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BIOSURFACE TECHNOLOGY PLANNING TO EXPAND ACTICEL TRIALS FOR VENOUS ULCERS

This article was originally published in The Gray Sheet

Executive Summary

BIOSURFACE TECHNOLOGY PLANNING TO EXPAND ACTICEL TRIALS FOR VENOUS ULCERS; the company expects to file an investigational device exemption application supplement in 1993 for a "pivotal" study of the wound dressing product as a treatment for venous ulcers, according to a Dec. 18 prospectus for an initial public offering. A pilot study of Acticel for venous ulcers had "favorable results...relating to the percentage of ulcers which healed completely and the percentage reduction in ulcer size for those that did not," Biosurface says in the prospectus. The company estimates that approximately 500,000 patients in the U.S. are diagnosed with venous ulcers each year. Acticel is intended to serve as a temporary "living bandage" to promote healing, reduce pain and improve cosmetic appearance. Acticel is made from cells grown from neonatal foreskins. Biosurface says that Acticel dressings "are temporarily incorporated into the wound bed and are displaced within several weeks by the patient's own epidermis." Biosurface is planning to conduct full-scale clinical studies of Acticel for several applications in addition to venous ulcers. The firm "recently" received FDA clearance to begin a 150-patient clinical trial of Acticel as a treatment for pressure sores. Two additional final-phase studies of the product were initiated in 1992: a 150-patient trial of Acticel for treatment of deep partial-thickness burns began in August, and a study of the product as a therapy for skin graft donor site wounds began in April. A pilot study for use on superficial partial-thickness burns also is under way. In addition, Biosurface notes that during 1993, it will seek FDA approval of a pilot study of Acticel with diabetic ulcer patients. Further in the future, the firm intends to study the product as a treatment for skin wounds caused by "Mohs' surgery," a procedure used to treat skin cancer. Biosurface is "seeking a distribution partner" that would sell Acticel in the chronic skin ulcer market. Biosurface "intends to retain direct marketing rights for burn-related Acticel wound dressing indications in the U.S. and Europe." Part of the proceeds from the IPO will be used to support the various Acticel trials. Biosurface Technology is expecting to net approximately $20 mil. through an offering of 2 mil. shares priced at $11 per share. Hambrecht & Quist and Cowen & Company are underwriting. Funds from the offering also will be used to support sales of Epicel cultured skin grafts, the firm's only marketed product line. Epicel grafts, which are used as an alternative to natural skin grafts to treat severe burns, are "grown to order" by Biosurface from a patient's own skin cells. Biosurface markets Epicel directly to burn centers through a seven-member field sales force. The product has generated 97% of the company's cumulative revenues of approximately $20 mil. since the firm's inception in 1987. Remaining IPO proceeds will be used for research and development of Chondrograft, a cartilage repair product, as well as for "capital expenditures including the expansion of facilities" and general corporate purposes. Chondrograft, like Epicel and Acticel, is based on Biosurface's "core cell culturing technology" and will be the first product to emerge from "a major program" initiated in 1992 to develop a number of cartilage products. The product is made of cultured articular cartilage and is designed to replace damaged, deteriorating cartilage in the knee in order to obviate the need for total joint replacement. In 1991, Biosurface had $6 mil. in revenues and recorded a loss of $4.9 mil. For the nine months ended Sept. 30, sales were $5.7 mil. and the company lost $2.7 mil. The company has not yet generated any profits. Biosurface operates out of a 43,000-square-foot corporate, R&D and manufacturing facility in Cambridge, Massachusetts. David Castaldi, one of the company's founders, is president and CEO of the company. Castaldi was president of Baxter Travenol's Hyland Therapeutics Division before moving to Biosurface.
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