Interview conducted by: Lynn Fosse, Senior
Editor, CEOCFOinterviews.com, July 10, 2009
CEOCFO: Dr.
Chan, what is your vision at MedaSorb?
Dr. Chan:
“MedaSorb Technologies Corporation is a medical device company focused on
treating severe sepsis with a novel blood purification device called
CytoSorb™. Severe sepsis, often called ‘overwhelming infection’, is very
common affecting all ages, all walks of life, and all ethnicities.
Unfortunately most of us know someone – a loved one, a relative, a friend, a
co-worker perhaps, that developed a severe infection like pneumonia, a
kidney infection, a ruptured appendix or even influenza, requiring intensive
care treatment including, for example, mechanical ventilation to help them
breathe, dialysis to replace failed kidneys or strong medications to support
falling blood pressure. This is severe sepsis and it afflicts more than 1
million people in the US annually, 18 million people worldwide, and kills 1
in every 3 patients despite the best medical care. In fact, more people die
of severe sepsis in the US than die from either heart attacks, strokes or
any single form of cancer. And the numbers are growing. An aging population,
an increase in antibiotic resistant bacteria, the increased use of
implantable devices like artificial hips and knees, and co-morbid diseases
like cancer and the diabetes epidemic are just some of the factors that put
people at higher risk of infection. And all of these are driving the
occurrence of sepsis. Sepsis is also one of the most difficult and expensive
diseases to treat, costing our healthcare system more than an estimated $18
billion annually. Our goal at MedaSorb is to develop CytoSorb™ as a
significant therapy to address this major medical need.”
CEOCFO:
Would you tell us about your CytoSorb™ technology and how it works?
Dr. Chan:
“In order to understand how our technology works, it is important to
understand what causes severe sepsis.
Severe sepsis is typically caused by two
processes. The first is the infection, usually bacterial or viral, that
triggers the sepsis cascade and can often be treated with antibiotics or
antiviral drugs. The second and often more devastating, however, is the
body’s abnormal immune response to the infection. In response to a mild
infection, the body normally produces substances called cytokines. Cytokines
are protein messengers that stimulate the immune system to fight off the
infection and help regulate it. However, in severe infection, in many
people, the body’s immune response often goes haywire, producing massive
amounts of these cytokines in something called cytokine storm. At these
levels, cytokine storm causes direct cell death and organ damage, ultimately
leading to organ failure and in many cases death. Cytokine storm is widely
accepted by the medical and research communities as the underlying cause of
organ failure and a major contributor of death in severe sepsis. If you do a
PubMed or literature search on ‘cytokines’ and ‘sepsis’ you will literally
bring up ten thousand articles. As an example of cytokine storm, if you’ve
ever had the flu, it’s not the virus but really the body’s immune response
to the virus and the mini-cytokine storm that ensues that causes the fever,
chills, body aches, extreme fatigue and the feeling of being extremely ill.
In severe sepsis, this process is greatly magnified to where these cytokines
actually cause direct toxic injury to the body, leading to organ failure and
death. In sepsis due to both gram positive and gram negative bacteria, this
process is very clear and widely accepted. In viral infections, such as
those caused by the SARS virus or virulent strains of influenza such as
avian flu or swine flu, cytokine storm has been implicated as a major
contributor of complications that can lead to death. Cytokine storm can also
cause the immune system to become dysfunctional, preventing the body from
being able to fight infection at the worse possible time.
The reduction of cytokine storm has been the
holy grail of the medical industry for the past three decades. Though many
have tried, most have been unable to reduce more than a single cytokine or
inflammatory mediatory or impact more than one part of the sepsis cascade.
As such, most of these therapies have failed. There is so much redundancy in
the immune system during severe sepsis that the removal of just one cytokine
has little effect because 10 others quickly take its place. As evidence of
this, there are currently no FDA approved treatments to specifically reduce
cytokine storm. What is needed is a broad spectrum removal approach that can
eliminate large amounts of many different cytokines simultaneously. At
MedaSorb, we believe we have developed such a solution. We are pioneers in
the rapid and broad removal of cytokines from blood. CytoSorb™ is a highly
porous resin that acts as a state-of-the-art cytokine filter designed to
reduce cytokine storm in severe sepsis. We are currently running, to our
knowledge, the largest randomized, controlled trial of its kind for broad
cytokine reduction. It is an up to 100-patient study in Europe involving
patients with severe sepsis in the setting of respiratory failure. We treat
patients very simply. Using standard hospital dialysis equipment, blood is
pumped though a CytoSorb™ cartridge where the resin binds and removes
cytokines and other toxins related to sepsis, and the purified blood is then
put back into the body. We treat patients for 6 hours a day for 7 days, each
day with a new device.”
