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Bioactive wound healing, bioaesthetics and biosurgery: three pillars of product development

Geoff MacKay,
2006

Tissue regeneration specialist company Organogenesis Inc. was one of the first biotech companies formed. Incorporated in 1985, the company was originally a spin-off from a research program at MIT. For the first 10–15 years, Organogenesis was heavily research based, but then gradually moved into development. The company’s flagship product is Apligraf^®—a living, bilayered skin construct with two FDA-approved indications: diabetic foot ulcers and venous leg ulcers. As Apligraf neared the market, it was necessary to ‘graft’ a manufacturing capability onto the company. As a consequence the company moved south from Massachusetts’s cradle of biotechnology to Canton, MA, USA. Having experienced many of the highs and lows that characterize the biotech industry, the company is now consolidating its position as a center of expertise in commercializing living, cell-based products. The company has now built a sales, marketing and reimbursement team with the unique skill set to integrate novel technology into the US healthcare system. President & Chief Executive Officer Geoff MacKay takes great pride in the leading role that Organogenesis is playing in ushering in the field of tissue regeneration. Here, he discusses with Regenerative Medicine’s Elisa Manzotti the ‘three pillars’ of the Organogenesis pipeline: bioactive wound healing, bioaesthetics and biosurgery. He focuses both on the rewards, and the trials and tribulations, of the commercialization of living cell-based technology.

How would you summarize achievement Organogenesis’ expertise in the tissue regeneration field?

Specifically, there are three elements that make Organogenesis’ know-how unique. First is our ability to build 3D living-cell constructs. One of the things the company will always be remembered for is obtaining the first FDA approval of an allogeneic living cell therapy with Apligraf^®. That not only changed what was initially science fiction into a proven science, but it transitioned the field into a commercial reality that can be judged in terms of finance fundamentals rather than just the exciting nature of the technology. That was our first milestone.

Second is the ability to mass produce a living-cell therapy—consistently, reliably and seamlessly— when the physicians require the product. It’s one thing to build the recipe book in research; it’s another thing to mass produce. It requires a transition from research into process development and engineering in order to replicate at scale. So the second key milestone was mastering the ability to mass produce living cell-based technology—a whole new skill set and major challenge.

The third area of expertise is the ability to commercialize our products. This is the most recent achievement. There is often a tendency, particularly in mainstream biotech companies, to take something through R&D and then seek a partner to outlicense the product. With cell-based technologies, there really isn’t that ‘big brother’ to look to. The device companies are mildly interested, but they’re not interested in changing their model, but rather taking something off the shelf and fitting it into their own device model. This isn’t really possible for cell-based technology. The pharmaceutical companies are predominantly focused on small molecules at the moment, so they can’t really see how this fits with their infrastructure. We were even slow ourselves to recognize the importance of this third area. So that is the third key milestone—the ability to build unique commercial competencies to sell, market, obtain reimbursement and distribute living technology.

What products & therapeutic areas do Organogenesis currently have under investigation?

Firstly, as a privately held company, we disclose only that which has entered clinical trials, so I can’t talk about our research that hasn’t yet been applied to humans. But you can describe our active programs in terms of three pillars—bioactive wound healing, bioaesthetics and biosurgery.

Bioactive wound healing

More than 120,000 patients in the USA have been treated with Apligraf to date and we are expanding to other markets in 2006. We estimate that this figure represents approximately two-thirds of all patients who have received living cell-based products across any therapeutic field. Our goal is to introduce the next-generation Apligraf in a few years time, using our self-assembly technology—a patented technology where our living cells create their own matrix/scaffold around them, rather than adding animal-derived collagen. That product is intended to eventually replace Apligraf.

In November 2005, we received FDA clearance for a product called Fortaderm™, which is an acellular collagen scaffold that we have combined with different antimicrobials. The goal is to provide a scaffold over which cells migrate, but which at the same time provides an adequate zone of inhibition against bacteria. The challenge was navigating a narrow therapeutic range so that it is effective but not cytotoxic. That is a more basic product in that it doesn’t contain living cells and it doesn’t deliver growth factors but it is a nice collagen biomaterial.

The final product in bioactive wound healing is for Achilles tendon, and that is also FDA cleared. The unique selling point is that it has the best strength-to-thinness ratio, which is very relevant in Achilles and is exactly what surgeons say they are looking for to strengthen tendon repair procedures.

