mr. McNaughton practiced from 1982 to 1990 as a Certified Public Accountant in the audit services group of Deloitte & Touche, LLP. Mr. McNaughton holds a B.S. in accounting and finance from Babson College.

During the time period following the consummation of this offering and the planned distribution of our common stock by Harvard Bioscience, Mr. McNaughton will remain employed at both our company and Harvard Bioscience but will split his time between the two companies.

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Chane Graziano — Director

Mr. Graziano has served as a member of our board of directors since May 3, 2012. Since March 1996, Mr. Graziano has served as the Chief Executive Officer and Chairman of the board of directors of Harvard Bioscience. Mr. Graziano served as the President of Analytical Technology Inc., an analytical electrochemistry instruments company, from 1993 to 1996 and as the President and Chief Executive Officer of its predecessor, Analytical Technology Inc. Orion, an electrochemistry instruments and laboratory products company, from 1990 until 1993. Mr. Graziano served as the President of Waters Corporation, an analytical instrument manufacturer, from 1985 until 1989. Mr. Graziano has over 42 years of experience in the laboratory products and analytical instruments industry. Mr. Graziano currently serves on the boards of directors of Nova Analytics Corporation and Advion BioSciences, Inc.

We believe Mr. Graziano’s qualifications to sit on our board of directors include his executive leadership experience, significant operating and management expertise in the scientific products industry and the extensive knowledge and understanding of our company that he has acquired through his position of Chief Executive Officer and Chairman of the board of directors of Harvard Bioscience.

John F. Kennedy — Director

Mr. Kennedy has served as a member of our board of directors since December 3, 2012. From June 2006 until his retirement in October 2008, Mr. Kennedy served as President and Chief Financial Officer of Nova Ventures Corporation, the management company providing executive management services to the operating companies of Nova Holdings LLC, Nova Analytics Corporation and Nova Technologies Corporation. From 2002 to 2006, Mr. Kennedy served as the President and Chief Financial Officer of Nova Analytics Corporation, a worldwide supplier and integrator of analytical instruments. From 1999 to 2002, Mr. Kennedy served as the Senior Vice President, Finance, Chief Financial Officer and Treasurer of RSA Security Inc., an e-business security company. Prior to joining RSA Security, Mr. Kennedy was Chief Financial Officer of Decalog, NV, a developer of enterprise investment management software, from 1998 to 1999. From 1993 to 1998, Mr. Kennedy served as Vice President of Finance, Chief Financial Officer and Treasurer of Natural MicroSystems Corporation, a telecommunications company. Mr. Kennedy, a former CPA, also practiced as a public accountant at KPMG for six years. Mr. Kennedy currently serves on the boards of directors of Harvard Bioscience and Datacom Systems, Inc. Mr. Kennedy holds an M.S.B.A. in Accounting from the University of Massachusetts Amherst.

We believe Mr. Kennedy’s qualifications to sit on our board of directors include his executive leadership experience, his significant operating, accounting and financial management expertise and the knowledge and understanding of our company and industry that he has acquired over 11 years of service on the board of directors of Harvard Bioscience.

Thomas Robinson — Director

Mr. Robinson has served as a member of our board of directors since December 3, 2012. Since September 2011, Mr. Robinson has served as a partner with RobinsonButler, an executive search firm. In 2010, Mr. Robinson served as managing director at Russell Reynolds Associates. From 1998 to 2010, Mr. Robinson served as managing partner of the North American medical technology practice, which includes the medical device, hospital supply/distribution and medical software areas, of Spencer Stuart, Inc., a global executive search firm. From 2002 to 2010, Mr. Robinson was a member of Spencer Stuart’s board services practice, which assists corporations to identify and recruit outside directors. From 1998 to 2000, Mr. Robinson headed Spencer Stuart’s North American biotechnology specialty practice. From 1993 to 1997, Mr. Robinson served as president of the emerging markets business at Boston Scientific Corporation, a global medical devices manufacturer. From 1991 to 1993, Mr. Robinson also served as president and chief operating officer of Brunswick Biomedical, a cardiology medical device company. Mr. Robinson currently serves on the board of directors of Cynosure, Inc. He received his M.B.A. from Harvard Business School and his B.A. in mathematics and economics from Brown University.

We believe Mr. Robinsons’ qualifications to sit on our board of directors include his executive leadership experience in, and knowledge of, the medical device and regenerative medicine industries, and his significant expertise in the areas of public company corporate governance and operations.

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The Board of Directors Following the Separation

Our business and affairs are managed under the direction of our board of directors. We currently have four directors, two of whom will be considered independent under the independence requirements of the NASDAQ Stock Market. Our directors will have discretion to increase or decrease the size of the board of directors. Our board of directors will be divided into three classes with staggered terms, which means that directors in one of the classes will be elected each for a new three-year term. Class I directors will have an initial term expiring in 2014, Class II directors will have an initial term expiring in 2015 and Class III directors will have an initial term expiring in 2016.

Director Independence

Mr. Kennedy and Mr. Robinson meet NASDAQ’s listing standards for independence. Mr. Green does not meet these standards because he is our employee. Mr. Graziano does not meet NASDAQ’s listing standards for independence because he is the Chief Executive Officer of Harvard Bioscience.

The NASDAQ listing rules require that the board be comprised of a majority of independent directors. We intend to rely on the phase-in-periods provided by Rule 4350(a)(5) of the NASDAQ rules and Rule 10A-3(b)(iv)(A) of the Exchange Act, which provide for phase-in compliance where the issuer has not previously been required to file public company reports under Section 13(a) or 15(d) of the Exchange Act. Accordingly, we plan to have a board of directors comprised of a majority of independent directors and an audit committee comprised solely of independent directors within one year of our listing.

There are no family relationships among any of the individuals who are expected to serve as members of our board of directors and as our executive officers following Harvard Bioscience’s planned distribution of our common stock to its stockholders.

Board Committees

Prior to the consummation of this offering, our board of directors will have an audit committee, a compensation committee and a nominating and corporate governance committee.

The table below provides committee assignments for each of the committees of our board of directors:

     
Name   Audit Committee   Compensation Committee   Nominating and Corporate Governance Committee
John F. Kennedy   X*    
Thomas Robinson        X*   X*

* Indicates Committee Chair

Audit Committee

The audit committee will be established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. We are relying on the phase-in-periods provided by Rule 4350(a)(5) of the NASDAQ Rules and Rule 10A-3(b)(iv)(A) of the Exchange Act. Accordingly, we plan to have an audit committee comprised solely of independent directors as defined by the NASDAQ listing standards within one year of our listing, and at least one director will satisfy the definition of audit committee financial expert as determined by the SEC.

