COLLAGEN STOCK CONTINUES SUMMER CLIMB WITH 1-1/4 POINT GAIN IN SEPTEMBER

Collagen stock maintained its summer run-up in September, advancing 1-1/4 to 27-1/2, a 4.8% increase. The issue has been building momentum since June, when it closed at 22-3/4, on anticipation of FDA approval of Contigen Bard. The injectable bovine collagen urinary incontinence implant was approved on Sept. 30 and shipments by its co-developer Bard are set to commence Oct. 11 ("The Gray Sheet" Oct. 4, p. 1). The approval is the best news for the company since May, when FDA approved Collagraft, a bone graft matrix jointly developed with Zimmer. In Collagen's recently released 1993 annual report, Chairman Reid Dennis and President and CEO Howard Palefsky say that 1993 has been a "turning point" from a regulatory perspective, noting that the company has faced "intense scrutiny during recent years regarding the safety of [its] products." Collagen has several new projects in the works. The firm received an approvable letter in August for a second generation Collagraft bone graft matrix strip, also developed with Zimmer. During September, the firm also said it expects its 30%-owned LipoMatrix unit to begin clinical trials in the next few months in Europe of a breast implant filled with triglyceride (soy oil) ("The Gray Sheet" March 9, 1992, p. 5). An investigational device exemption has been filed for clinicals in the U.S. Among other projects, Collagen's 67%-owned CollOptics unit is in the early pre-clinical stage of development for collagen-based "lenticules" or "semipermanent" contact lenses for the correction of refractive errors ("The Gray Sheet" Jan. 18, I&W-2). In early development by Collagen's 36%-owned Prograft Medical are vascular grafts, stents and "stent graft combinations that allow the repair of stenosis...thrombosis...and certain aneurysms...in blood vessels having diameters of less than five or six millimeters," the annual report states. Prograft was formed in June by Collagen, its 34%-owned unit Target Therapeutics, and Celtrix Pharmaceuticals. U.S. clinicals are slated to begin in 1994 "to evaluate the use of human placental collagen in treating nasolabial furrows in patients with diagnosed hypersensitivity to bovine collagen." Collagen is working with Lyon, France-based Imedex to develop the human-derived collagen. In May, the firm also made an equity investment in GenPharm, with which it will collaborate to develop human collagen from transgenic animals. Collagen was one of eight point-or-better gainers in September on the O-T-C Index. Of the 40 NASDAQ-traded medical device and diagnostics issues tracked on a monthly basis by "The Gray Sheet," losers outpaced gainers four-to-three as 20 issues sank, 15 advanced and five were flat for the month. The overall positive Index gain of 1.1% was aided by the strong performance of the most heavily weighted issue, Chiron, the largest point-gainer for the month (up 11-1/8, or 17.5%, to 74- 7/8). Investors became enthusiastic during September about the commercial prospects of its multiple sclerosis treatment Betaseron.