Bioaesthetics

The key product actively under investigation in the second pillar of our pipeline-bioaesthetics—is Revitix™. This product is a mixture of multiple growth factors that have been formulated in such a way that they are aesthetically pleasing. We are undertaking clinical trials to assess the efficacy of Revitix in skin rejuvenation. The concept is relatively simple, i.e., that aged skin is wounded skin— wounded, for example, by pollution, the environment and exposure to the sun. Delivering these factors in a continuous manner can help to restore the cell communication balance and potentially have an impact on hyaluronic acid, collagen and elastin production.

The second product in bioaesthetics leverages our collagen biomaterial intellectual property that we developed in the 1990s when we were working on a vascular graft program. We have developed a biomaterial that can persist in the body for a very long time and eventually remodel and integrate with the patient’s own tissue. The intended applications are plastic and reconstructive tissue repair and support. We have completed a 3-year pilot study that demonstrates the product is biocompatible with breast tissue and delivers long-term support for breast tissue. A larger clinical trial starts later in 2006. This is potentially a large market, and represents a real clinical problem, not just an aesthetic opportunity. It is something that can actually serve an unmet medical need.

Biosurgery

The easiest way to understand the third pillar—biosurgery—is to look at where synthetic biomaterials or cadaveric tissues are used for multiple surgical applications and to simply ask the question ‘do they do the job or would a nonsynthetic perform better or differently?’. The answers vary depending on the clinical application. In some areas, such as hernia repair, the synthetics are working very well in most cases but there are certain refractory cases where an acellular collagen biomaterial can outperform. So the key is to identify and specifically target where the patients can benefit. In other applications, sometimes a biomaterial can be first-line— we have developed these acellular biomaterials for a range of applications:

• Closure of the hole between heart chambers (patent foramen ovale) in association with our partner NMT Medical Inc.
  


• Rotator cuff surgery: an area we are focusing on with our partner Biomet
  


• Vaginal prolapse: we have just completed a 100-patient study with the Cleveland Clinic
  


• Stress urinary incontinence is currently under late-stage clinical evaluation.

So the idea is really to specifically engineer our collagen biomaterials to address clinical needs in which a synthetic is not performing adequately. The parameters we can adjust are the strength of the product, persistency of the product and thickness. The product comes hydrated, ready for use. Once we understand the clinical application we can engineer the biomaterial to fit the application.

The world of biosurgery is largely acellular at the moment where the goal is to provide support and repair and let the body’s own tissue eventually migrate in and around the area, to replace the biomaterial. This will remain the concept for our next-generation products, but in addition we aim to provide living cells as well, thus providing that strength and repair but also stimulation of the healing process.

You became CEO of Organogenesis in late 2003 after spending 10 years at Novartis. How did you find the transition?

It certainly is a transition. There is no better place than Novartis to learn all of the individual skills that are required in the healthcare industry. I was able to develop cross-functional expertise in sales and marketing, health policy, finance and medicine. The company is excellent at training and personal development, and the multicultural nature of a global company is exciting. I worked in Canada, USA and Europe, which contributes to a well rounded education. What is different, and what took a little bit of adjustment, is going from a company with more than 80,000 employees to one with 200. In fact, at the time I joined Organogenesis there were only 60 or 70 staff.

Most of what you learn in a large organization is relevant and applicable in a small company but it needs to be dramatically simplified to come up with pragmatic solutions. With any major pharmaceutical company, there is always the ‘mother ship’ present, with all of the associated massive efficiencies, the scale, the standard operating procedures and the professionalism. In a small company there is no safety net and there are no guidelines. So the leadership team must really think for themselves and navigate the stormy weather on their own. The benefit, however, is that you can turn on a dime—you can react very quickly and the people, who are 110% focused on the business, guide the ship rather than trying to influence a much broader organization.

What were the major factors that enabled you to successfully turn round Organogenesis from a 'bankrupt Chapter 11 company' into the profitable company it is now?

We faced the usual complexities of a turn around: getting our costs under control, narrowing our focus and driving up top-line sales. You can look at this in the greater context and ask the question: how many examples are there of a proven, successful best-in-class technology in healthcare that has somehow not managed to succeed? I can’t personally think of one. With the Apligraf flagship product, the technology was proven and was FDA approved, yet the product was captive of a business model that didn’t make sense. The technology was sound, it was late-stage, and approved by the FDA for multiple indications, so clearly from a patient-need perspective, the product deserved to be available. When assessing the opportunity, I spoke to opinion leaders both in the USA and elsewhere to determine how they perceived the medical need. The response was that the technology definitely deserved to be put in place. So the question was, how to make the business model work, and this required some specific steps.