The audit committee will be responsible for reviewing and discussing with management our policies with respect to risk assessment and risk management. The board of directors and the audit committee will discuss matters relating to risks that arise or may arise.

Upon completion of this offering, the audit committee will consist of John F. Kennedy. Mr. Kennedy is considered independent under the NASDAQ listing standards and an audit committee financial expert under SEC rules. Prior to the consummation of this offering, our board of directors will adopt a written charter under which the audit committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and NASDAQ, will be available without charge on the investor relations portion of our web site.

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Compensation Committee

Each member of the compensation committee will be independent as defined by the NASDAQ listing standards, subject to the phase-in periods provided by Rule 4350(a)(5) of the NASDAQ Rules. Accordingly, we plan to have a Compensation committee comprised solely of independent directors within one year of our listing.

Upon completion of this offering, the compensation committee will consist of John F. Kennedy and Thomas Robinson, each of whom is considered an independent director under the NASDAQ listing standards. Prior to the consummation of this offering, our board of directors will adopt a written charter under which the compensation committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and NASDAQ, will be available without charge on the investor relations portion of our web site.

Nominating and Corporate Governance Committee

Upon completion of this offering, the nominating and corporate governance committee will consist of Thomas Robinson and John F. Kennedy, each of whom is considered an independent director under the NASDAQ listing standards. Prior to the consummation of this offering, our board of directors will adopt a written charter under which the nominating and corporate governance committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and the NASDAQ Stock Market, will be available without charge on the investor relations portion of our web site.

Board Leadership Structure and the Board’s Role in Risk Oversight

Our board of directors believes that the combined role of Chairman of the Board and Chief Executive Officer promotes and facilitates information flow between management and the board of directors, which is essential to effective governance. Having considered the particular circumstances of our company, including its status as a “controlled company,” the individual attributes of our current directors, including our Chairman of the Board and Chief Executive Officer, the effective manner in which certain of our directors historically have performed their duties as Harvard Bioscience directors, and the critical need for stability and continuity of leadership and decision-making necessary in connection with our separation from Harvard Bioscience, it is our board of directors’ belief that, at this time, there is no need to separate the offices of Chairman of the Board and Chief Executive Officer.

Management is responsible for the day-to-day management of risks we face while the board of directors, as a whole and through its committees, will oversee risk management. The audit committee is responsible for reviewing and discussing with management our policies with respect to risk assessment and risk management. The board of directors and the audit committee will review and discuss, including with management, risks that arise or may arise. For example, the audit committee will discuss financial risk, including with respect to financial reporting and internal controls, with management and our independent registered public accounting firm and the steps management has taken to minimize those risks. Our board of directors will also administer its risk oversight function through the required approval by the board of directors (or a committee of the board of directors) of significant transactions and other material decisions.

Code of Business Conduct and Ethics

Effective upon completion of this offering, our board of directors will adopt a written Code of Business Conduct and Ethics applicable to our directors, chief executive officer, chief financial officer and all other officers and employees of our company and its subsidiaries. Copies of the Code of Business Conduct and Ethics will be available without charge on the investor relations portion of our web site upon completion of this offering or upon request in writing to Harvard Apparatus Regenerative Technology, Inc., 84 October Hill Rd., Holliston, MA 01746, Attention: Corporate Secretary.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is an officer or employee of our company. David Green currently serves as a member of the board of directors of Harvard Bioscience. Chane Graziano, the Chief Executive Officer of Harvard Bioscience is a member of our board of directors.

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DIRECTOR AND EXECUTIVE COMPENSATION

Board of Directors’ Compensation

No compensation has been paid to our non-employee directors since our inception. Following completion of this offering, we intend to provide compensation to our non-employee directors that will enable us to attract and retain high-quality directors, provide them with compensation at a level that is consistent with our compensation objectives and competitive with market levels of director compensation, and encourage their ownership of our stock to further align their interests with those of our stockholders. Directors who are also our employees will receive no additional compensation for service as a director.

Executive Compensation

As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act. We have only two executive officers, David Green, our Chief Executive Officer, and Thomas McNaughton, our Chief Financial Officer, who will be our named executive officers. No compensation was paid to our executive officers during the fiscal year ended December 31, 2012. Our officers were paid by Harvard Bioscience and the expense of such compensation was allocated to us in connection with the preparation of our financial statements included in this prospectus. As discussed below in more detail, during the time period following the consummation of this offering and the planned distribution of our common stock by Harvard Bioscience, Messrs. Green and McNaughton will remain employed at both our company and Harvard Bioscience. During this time period, they will continue to be compensated by Harvard Bioscience and 95% of the expense of such compensation for Mr. Green and 30% of the expense of such compensation for Mr. McNaughton will be allocated to us.

Employment Agreements — Named Executive Officers

Prior to the consummation of this offering, we will enter into employment agreements with our named executive officers that will have a term that commences upon the planned distribution of our common stock by Harvard Bioscience. The anticipated material terms of those agreements are summarized below.

David Green

Mr. Green’s employment agreement will have a term of two years, but shall automatically renew for successive two year periods unless either party provides 90 days notice that it does not wish to extend the agreement. Mr. Green’s employment agreement provides for an annual base salary in the amount of five hundred four thousand seven hundred dollars ($504,700) which shall be reevaluated on an annual basis by the board of directors or the compensation committee. Mr. Green will be eligible to receive cash incentive compensation as determined by the board of directors or the compensation committee, and shall also be eligible to participate in all of our employee benefit plans, including without limitation, retirement plans, stock option plans, and medical insurance plans. Mr. Green is also entitled to use a car leased for him by us.

Mr. Green’s employment agreement also provides for payments to be made to Mr. Green in the event of his termination under certain circumstances. If Mr. Green’s employment is terminated by us without “cause” (as such term is defined in Mr. Green’s employment agreement) or by Mr. Green for “good reason” (as such term is defined in Mr. Green’s employment agreement), we are obligated to pay Mr. Green two times the sum of his average annual base salary for the prior three fiscal years or annual salary for the prior fiscal year, whichever is higher, and his average annual cash incentive compensation for the prior three fiscal years or annual cash incentive compensation for the prior fiscal year, whichever is higher. Such payment is conditioned upon Mr. Green’s execution of a general release of claims against us. In addition, all of Mr. Green’s stock options or stock based awards that would otherwise vest within the 24 month period following such termination shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. Green and his immediate family for a period of one year following his termination without cause or for good reason.