CEOCFO: So,
a single CytoSorb™ cartridge is only used once?
Dr. Chan:
“Yes and this is the basis of our strong business model. A typical patient
in our trial uses seven CytoSorb™ cartridges. A similar hemoperfusion
charcoal cartridge used for drug detoxification, but that cannot efficiently
remove cytokines, is currently sold for $500 per device. At this price
point, CytoSorb™ has exceptional profit margins with a course of treatment
costing $3,500. This is very affordable for hospitals, especially since a
sepsis patient costs the hospital more than $3,000 for each day they stay in
the intensive care unit. If CytoSorb™ can speed recovery and get a patient
out of the intensive care unit just one day faster, it could pay for itself.
In addition to being a high profit margin disposable, CytoSorb™ is
compatible with standard hemodialysis equipment found in any major hospital.
This is very important in this cost conscious environment, since hospitals
don’t need to purchase any additional equipment to use our device. Also, the
device can easily be run by a technician familiar with dialysis, so no
significant training is needed. CytoSorb™ is very much a plug and play
device and is a high margin ‘razorblade’ that can drive usage of other
companies’ ‘razor’ dialysis machines. We think that a number strategic
partners will see the potential of our CytoSorb™ cytokine filter.”
CEOCFO: How
is severe sepsis currently being treated?
Dr. Chan:
“Severe sepsis remains a major, unmet medical need. Currently, patients with
severe sepsis are treated predominately with standard of care therapy that
includes antibiotics, fluid resuscitation, and nutritional and metabolic
support. When necessary, other interventions like mechanical ventilation,
dialysis and vasopressors are used. Though this is considered the best care
available, the mortality of severe sepsis is still roughly 30-35%. The only
FDA approved product to treat sepsis is called Xigris®. This is a good drug
manufactured by Eli Lilly and Company (NYSE: LLY), but has not been widely
embraced by the physician community due to high cost, controversy about
efficacy and when to use it as well as potentially dangerous side effects.
In a multi-billion dollar market, it had less than $200 million in annual
worldwide sales in 2008. We hope to demonstrate that CytoSorb™ plus standard
of care therapy is better than standard of care therapy alone.”
CEOCFO:
Would you tell us about your clinical trial that is being conducted in
Europe?
Dr. Chan:
“We are currently running an up to 100 patient, randomized, controlled human
trial in Europe to treat patients with severe sepsis in the setting of
respiratory failure. We have recruited 28 patients from 4 clinical sites to
date and expect recruitment to accelerate now that we have a total of 12
sites. The primary endpoint of the trial is cytokine reduction. However, the
secondary and tertiary endpoints include all of the things that both
regulatory agencies like the FDA and clinicians are interested in, including
28-day and 60-day all-cause mortality, ventilator-free days, organ failure
scores, hemodynamic stability, vasopressor use and others. We plan to finish
this trial by the end of 2009 and to have data to support both strategic
partnership and investor discussions. We also plan to obtain CE Mark
approval in Europe in the first half of 2010 and begin commercializing and
selling our device in Europe in 2010 as well.”
CEOCFO:
What about the safety of your device?
Dr. Chan:
“Similar to antibiotics, the treatment for severe sepsis with our device is
also considered short term, approximately 7 days of treatment. Because of
this, short-term, rather than chronic, safety is the main issue. CytoSorb™
has passed strict FDA and medical device standards for safety and quality.