First, we had to amicably divorce Novartis because our interests were no longer aligned. They had refocused away from the areas of woundcare, xenotransplantation, gene therapy and tissue engineering, so the involvement of Novartis would have forever held back Organogenesis. Second, manufacturing had to be brought under control in terms of cost and also reliability—the cost to produce this living technology had to be cut substantially. We also needed to deliver total reliability to the customer.

Fortunately, in the early days, the physicians were remarkably resilient. They would call and ask for the product; sometimes we could provide it and sometimes not. So manufacturing clearly verhaul.

In the USA, Medicare pays for two-thirds of customers’ reimbursement. The level of reimbursement for Apligraf was such that the ‘for profit’ woundcare centers couldn’t justify usage of the product. So Medicare rates had to be fixed. Finally, the top-line revenue of Apligraf had to go up very quickly. This task was given a substantial boost when more than 30 people quit Novartis to follow their passion for tissue regeneration and joined Organogenesis.

Another factor is that our board of directors were very consistent and very clear with the objective—they want to build a great company as opposed to dressing up assets for sale. So that enabled us to chart a path to address these challenges one by one over the past 3 years.

What is the company’s strategy in commercializing tissue regeneration?

The strategy for commercialization is interesting. In terms of the intellectual property (IP) we have generated over the last 20 years, we have many assets. One of the key challenges was betting on what to continue to develop and what to invest further and commercialize. We assessed our assets using three different filters:

• What are we passionate about?


• What can we make money on?


• Where do we have the competencies to be the best in the world?

• Is our technology really best in class?


• How large is the target audience?

If the product is not indisputably best in class, then we won’t take the risk. Certain markets would just be too large for a company such as ours. An example would be the development of a product for hernia, as there are more than 50,000 general surgeons across the USA alone. So we are interested in those areas where there are manageable numbers of specialized physicians that we can target specifically. Our tissue regeneration specialists can then work closely with them and teach them how to use the technology.

Certain areas, as I have mentioned, are clear-cut candidates for outsourcing. In wound healing, we have developed the unique competencies to commercialize ourselves, so we are not looking to out-license within that portfolio. Within bioaesthetics, the decision will be dictated by the results of a clinical trial due in April 2006. This is an extensive pilot study with quantitative biopsy end points of our lead product, Revitix, coordinated by researchers at the University of British Columbia and Harvard University. Should those results prove positive, it may trigger us to establish our own commercial presence because then we could answer the question: are we best in class? In bio-surgery, we have developed acellular collagen bio- materials for certain areas, including rotator cuff surgery and procedures for Achilles tendon, vaginal prolapse and urinary incontinence. Those are almost all outlicensing opportunities because, in this instance, we feel that the specialized surgical device companies could fit these technologies into their portfolios and do a better job than we could. We have cellular biomaterials in development—they are a few years away yet—and when they come, they may trigger a different decision in terms of commercialization, but we will certainly outlicense for acellular products.

What are the challenges in bringing such a new technology to market?

From a financial perspective, one of the major challenges is regaining the confidence of the investment community. This is because, whilst all the science has been very exciting, the financial return has been lacking with virtually every product in the class, which has led to some disenchantment in the financial community. Organogenesis hopes to help turn the tide in this respect by presenting the first profitable business model in living cell-based therapy.

Other challenges exist at every step of the way. R&D companies often focus on the FDA as the major hurdle, but when that is overcome, they realize that there are many more ahead. The challenges are really incremental. Once a product has been discovered and properly researched, then you meet the challenge of scale-up. To be able to consistently reproduce living cell technology at scale presents a whole set of challenges in itself in terms of process development and process engineering. Furthermore, to do this in a way that makes economic sense is a huge hurdle.

In terms of regulatory issues, the FDA has a growing body of experience in regulating such products. So finally the rules are quite clear. In Europe they are becoming clear, but we are not there yet. There are significant challenges in clinical development because you are studying a technique as well as the product itself, and how the clinician or surgeon applies the product can have great impact on the clinical results. In addition, sometimes these studies cannot be blinded, so we have to work very closely with the regulatory agencies to devise specific methodologies.