Mr. Green may also be entitled to certain payments in the event of a change in control of our company. If Mr. Green’s employment is terminated by us without cause or by Mr. Green for good reason within 18 months

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of a change in control of our company, Mr. Green is entitled to receive a lump sum cash payment in an amount equal to three times the sum of Mr. Green’s most recent annual salary and his most recent cash incentive compensation. In addition, in the event of a change in control, all of Mr. Green’s stock options or stock based awards shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. Green and his immediate family for a period of one year following his termination as a result of a change in control. Any distribution of the shares of our common stock by Harvard Bioscience to its stockholders will be expressly excluded from the definition of change in control in Mr. Green’s employment agreement.

Mr. Green will not be entitled to severance payments unless mutually agreed upon in writing if Mr. Green is terminated for cause, due to death or disability, or he terminates his employment without good reason. In the event Mr. Green is terminated due to death or disability, we shall continue to pay health insurance premiums for health insurance coverage for Mr. Green and his immediate family for a period of one year following his termination.

Mr. Green is also eligible to receive a gross up payment in the event that any amounts received pursuant to the terms of his employment agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties on such excise tax are incurred by Mr. Green. Such payment shall be equal to the amount of (i) the excise tax, (ii) any federal, state or local tax resulting from the gross up payment and (iii) any interest and/or penalties assessed with respect to such excise tax.

Pursuant to the terms of his employment agreement, Mr. Green is also subject to certain confidentiality, non-solicitation and non-competition obligations. The non-solicitation and non-competition obligations survive during the term of his agreement and for a period of 12 months thereafter.

For purposes of Mr. Green’s employment agreement, “cause” shall mean: (A) conduct by Mr. Green constituting a material act of willful misconduct in connection with the performance of his duties; (B) criminal or civil conviction of Mr. Green, a plea of nolo contendere by Mr. Green or conduct by Mr. Green that would reasonably be expected to result in material injury to our reputation if he were retained in his position with us; (C) continued, willful and deliberate non-performance by Mr. Green of his duties; (D) a breach by Mr. Green of his confidentiality, non-solicitation and non-competition obligations to us; or (E) a violation by Mr. Green of our employment policies.

For purposes of Mr. Green’s employment agreement, “good reason” shall mean the occurrence of any of the following events: (A) a substantial diminution or other substantive adverse change, not consented to by Mr. Green, in his responsibilities, powers, or duties; (B) any removal of Mr. Green’s title of President and Chief Executive Officer; (C) an involuntary reduction in Mr. Green’s annual salary except for across-the-board reductions similarly affecting substantially all management employees; (D) a breach by us of any of our other material obligations under Mr. Green’s employment agreement; (E) the involuntary relocation of our offices at which Mr. Green is principally employed to a location more than 30 miles from our current offices; or (F) our failure to obtain the agreement from any successor company to us to assume and agree to perform Mr. Green’s employment agreement.

Thomas McNaughton

Mr. McNaughton’s employment agreement will have a term of two years, but shall automatically renew for successive two year periods unless either party provides 90 days notice that it does not wish to extend the agreement. Mr. McNaughton’s employment agreement provides for an annual base salary in the amount of three hundred nine thousand ($309,000) which shall be reevaluated on an annual basis by the board of directors or the compensation committee. Mr. McNaughton will be eligible to receive cash incentive compensation as determined by the board of directors or the compensation committee, and shall also be eligible to participate in all of our employee benefit plans, including without limitation, retirement plans, stock option plans, stock purchase plans and medical insurance plans.

Mr. McNaughton’s employment agreement also provides for payments to be made to Mr. McNaughton in the event of his termination under certain circumstances. If Mr. McNaughton’s employment is terminated by us without “cause” (as such term is defined in Mr. McNaughton’s employment agreement) or by Mr. McNaughton for “good reason” (as such term is defined in Mr. McNaughton’s employment agreement), we

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are obligated to pay Mr. McNaughton the sum of his average annual base salary for the prior three fiscal years or annual salary for the prior fiscal year, whichever is higher, and his average annual cash incentive compensation for the prior three fiscal years or annual cash incentive compensation for the prior fiscal year, whichever is higher. Such payment is conditioned upon Mr. McNaughton’s execution of a general release of claims against us. In addition, all of Mr. McNaughton’s stock options or stock based awards that would otherwise vest within the 18 month period following such termination shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. McNaughton and his immediate family for a period of one year following his termination without cause or for good reason.

Mr. McNaughton may also be entitled to certain payments in the event of a change in control of our company. If Mr. McNaughton’s employment is terminated by us without cause or by Mr. McNaughton for good reason within 18 months of a change in control of our company, Mr. McNaughton is entitled to receive a lump sum cash payment in an amount equal to the sum of Mr. McNaughton’s most recent annual salary and his most recent cash incentive compensation. In addition, in the event of a change in control, all of Mr. McNaughton’s stock options or stock based awards shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. McNaughton and his immediate family for a period of one year following his termination as a result of a change in control. Any distribution of the shares of our common stock by Harvard Bioscience to its stockholders will be expressly excluded from the definition of change in control in Mr. McNaughton’s employment agreement.

Mr. McNaughton will not be entitled to severance payments unless mutually agreed upon in writing if Mr. McNaughton is terminated for cause, due to death or disability, or he terminates his employment without good reason. In the event Mr. McNaughton is terminated due to death or disability, we shall continue to pay health insurance premiums for health insurance coverage for Mr. McNaughton and his immediate family for a period of one year following his termination.

Mr. McNaughton is also eligible to receive a gross up payment in the event that any amounts received pursuant to the terms of his employment agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties on such excise tax are incurred by Mr. McNaughton. Such payment shall be equal to the amount of (i) the excise tax, (ii) any federal, state or local tax resulting from the gross up payment and (iii) any interest and/or penalties assessed with respect to such excise tax.

Pursuant to the terms of his employment agreement, Mr. McNaughton is also subject to certain confidentiality, non-solicitation and non-competition obligations. The non-solicitation and non-competition obligations survive during the term of his agreement and for a period of 12 months thereafter.

For purposes of Mr. McNaughton’s employment agreement, “cause” shall mean: (A) conduct by Mr. McNaughton constituting a material act of willful misconduct in connection with the performance of his duties; (B) criminal or civil conviction of Mr. McNaughton, a plea of nolo contendere by Mr. McNaughton or conduct by Mr. McNaughton that would reasonably be expected to result in material injury to our reputation if he were retained in his position with us; (C) continued, willful and deliberate non-performance by Mr. McNaughton of his duties; (D) a breach by Mr. McNaughton of his confidentiality, non-solicitation and non-competition obligations to us; or (E) a violation by Mr. McNaughton of our employment policies.

