The Healers

Developments in the field of wound care have been very slow to occur over the centuries. However in Australia, expertise is beginning to evolve in an industry that is greatly in need of technological advancement. There are now five listed biotech companies on the Australian market that specialise in, or have interests in, wound healing, each company quite different, and it’s worth looking at these investment options for investors.

HISTORY OF WOUND CARE

At the Bioshares Thredbo conference in July this year, Tissue Therapies’ CEO, Steven Mercer, outlined the history of wound care, which dates back as far as practises of ancient Egyptian doctors. Hippocrates, the first Greek surgeon, used vinegar for wound irrigation and to promote healing in his time, between 460 – 377 BC. Galen, the Roman gladiator surgeon (200 - 130 BC) re the ognised stage in that pus represents.

During Napoleon’s retreat from Russia in 1912, a common practise was to cauterise wounds with hot oil, although the army found that soldiers had a better survival chance if the wounds were left untreated. Louis Pasteur (1822 – 1985) established a cornerstone of modern medicine through his discovery that infectious diseases are caused by germs (bacteria) and Alexander Fleming’s discovery of penicillin in 1928 and Howard Florey’s successful scaled-up manufacture of the drug that in 1940 enabled clinical use of penicillin.

MODERN WOUND DRESSINGS

Modern wound dressing began with a Vaseline coated gauze in 1916. However, the concept of moist wound healing was introduced in 1962 with moist transparent film dressings such as Smith & Nephew’s Opsite released on to the market in 1978.

Today, 'advanced’ wound healing treatments involve foams, hydrocolloids, hydrogels, alginates, silver crystalline products and growth factor dressings which include fibroblast cells. (Silver in a nanocrystalline form exhibits strong anti-microbial activity against gram positive and gram negative bacteria as well as activity against yeasts and fungi). According to Mercer, the global advanced wound management market was worth US$1.5 billion in 2004 and is growing at 11% a year.

What this history shows is that the wound care field has been very slow to bring about technological advances. However several Australian companies are seeking to be driving forces to effect that change.

CLINICAL CELL CULTURE (C3)

Clinical Cell Culture (CCE: 36.5 cents) has developed a number of products based on its spray-on skin technology. It has two business streams. The first is for laboratory-based cell culturing of autologous (patient’s own) spray-on skin for the treatment of burns, from 10% up to 90% of total body surface area. Skin cells are harvested by the surgeon, then sent to C3’s processing laboratory in Belgium, where the cells are expanded over a period of between two to seven days, prior to being returned to the surgeon and applied to wound.

The two associated major burns products, CellSpray and CellSpray XP, have both recently been released in Europe and present an attractive alternative to the cultured epithelial skin sheet grafts and split skin grafts that both result in high levels of scarring.

The company’s second product, ReCell is a variation on its first product. It allows surgeons to process the skin cells in theatre in 30 minutes for treatment areas of up to 2% of total body surface area. This product is a disposable kit and is currently being sold through distributors in Europe and Japan. The larger application of this product is in cosmetic surgery, which could easily exceed the burns treatment market.

In the last financial year, C3 generated sales of $1.4 million and recorded a net loss of $14.2 million. The large loss recorded reflects the rapid global rollout of the company’s products currently underway. The company is capitalised at $81 million and had $18 million cash (reported last month).

TISSUE THERAPIES

Tissue Therapies (TIS: 61 cents) has developed a combination of growth factor and protein binding compounds, call VitroGro, that not only promote skin cell growth, but also promote skin cell migration. In the wound care market, the technology can potentially be applied for the treatment of paediatric and adult burns, diabetic and venous ulcers, use in healing surgical wounds and also in consumer products or in a bioactive bandage.

Preclinical studies have shown VitroGro can accelerate wound healing in burns by up to five weeks. By the end of 2006, the company expects to have conducted its adult burns trials, the paediatric burns trials are expected to be completed by October 2007. Tissue Therapies anticipates it will file for regulatory approval in Europe and Australia by the end of 2007.

Clinical trials in patients with diabetic ulcers are expected to conducted over the next 12 months. Effective treatment of diabetic ulcers is a very important unmet clinical need. In the US and Canada there are 20 million diabetics and over their lifetime, 2.4% will have a limb amputated because of diabetic ulcers that do not heal. Tissue Therapies has shown that it can regrow cells in a laboratory taken from the site of amputation using its VitroGro product.

Tissue Therapies is currently capitalised at $9 million and will be a stock to watch over the next 12 months.

ACURON

Acuron (AVP: 6.6 cents) has developed a novel wound dressing that uses capillary action to draw exudate away from the wound, which wicks laterally in the mid layer of the dressing. The technology, called Vacutex, was sourced from the acquisition of Vacutex Ltd in the UK in August 2004. The product is currently being sold in Australia, New Zealand, Singapore and South Africa through distributors, and in the UK through a direct sales force.

The company is looking to license the product in the US and needs to complete a product evaluation in the US and achieve health insurance reimbursement status first. In the last financial year, the company generated revenue from its healthcare business of $800,000. Acuron has a market capitalisation of $5.6 million.

SALUS TECHNOLOGIES

The latest company to emerge into wound care area is Salus Technologies (SAH: 7.2 cents), which has been merged into the former Q-Vis Ltd shell. The wound healing and tissue engineering technology emanates from Singapore. The first product, Attaderm, has its origins in Chinese medicine and has been developed over the last five years. The compound occurs in a powdered form that when applied to the (wet) wound, forms into a sticky membrane and breathable physical barrier, enabling the prevention infection and encouragement of regrowth.

The second product the company is developing is a tissue engineering control system that uses bio-mimetic manipulation to stimulate cell growth. Both projects are at very early stages of development and proof-of-principal studies have yet to be completed.

NOVOGEN

Novogen (NRT: $4.83) has established a subsidiary company, Glycotex Inc, as the development engine for its wound healing technology Glucoprime, a carbohydrate base drug. This technology dates back to 1995, with a US patent granted in June 2001. The technology was considered an important part of the Novogen portfolio, at least in the company’s 1996 and 1997 annual reports, but seemed to take a back seat until recently. Novogen owns 84.3% of Glycotex, which was capitalised at its last funding round in April 2005 at $52 million.

Glycotex has completed a 60 patient Phase II study of Glucoprime in patients suffering chronic deep venous stasis leg ulcers. Glucoprime achieved a mean 59% healing improvement (0.1% formulation), 55% healing (1.0% formulation) against 10% for the placebo. While the result is confounding, it would appear that this trial has provided the company with enough evidence to conduct further studies that meet regulatory requirements.

RECOMMENDATIONS:

Clinical Cell Culture: Speculative Buy Class A
Tissue Therapies: Speculative Buy Class A
Acuron: Speculative Buy Class B
Salus Technologies: No Current Recommendation
Novogen: No Current Recommendation

Reproduced by permission from Bioshares 138 (September 30, 2005)

Bioshares is Australia's only independent weekly biotech and pharma stock report, now into its sixth year of publication (www.bioshares.com.au). If you would like to read some back issues please contact David Blake via email atblake@bioshares.com.au.