The overall challenge is that we require a different skill set from those of the medical device and pharmaceutical companies. While skills overlap, the approach is really just to break down each one of these functions and determine, based on a particular business model, what the challenges are. We need to identify the gap that lies between what we have now and where we want to be and how we close that gap. The business models in tissue regeneration are evolving and it’s not a one-size-fits-all model, for example, whether it is an autologous model or an allogeneic model will have a huge impact on how a company is built.

How does a company like Organogenesis develop the sales infrastructure and visibility to maximize the commercial potential of its products?

If what we were trying to sell was a better ß-blocker, a pharmacologic with limited differentiation, then I think it wouldn’t be possible for Organogenesis to compete. But because we are the leading living cell-based company, this has allowed us to carve out a unique space in the minds of the customers. We have recently validated that position by performing extensive market research in the USA within the surgical community. Among these specialists Organogenesis was perceived to be the leading tissue regeneration company, committed to clinical outcome and evidence-based product development. The minds of physicians are very crowded with all kinds of different therapeutic options and pharmacological opportunities—the good news for people in this field of tissue regeneration is that we are unique and we stand out in certain clinical applications. Where a finite number of surgeons or physicians use a particular product, they are more than willing to work with a mid-sized tissue regeneration company as opposed to a major pharmaceutical or device company.

What challenges did you face in gaining marketing approval for mass-manufactured medical products containing living cells?

I would hope that the challenges that we faced in gaining approval would not all be replicated for others. We acted as pioneers at every step of the way—we worked with the FDA to create policy and also with Centers for Medicare and Medicaid Services (CMS Medicare) to resolve reimbursement issues. We also had no distribution models to follow. We had to invest approximately $400 million to blaze the trail. While it was money well spent, I'd hope that wouldn’t be the model for other companies in future.

The main challenge for companies following in our footsteps will be the decision, up front, on what business model they require. They will need to be very introspective regarding what they have the competence to achieve. Also, people tend to automatically look for a partner but, in fact, most partnerships fail. In most cases the junior partners—the biotech partners—are dissatisfied by them. This usually happens because the parties’ interests are no longer aligned and the larger partner is juggling multiple opportunities and thus having problems with focus. Where companies do need to look for a partner, it is not really a case of ‘bigger is better’, it is more ‘smarter is better’, with focus and complete commitment to the therapeutic field being vital.

After failing to win US regulatory approval for its use in treating venous leg ulcers, Smith & Nephew are putting their Dermagraft business up for sale. What impact do you think this will have?

For Organogenesis, this will be both a positive and a negative thing. I think that the positive will be a short-term blip in sales. In 2005, Apligraf was outselling Dermagraft four-to-one in terms of patient share. This was one of the key factors in Smith & Nephew’s decision. So some physicians and patients will have to change treatment modalities, but not a huge number.

On the negative side, there is one less professional and dedicated company trying to introduce this type of technology. Our mission at Organogenesis is to make tissue regeneration the standard of care for the patients that deserve it, and that’s clearly much easier when there are more dedicated companies. For example, even at the level of, say, the medical congress, there will now be only one, rather than two, companies presenting the benefits of this cell-based technology at satellite symposia. I believe that Smith & Nephew remain committed to tissue regeneration in orthopedics and other applications, but they have just divested this technology in woundcare.

What advances can we expect to see in the longer term—say, in a 10-year timeframe?

When I entered this field 10 years ago, what we predicted in that timeframe was that xenotransplantation would be a reality, that gene therapy would be a reality and that very intricate 3D tissue engineering of organs would be commonplace. Clearly, we have missed those targets, although there has been remarkable progress in the field. It just highlights the fact that 10 years in medicine is actually not a long time. We have been a little overambitious in our predictions, but a lot of things are now going very well, which suggests that we will be in a very different place 10 years from now.

There are two key barriers that have held back tissue regeneration. First, immunology— whether it is research in tolerance or whether it is safer immunosuppressant cocktails, I believe that, one way or another, we will get around the body’s own immunological reactions for at least some therapeutic applications. The second hurdle has been the lack of vascularization in the more complex tissue regeneration products. In future, more elaborate, thicker tissue regeneration constructs should be possible and will be able to be vascularized, most likely through microvascular holes in the constructs. Such advances will allow the community to think in more ambitious terms.

Human collagen biomaterials will play a greater role in tissue regeneration, rather than xeno-derived sources. Cell therapy automation will also really change the field, with improved reliability and cost-effectiveness.

One other issue I see in my crystal ball is that in 10 years’ time the financial community will have learned to like us again. I expect Organogenesis to play a major role in addressing this last point.

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