For purposes of Mr. McNaughton’s employment agreement, “good reason” shall mean the occurrence of any of the following events: (A) a substantial diminution or other substantive adverse change, not consented to by Mr. McNaughton, in his responsibilities, powers, or duties; (B) any removal of Mr. McNaughton’s title of Chief Financial Officer; (C) an involuntary reduction in Mr. McNaughton’s annual salary except for across-the-board reductions similarly affecting substantially all management employees; (D) a breach by us of any of our other material obligations under Mr. McNaughton’s employment agreement; (E) the involuntary relocation of our offices at which Mr. McNaughton is principally employed to a location more than 30 miles from our current offices; or (F) our failure to obtain the agreement from any successor company to us to assume and agree to perform Mr. McNaughton’s employment agreement.

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IPO Grants

Prior to the consummation of this offering, our compensation committee and independent directors plan to grant stock options to acquire our common stock with an exercise price equal to the initial public offering price to our named executive officers and certain other employees.

These grants are intended to:

provide the named executive officers and other employees receiving grants an immediate equity interest in our company in order to align their interests with those of our stockholders; and
induce certain of the named executive officers to execute their employment agreements with our company pertaining to their executive roles at our company, the term of which will commence at the time of the planned distribution our common stock by Harvard Bioscience, and to waive their rights under their employment agreements with Harvard Bioscience to terminate their employment for “good reason” due to a substantial diminution or other substantive adverse change in their responsibilities, powers, or duties arising from their new roles at our company.

The option grants to our named executive officers are described below:

   
  Value   Options
David Green   $                  
Thomas McNaughton   $           
All Named Executive Officers   $           

The number of stock options to be granted to named executive officers will be based on a percentage of our company’s outstanding common stock. The Black-Scholes value of our stock options will be based on a number of assumptions, including an exercise price equal to $    , which is the midpoint of the range set forth on the cover page of this prospectus. The actual exercise price of the stock options granted pursuant to such grants will be the initial public offering price. Such option grants will become effective as of, and are conditioned upon, the determination of the initial public offering price.

Treatment of Outstanding Harvard Bioscience Equity Awards

Following completion of this offering, all outstanding Harvard Bioscience stock options and restricted stock units will remain outstanding and will not be modified. At the time of Harvard Bioscience’s distribution of our common stock it then owns, holders of Harvard Bioscience stock options and restricted stock units issued previously to employees and directors as part of Harvard Bioscience’s equity compensation plans will receive an adjustment to their stock options and restricted stock units because those securities will not participate in the distribution. The adjustments will be based on the estimated value of the entire distribution, as measured by the relationship between Harvard Bioscience’s common stock price just prior to and after the distribution. We expect that, for adjustments to the quantity of outstanding stock options and restricted stock units, Harvard Bioscience will provide 80% of the value of the adjustment by issuing the holder additional Harvard Bioscience restricted stock units and options for shares of Harvard Bioscience common stock and 20% of the value of the adjustment will be provided by us issuing restricted stock units and options for shares of our common stock. Such modified awards will otherwise have substantially identical terms, including term and vesting provisions, as the existing Harvard Bioscience equity awards. The continued vesting and exercisability of the stock options and restricted stock units will be conditioned on the recipient’s continued service to or employment with Harvard Bioscience or our company.

Separately, certain of our employees and directors, including our executive officers, are holders of vested and unvested options to buy Harvard Bioscience common stock and unvested restricted stock units pertaining to Harvard Bioscience’s common stock. Vesting and exercisability of such options and restricted stock units will continue through their original expiration dates so long as the individual holder is employed or providing service to us or Harvard Bioscience.

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With respect to individual owners of both options and/or restricted stock units issued by our company and those issued by Harvard Bioscience, the compensation expense for such options and restricted stock units will be recognized by the company receiving the individual’s services. However, cash proceeds from the future option exercises will be realized by the company that issued the respective option.

Employment Benefit Plans

2013 Equity Incentive Plan

On       , 2013, our sole stockholder and board of directors approved our 2013 Equity Incentive Plan, or 2013 Plan, pursuant to which our board of directors can grant incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, unrestricted stock awards, performance shares and dividend equivalent rights to employees, directors and consultants. In addition, the issuance of awards in partial substitution for equity awards of common stock of Harvard Bioscience immediately prior to the spin-off of our company by Harvard Bioscience are authorized to be issued under the 2013 Plan.

Shares Available.  The maximum number of shares authorized for issuance under the 2013 Plan is       shares of common stock. The shares underlying any awards that are forfeited, canceled or are otherwise terminated (other than by exercise) under the 2013 Plan will be added back to the shares authorized for issuance under the 2013 Plan. Shares tendered or held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding are not available for future issuance under the 2013 Plan. In addition, upon exercise of stock appreciation rights, the gross number of shares exercised shall be deducted from the total number of shares remaining available for issuance under the 2013 Plan. The share reserve under the 2013 Plan would be reduced by       shares for each share that underlies an award granted under our 2013 Plan for deferred stock awards of restricted stock units, restricted stock awards, unrestricted stock awards, performance share awards or other awards under our 2013 Plan for which the full value of such share is transferred by us to the award recipient.

Plan Administration.  The 2013 Plan will be administered by the compensation committee of the board of directors. The administrator of the 2013 Plan has full power and authority to select the participants to whom awards will be granted, to make any combination of awards to participants, to accelerate the exercisability or vesting of any award, subject to limitations, and to determine the specific terms and conditions of each award, subject to the provisions of the 2013 Plan. The administrator may delegate to the Chief Executive Officer the authority to grant awards to employees, other than our executive officers, provided that the administrator includes a limitation as to the number of shares that may be awarded and provides specific guidelines regarding such awards.

Eligibility and Limitations on Grants.  All full-time and part-time officers, employees, non-employee directors and other key persons, including consultants, are eligible to participate in the 2013 Plan, subject to the discretion of the administrator. Approximately, individuals are currently eligible to participate in the 2013 Plan.

Performance-Based Compensation.  To ensure that certain awards granted under the 2013 Plan, including awards of restricted stock, deferred stock, cash-based awards or performance shares to a “Covered Employee” (as defined in the Code) qualify as “performance-based compensation” under Section 162(m) of the Code, the 2013 Plan provides that the compensation committee may require that the vesting of such awards be conditioned on the satisfaction of performance criteria including: (1) return on equity, assets, capital or investment; (2) pre-tax or after-tax profit levels; (3) cash flow, funds from operations or similar measure; (4) total shareholder return; (5) changes in the market price of the our common stock; (6) revenues, sales or market share; (7) net income (loss) or earnings per share; (8) expense margins or operating efficiency (including budgeted spending limits) or (9) project development milestones, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group and, for financial measures, may be based on numbers calculated in accordance with U.S. generally accepted accounting principles or on an as adjusted basis. These performance criteria may be expressed in terms of overall company performance or the performance of a division, business unit, or an individual. The compensation committee will select the particular performance criteria within 90 days following the commencement of a performance cycle, and each performance cycle must be at least three months long.

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Subject to adjustments for stock splits and similar events, the maximum award of restricted stock or deferred stock or performance shares (or combination thereof) granted to any one individual that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will not exceed 1,000,000 shares, or $2,000,000 in the case of a performance-based award that is a cash-based award for any performance cycle, and options or stock appreciation rights with respect to no more than 1,000,000 shares may be granted to any one individual during any calendar year period.

Stock Options.  The exercise price of stock options awarded under the 2013 Plan may not be less than the fair market value of the common stock on the date of the option grant. The term of each stock option may not exceed ten years from the date of grant. The administrator will determine at what time or times each option may be exercised and, subject to the provisions of the 2013 Plan, the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised.

To qualify as incentive stock options, stock options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive stock options which first become exercisable in any one calendar year, and a shorter term and higher minimum exercise price in the case of certain stockholders that hold more than ten percent of the combined voting power of all classes of our stock.

Automatic Grants to Non-Employee Directors.  The 2013 Plan provides for the automatic grant of a non-qualified stock option to purchase       shares of common stock to non-employee directors on the fifth day after being initially elected to the our board of directors. The exercise price of the automatically granted stock options is equal to 100% of the fair market value of the common stock on the date of grant and, unless otherwise provided by the administrator, one-third of any such stock option grant becomes exercisable on each of the first through third anniversaries of the date of grant. The automatically granted stock options expire ten years after the date of grant.

Stock Appreciation Rights.  The administrator may award a stock appreciation right independently of a stock option. The administrator may award stock appreciation rights subject to such conditions and restrictions as the administrator may determine, provided that the exercise price may not be less than the fair market value of the common stock on the date of grant and no stock appreciation right may be exercisable more than ten years after the date of grant. Additionally, during the participant’s lifetime, all stock appreciation rights are exercisable only by the participant or the participant’s legal representative.

Restricted Stock.  The administrator may award shares to participants subject to such conditions and restrictions as the administrator may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with our company through a specified restricted period. However, in the event these awards to employees have a performance-based goal, the restriction period will be at least one year, and in the event these awards to employees have a time-based restriction, the restriction period will be at least three years.

Deferred Stock.  The administrator may award phantom stock units to participants subject to such conditions and restrictions as the administrator may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with our company through a specified restricted period. However, in the event these awards to employees have a performance-based goal, the restriction period will be at least one year, and in the event these awards to employees have a time-based restriction, the restriction period will be at least three years. At the end of the deferral period, the participants shall be paid, to the extent vested, in shares.

Unrestricted Stock.  The administrator may grant shares (at par value or for a purchase price determined by the administrator) that are free from any restrictions under the 2013 Plan. Unrestricted stock may be issued to participants in recognition of past services or other valid consideration, and may be issued in lieu of cash compensation to be paid to such individuals.

Performance Shares.  The administrator may grant performance share awards that entitle the recipient to acquire shares of common stock upon the attainment of specified performance goals. The administrator determines the performance goals, performance periods and other terms of any such awards. However, performance share awards to employees will have a restriction period of at least one year.

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Cash-Based Awards.  Each cash-based award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the administrator. Payment, if any, with respect to a cash-based award may be made in cash or in shares of common stock, as the administrator determines.

Dividend Equivalent Rights.  The administrator may award dividend equivalent rights under the 2013 Plan subject to such conditions and restrictions as the administrator may determine, provided that dividend equivalent rights may only be granted in tandem with restricted stock awards, deferred stock awards, performance share awards or unrestricted stock awards. Dividend equivalents credited to the holder may be paid currently or may be deemed to be reinvested in additional shares of stock, which may thereafter accrue additional equivalents.

Tax Withholding.  Participants in the 2013 Plan are responsible for the payment of any federal, state or local taxes that we are required by law to withhold upon any option exercise or vesting of other awards. Subject to approval by the administrator, participants may elect to have the minimum tax withholding obligations satisfied either by authorizing us to withhold shares to be issued pursuant to an option exercise or other award, or by transferring to us shares having a value equal to the amount of such taxes.

Change of Control Provisions.  In the event of a merger, sale or dissolution of our company, or a similar “sale event” (as defined in the 2013 Plan) and upon a change of control all outstanding awards under the 2013 Plan, unless otherwise provided for in a particular award agreement, all stock options and stock appreciation rights will automatically become fully exercisable and all other awards with conditions and restrictions relating solely to the passage of time will become fully vested and non-forfeitable as of the effective time of the sale event or change of control, except as may be otherwise provided in the relevant award agreement. The term change of control is defined in the 2013 Plan and generally refers to any person becoming the beneficial owner of more than twenty five percent voting power of our securities having the right to vote in an election of our board of directors, our board of directors at the time of the offering (or those added by approval of such directors) ceasing for any reason to constitute at least a majority of our board of directors, the consummation of a consolidation, merger or consolidation or sale or other disposition of all or substantially all of our assets, and/or the approval by our stockholders of any plan or proposal for the liquidation or dissolution of us. In addition, upon a sale event, all outstanding awards under the 2013 Plan will terminate unless the parties to the transaction, in their discretion, provide for assumption, continuation or appropriate substitutions or adjustments of such awards. In the event of such termination in connection with a sale event, each holder of an option or a stock appreciation right will be permitted to exercise such award for a specified period prior to the consummation of the sale event. The administrator may also provide for a cash payment with respect to outstanding options and stock appreciation rights in exchange for the cancellation of such awards.

Term.  No awards of incentive stock options may be granted under the 2013 Plan after the 10-year anniversary of the date that the 2013 Plan was approved by the board of directors. No other awards may be granted under the 2013 Plan after the 10-year anniversary of the date that the 2013 Plan was approved by stockholders.

Amendments.  Stockholder approval will be required to amend the 2013 Plan if the administrator determines that this approval is required to ensure that incentive stock options qualify as such under the Code, or that compensation earned under awards qualifies as performance-based compensation under the Code or as required under the applicable securities exchange or market system rules. Otherwise, the board of directors may amend or discontinue the 2013 Plan at any time, and the administrator may amend or cancel any outstanding award for the purpose of satisfying changes in law or for any other lawful purpose, provided that no such amendment may adversely affect the rights under any outstanding award without the holder’s consent.

Repricing.  Other than in the event of a necessary adjustment in connection with a change in our stock or a merger or similar transaction, the administrator may not “reprice” or otherwise reduce the exercise price of outstanding stock options or stock appreciation rights without stockholder approval.

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Employee Stock Purchase Plan

On      , 2013, our sole stockholder and board of directors approved the 2013 employee stock purchase plan. Under this plan, participating employees can authorize us to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of our common stock. Under this plan,       shares of common stock are authorized for issuance. The first offering under the this will commence on       and end on      . Subsequent offerings will commence on each January 1 and July 1 thereafter and will have a duration of six months. Generally, all employees who are customarily employed for more than 20 hours per week as of the first day of the applicable offering period are eligible to participate in the plan. Any employee who owns or is deemed to own shares of stock representing in excess of 5% of the combined voting power of all classes of our stock may not participate in the plan. During each offering, a participating employee may purchase shares under the plan by authorizing payroll deductions of up to 10% of his cash compensation during the offering period. Unless the employee has previously withdrawn from the offering, his accumulated payroll deductions will be used to purchase shares of our common stock on the last business day of the period at a price equal to 85% of the fair market value of our common stock on the first or last day of the offering period, whichever is lower. Under applicable tax rules, an employee may purchase no more than $25,000 worth of our common stock in any calendar year under the plan. We have not issued any shares to date under the plan.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Related Persons

Our audit committee charter will set forth the standards, policies and procedures that we follow for the review, approval or ratification of any related person transaction that we are required to report pursuant to Item 404(a) of Regulation S-K promulgated by the SEC. Under the audit committee charter, which will be in writing, the audit committee must conduct an appropriate review of these related person transactions on an ongoing basis, and the approval of the audit committee is required for all such transactions. The audit committee relies on management to identify related person transactions and bring them to the attention of the audit committee. We do not have any formal policies and procedures regarding the identification by management of related person transactions.

Employment Agreements

Prior to the consummation of this offering, we will have entered into employment agreements with our named executive officers that will have a term that commences upon the planned distribution of our common stock by Harvard Bioscience following this offering. For more information regarding our agreements with our Chief Executive Officer and Chief Financial Officer, see “Director and Executive Compensation.”

Indemnification Agreements

We have entered into or plan to enter into indemnification agreements with each of our directors and executive officers, the form of which is attached as an exhibit to the registration statement of which this prospectus is a part. These agreements provide that we will, among other things, indemnify and advance expenses to our directors and officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by us arising out of such person’s services as our director or officer, or any other company or enterprise to which the person provides services at our request. We believe that these agreements are necessary to attract and retain qualified persons as directors and officers.

Our Relationship with Harvard Bioscience

Prior to this offering we are a wholly-owned subsidiary of Harvard Bioscience. Immediately following this offering, Harvard Bioscience will own at least eighty percent of our outstanding common stock and Harvard Bioscience will continue to control our operations through such ownership. Harvard Bioscience plans to distribute all of the shares of our common stock it then owns to Harvard Bioscience’s stockholders on or after the date that is four months after the completion of this offering by means of a spin-off, which is a pro rata distribution by Harvard Bioscience of the shares of our common stock it owns to holders of Harvard Bioscience’s common stock. At such point Harvard Bioscience will no longer be a stockholder of our common stock and will no longer control our operations.

Directors and Officers of Harvard Bioscience

Some of our directors and officers continue to serve as directors and officers of Harvard Bioscience, our parent company. David Green, our President and Chief Executive Officer and Chairman of our board of directors, currently serves as the President and a director of Harvard Bioscience. Thomas McNaughton serves as the Chief Financial Officer of Harvard Bioscience as well as our Chief Financial Officer. It is anticipated that Messrs. Green and McNaughton will resign as officers of Harvard Bioscience at the time of the planned distribution of our common stock by Harvard Bioscience. Mr. Green intends to remain a director of Harvard Bioscience following this offering and such planned distribution. Chane Graziano, one of our directors, serves as the Chief Executive Officer and Chairman of the board of directors of Harvard Bioscience and intends to continue in such positions following this offering and such planned distribution. John F. Kennedy, one of our directors, is a director of Harvard Bioscience and intends to continue in such position following this offering and such planned distribution.

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Agreements with Harvard Bioscience

Before our separation from Harvard Bioscience, subject to the respective approval of our board of directors and the board of directors of Harvard Bioscience, we will enter into a separation and distribution agreement and several other agreements with Harvard Bioscience to effect the separation and provide a framework for our relationships with Harvard Bioscience after the separation. These agreements will govern the relationships between us and Harvard Bioscience subsequent to the completion of the separation plan and provide for the allocation between us and Harvard Bioscience of Harvard Bioscience’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) related to its regenerative medicine device business, attributable to periods prior to our separation from Harvard Bioscience. In addition to the separation and distribution agreement, which contains many of the key provisions related to our separation from Harvard Bioscience and the distribution of our shares of common stock to Harvard Bioscience stockholders, these agreements include:

an intellectual property matters agreement;
a product distribution agreement;
a tax sharing agreement;
a transition services agreement;
a sublicense agreement; and
a sublease agreement.

The principal agreements described below are filed as exhibits to this prospectus, and the summaries of each of these agreements below set forth the terms of the agreements that we believe are material. These summaries are qualified in their entireties by reference to the full text of the applicable agreements, which are incorporated by reference into this prospectus.

The terms of the agreements described below that will be in effect following our separation have not yet been finalized; changes, some of which may be material, may be made prior to our separation from Harvard Bioscience.

Intellectual Property Matters Agreement

The intellectual property matters agreement governs various arrangements between us and Harvard Bioscience. The agreement provides for the transfer by Harvard Bioscience of all patents, patent applications and inventions not yet filed as patents, as well as any other trade secrets or know-how, that were originated in our business following our establishment as a division of Harvard Bioscience. The agreement also provides for cross-licenses whereby we will have a worldwide royalty free license to use in our business certain of Harvard Bioscience’s currently existing intellectual property, technology and know-how, and Harvard Bioscience will have a worldwide royalty free license to use in certain of its businesses our currently existing intellectual property, technology and know-how. The transfer of the intellectual property from Harvard Bioscience to us that was originated in our business and the cross-licenses described above shall remain in effect in perpetuity.

In addition, in accordance with the intellectual property matters agreement, we will grant Harvard Bioscience an exclusive, worldwide license to use that intellectual property, including any technology or intellectual property developed in the future for a certain period of time following the date of the agreement, for use within the industries and fields in which Harvard Bioscience is currently operating now and in the future, excluding the fields and industries in which we operate. Generally speaking, Harvard Bioscience develops, manufactures and sells life science research tools for research applications. In addition, Harvard Bioscience will grant to us an exclusive, worldwide license to all technology or intellectual property developed in certain divisions of its business in the future for a certain period of time following the date of the agreement, for use within the industries and fields in which we operate. Such licenses are subject to expiration in the event the licensee ceases to actively use the licensed technology or suffers certain insolvency events, as well as upon the expiration of patents that may be included in the licensed technology. Such licenses will be royalty-free for a period of five years following the date of the agreement, provided the parties have agreed that if following such royalty-free five year period, a licensee desires to continue the license, the parties will negotiate in good faith the payment terms and conditions of a continued license.

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The intellectual property matters agreement also provides that for a period of ten years following the date of the agreement, each company will be subject to non-competition and non-solication provisions which restrict its ability to compete with the other company in such company’s respective field as well as soliciting and hiring employees of the other company under certain circumstances.

Product Distribution Agreement

We have entered into a product distribution agreement with Harvard Bioscience pursuant to which each company will become the exclusive distributor for the other party for products such other party develops for sale in the markets served by the other. The product distribution agreement has an initial term of ten years, provided that either party may terminate the agreement earlier in the case of material breach by the other party and certain other instances pertaining to insolvency events impacting a party.

Separation and Distribution Agreement

The separation and distribution agreement sets forth the agreements between us and Harvard Bioscience regarding the principal corporate transactions required to effect our separation from Harvard Bioscience, this offering and the distribution, if any, of our shares to Harvard Bioscience’s stockholders, and other agreements governing the relationship between Harvard Bioscience and us.

The Separation

The separation and distribution agreement will identify assets to be transferred, liabilities to be assumed and contracts to be assigned to each of us and Harvard Bioscience as part of the separation of Harvard Bioscience into two companies, and it will provide for when and how these transfers, assumptions and assignments will occur. In particular, the separation and distribution agreement will provide, among other things, that, subject to the terms and conditions contained therein:

certain assets related to the businesses and operations of Harvard Bioscience’s regenerative medicine device business, which we refer to as the HART Assets, will be transferred to us or one of our subsidiaries;
certain liabilities (including whether accrued, contingent or otherwise) arising out of or resulting from the HART Assets, and other liabilities related to the businesses and operations of Harvard Bioscience’s regenerative medicine device business, which we refer to as the HART Liabilities, will be retained by or transferred to us or one of our subsidiaries;
all of the assets and liabilities (including whether accrued, contingent or otherwise) other than the HART Assets and HART Liabilities (such assets and liabilities, other than the HART Assets and the HART Liabilities, are referred to as the Excluded Assets and Excluded Liabilities, respectively) will be retained by or transferred to Harvard Bioscience or one of its subsidiaries; and
certain shared contracts will be assigned, in part to us or our applicable subsidiaries or be appropriately amended.

Except as may expressly be set forth in the separation and distribution agreement or any other transaction agreements, all assets will be transferred on an “as is,” “where is” basis and the respective transferees will bear the economic and legal risks that (1) any conveyance will prove to be insufficient to vest in the transferee good title, free and clear of any security interest, and (2) any necessary consents or governmental approvals are not obtained or that any requirements of laws or judgments are not complied with.

Information in this prospectus with respect to the assets and liabilities of the parties following the separation is presented based on the allocation of such assets and liabilities pursuant to the separation and distribution agreement, unless the context otherwise requires. Certain of the liabilities and obligations to be assumed by one party or for which one party will have an indemnification obligation under the separation and distribution agreement and the other transaction agreements relating to the separation are, and following the separation may continue to be, the legal or contractual liabilities or obligations of the other party. Each party that continues to be subject to such legal or contractual liability or obligation will rely on the applicable party that assumed the liability or obligation or the applicable party that undertook an indemnification obligation with

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respect to the liability or obligation, as applicable, under the separation and distribution agreement to satisfy the performance and payment obligations or indemnification obligations with respect to such legal or contractual liability or obligation.

Claims

In general, each party to the separation and distribution agreement will assume liability for all pending, threatened and unasserted legal matters related to its own business or its assumed or retained liabilities and will indemnify the other party for any liability to the extent arising out of or resulting from such assumed or retained legal matters.

Intercompany Accounts

The separation and distribution agreement will provide that, subject to any provisions in the separation and distribution agreement or any other transaction agreement to the contrary, at or prior to the distribution of our common stock, all intercompany accounts between Harvard Bioscience and its subsidiaries, on the one hand, and our company and our subsidiaries, on the other hand, will be settled.

Further Assurances

To the extent that any transfers contemplated by the separation and distribution agreement have not been consummated on or prior to the date of the separation, the parties will agree to cooperate to effect such transfers as promptly as practicable following the date of the separation. In addition, each of the parties will agree to cooperate with the other party and use commercially reasonable efforts to take or to cause to be taken all actions, and to do, or to cause to be done, all things reasonably necessary under applicable law or contractual obligations to consummate and make effective the transactions contemplated by the separation and distribution agreement and the other transaction agreements.

Initial Public Offering

For a description of Harvard Bioscience’s ownership in us after completion of this offering, see “Principal Stockholders.”

The separation and distribution agreement will provide that the separation and this offering are subject to the satisfaction (or waiver by Harvard Bioscience in its sole discretion) of the following conditions:

the completion of the separation and the related transactions in accordance with the plan of reorganization set forth in the separation and distribution agreement;
the SEC declaring effective our registration statement on Form S-1, of which this prospectus is a part;
our receipt of approximately $10 million in cash from Harvard Bioscience;
all actions and filings necessary or appropriate under federal, state or foreign securities laws have been taken and, where applicable, become effective or been accepted by the applicable governmental authority;
the approval for listing on the NASDAQ Capital Market of the shares of our common stock being sold in this offering;
the transaction agreements relating to the separation have been duly executed and delivered by the parties;
we have entered into the underwriting agreement and all conditions to our obligations and the underwriters’ obligations under the underwriting agreement will have been satisfied or waived;
Harvard Bioscience is satisfied in its sole discretion that it will own at least 80% of our stock on a fully diluted basis, and Harvard Bioscience is satisfied in its sole discretion that all other conditions to the distribution qualifying as a tax-free distribution to Harvard Bioscience, us and Harvard Bioscience’s stockholders, to the extent applicable, as of the time of this offering, are satisfied and there is not any event or condition that is likely to cause any of such conditions not to be satisfied as of the time of the distribution or thereafter;

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no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the separation or this offering or any of the related transactions is in effect;
such other actions as Harvard Bioscience or we may, based upon the advice of counsel, reasonably request to be taken prior to the separation and this offering in order to assure the successful completion of the separation and this offering and the other transactions contemplated by the separation and distribution agreement will have been taken;
no termination of the separation and distribution agreement has occurred; and
no event or development has occurred or existed or is expected to occur that, in the judgment of the Harvard Bioscience board of directors, in its sole discretion, makes it inadvisable to effect the separation or this offering.

The Distribution

The separation and distribution agreement also governs the rights and obligations of Harvard Bioscience and our company regarding the proposed distribution by Harvard Bioscience to its stockholders of the shares of our common stock held by Harvard Bioscience following this offering, which we also refer to in this prospectus as the distribution. Harvard Bioscience expects to accomplish this distribution through a spin-off, which is a pro rata distribution by Harvard Bioscience of its shares of our common stock to holders of Harvard Bioscience’s common stock. There are various conditions to the completion of the distribution. In addition, Harvard Bioscience may terminate its obligation to complete the distribution at any time if the Harvard Bioscience board of directors, in its sole discretion, determines that the distribution is not in the best interests of Harvard Bioscience or its stockholders. Consequently, we cannot assure you as to when or whether the distribution will occur.

The separation and distribution agreement provides that Harvard Bioscience’s obligation to complete the distribution is subject to several conditions that must be satisfied (or waived by Harvard Bioscience in its sole discretion), including, among others:

Harvard Bioscience receives a private letter ruling from the IRS to the effect that, among other things, the contribution by Harvard Bioscience of the regenerative medicine device business to us and the distribution will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and 368(a)(1)(D) of the Internal Revenue Code continuing in effect, and Harvard Bioscience’s receipt of an opinion from Burns & Levinson LLP, counsel to Harvard Bioscience, to the effect that the contribution and distribution will qualify as a transaction that is described in Section 355 and 368(a)(1)(D) of the Internal Revenue Code;
all governmental approvals necessary to consummate the distribution have been obtained and are in full force and effect;
all actions and filings necessary or appropriate under applicable securities laws in connection with the distribution will have been taken or made, and, where applicable, become effective or been accepted by the applicable governmental authority;
the approval for listing on the NASDAQ Capital Market of the shares of our common stock to be distributed to the Harvard Bioscience stockholders in the distribution;
no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the related transactions are in effect, and no other event outside the control of Harvard Bioscience has occurred or failed to occur that prevents the consummation of the distribution or any of the related transactions; and
no other events or developments have occurred subsequent to the completion of this offering that, in the judgment of the Harvard Bioscience board of directors, would result in the distribution not being in the best interest of Harvard Bioscience or its stockholders.

Harvard Bioscience has the right to terminate its obligation to complete the distribution if, at any time, Harvard Bioscience’s board of directors determines, in its sole discretion, that the distribution is not in the

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best interests of Harvard Bioscience or its stockholders. In the event of such termination following the separation, neither party will have any liability to the other party under the separation and distribution agreement in respect of the distribution.

We will cooperate with Harvard Bioscience to accomplish the distribution and will, at Harvard Bioscience’s direction, promptly take any and all actions necessary or desirable to effect the distribution, including, without limitation, the registration under the Securities Act of our common stock on an appropriate registration form or forms to be designated by Harvard Bioscience.

Covenants

We have agreed that, for so long as Harvard Bioscience beneficially owns at least 50 percent of the total voting power of our outstanding capital stock entitled to vote in the election of our board of directors, we will not (without Harvard Bioscience’s prior written consent):

take any action that would limit the ability of Harvard Bioscience to transfer its shares of our common stock or limit the rights of any transferee of Harvard Bioscience as a holder of our common stock;
if Harvard Bioscience beneficially owns at least 80% of the total voting power of our outstanding capital stock entitled to vote in the election of our board of directors, issue any shares of our capital stock or any rights, warrants or options to acquire our common stock if this could cause Harvard Bioscience to own (1) less than 80% of the total voting power of our outstanding capital stock entitled to vote in the election of our board of directors, (2) less than 80% of any class of capital stock not entitled to vote in the election of our board of directors, or (3) less than 80% of the value of our outstanding capital stock;
take any actions that could reasonably result in Harvard Bioscience being in breach of or in default under any contract or agreement;
incur any indebtedness that could be reasonably likely to adversely impact the credit rating of any indebtedness of Harvard Bioscience;
acquire any other businesses or assets or dispose of any of our assets, in each case with an aggregate value for all such transactions in excess of $20 million; or
acquire any equity interests in, or loan any funds to, third parties in excess of $10 million in the aggregate.

Employee Matters

The separation and distribution agreement will also allocate liabilities and responsibilities relating to employee compensation, benefit plans, programs and other related matters in connection with the separation, including the treatment of outstanding incentive awards and certain retirement and welfare benefit obligations. The separation and distribution agreement provides for certain adjustments with respect to Harvard Bioscience equity compensation awards that will occur when Harvard Bioscience completes the distribution. Such adjustment is required under the Harvard Bioscience employee benefit plans and it is anticipated that each outstanding Harvard Bioscience option to purchase Harvard Bioscience common stock shall be converted on the date of the distribution into both an adjusted Harvard Bioscience option to purchase Harvard Bioscience common stock and an option to purchase our common stock. It is currently anticipated that Black-Scholes valuation modeling will be used to determine the value that each Harvard Bioscience option has lost at the time of the distribution and then to ensure the holder maintains such lost value, 80% of such lost value will be provided back to the holder by making appropriate adjustments to the share amount and exercise price of the existing Harvard Bioscience option and 20% of such lost value will be provided back to the holder through the issuance of an option to purchase our common stock. The share amounts and exercise prices of the adjusted Harvard Bioscience options and our options would be adjusted in a manner to ensure the intrinsic value held by the holder pertaining to the existing Harvard Bioscience award is maintained immediately following the distribution and shall be determined such that tax is not triggered under Section 409A of the Internal Revenue Code.

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Similar to the adjustment of the existing Harvard Bioscience options, with respect to each unvested Harvard Bioscience restricted stock unit outstanding at the time of the distribution, such Harvard Bioscience restricted stock unit shall be converted on the distribution date into both an adjusted Harvard Bioscience restricted stock unit and a restricted stock unit in our company. Immediately following the distribution, the market prices of Harvard Bioscience and our common stock will be used to determine the value that each Harvard Bioscience restricted stock unit lost at the time of the distribution and then to ensure the holder maintains such lost value, 80% of such lost value will be provided back to the holder by making appropriate increase of the share amount of the existing Harvard Bioscience restricted stock unit and 20% of such lost value will be provided back to the holder through the issuance of our restricted stock unit. The share amounts of the adjusted Harvard Bioscience restricted stock unit and our restricted stock unit would be set in a manner to ensure the intrinsic value held by the holder pertaining to the existing Harvard Bioscience award is maintained immediately following the distribution and shall be determined such that tax is not triggered under Section 409A of the Internal Revenue Code.

Auditors and Audits; Annual Financial Statements and Accounting

We have agreed that, for so long as Harvard Bioscience is required to consolidate our results of operations and financial position or account for its investment in our company under the equity method of accounting, we will:

not change our independent auditors without Harvard Bioscience’s prior written consent;