For example, CytoSorb™ passed strict ISO 10993 biocompatibility standards
used to evaluate 30-day implantable medical devices. These tests
demonstrated that CytoSorb™ was safe on blood and blood cells and did not
cause any acute or systemic toxicity in animals. In addition, the effluent
of the CytoSorb™ device also passed USP particulate standards for large
parenteral injections. We have also tested our device in humans in roughly
460 treatments, more than 100 of which have been in sepsis patients, and
there have been no severe device related adverse events. The treatment has
also been well-tolerated by patients. We don’t expect there to be any long
term negative effects of treatment with our device. On the contrary, we
expect there to be improved long-term outcome in patients by preventing some
of the horrible sequelae that happen because of severe sepsis.”
CEOCFO: How
do you get the medical community’s attention?
Dr. Chan:
“As I mentioned earlier, severe sepsis kills one in every three patients
despite the best medical care. As a physician, this is a horrible statistic,
yet it’s even worse when a patient is dying in front of your eyes and you
can’t do anything about it. Sepsis is such an important and costly medical
problem that if we can demonstrate that CytoSorb™ can save lives, our
therapy and company will become widely known amongst not only potential
investors and strategic partners, but more importantly by the physicians who
will use it. We have a distinguished Critical Care Advisory Board that
includes some of the top thought leaders in critical care medicine and blood
purification who can speak about our technology. We also plan to publish our
results and present at major annual conferences such as the International
Sepsis Forum and the Congress of the Society of Critical Care Medicine.
These activities will supplement interest by the popular press as well as
our own PR activities.”
CEOCFO:
Cytosorb™ can potentially revolutionize and really impact a major problem!
Dr. Chan: “Although we are waiting for
the results of our trial, we firmly believe it can. MedaSorb/CytoSorbents
is a pioneer in the use of blood purification and cytokine removal to treat
severe sepsis and all of us at the company are truly passionate about our
mission to help these patients, as most of us have been touched by it
somehow. And then you hear on the news how people we don’t even know are
affected. The deaths in the current swine influenza pandemic are just one
example of how critically ill patients are dying from complications of
infection and severe sepsis and how modern medicine is still poorly equipped
to save these patients. I can’t imagine what would have happened if this
virus were more deadly. Already with normal seasonal influenza, 40,000
people die each year in the US. The story of Mariana Bridi da Costa, the
young Brazilian model who, at age 20 earlier this year, developed a severe
urinary tract infection, and had to have her hands and feet amputated before
ultimately succumbing to sepsis is another tragic example. Here, the
infection was recognized late but physicians knew what the bacteria was, and
were giving the appropriate antibiotics to treat it, but had no way to treat
the cytokine storm that contributed to her death. CytoSorb™, as an efficient
cytokine filter, could fill this gap and represents, what we believe, a
truly novel ‘game-changing’ advance in the treatment of sepsis.”
CEOCFO:
What is the commercialization plan?
Dr. Chan:
“We plan to complete this trial by the end of 2009, obtain CE Mark approval
and begin commercializing the device by 2010 in Europe through independent
distributors with a particular focus on Germany where our trial is taking
place. Germany is the largest medical device market in the European Union
and third in the world. We are currently looking for a strategic partner to
license CytoSorb™ for the sepsis application and to help market and
distribute the device throughout Europe through their sales force and
distribution channels, providing a more rapid revenue ramp.
CEOCFO:
What is the financial picture like for MedaSorb?
Dr. Chan:
“We ended the first quarter of 2009 with $2.15 million in cash and are
looking at creative ways to supplement our current cash position. We want to
ensure that we have enough resources to comfortably finish our trial and
have time to raise additional capital and sign a strategic partner based on
what we hope will be encouraging results.”
CEOCFO:
What about potential reimbursement, ease of use, training needed and all
those little pieces that make CytoSorb™ viable for doctors to utilize?
Dr. Chan:
“We are running our trial in Germany. In terms of reimbursement, the
hospital system in Germany works on a fixed DRG or ‘diagnosis related group’
payment system, similar to the United States. For a given in-patient
diagnosis, hospitals receive a fixed payment. If patients stay longer than
expected, hospitals bear the cost. If patients get better more quickly, the
hospital earns a profit on those patients. Sepsis is one of those illnesses
that hospitals routinely lose money on because the treatment is so expensive
and the outcome is so variable. We believe if we can get patients off of the
ventilator sooner, out of the intensive care unit faster or otherwise get
patients better more quickly, hospitals will embrace our technology.
In terms of ease of use, our trial sites have
mentioned that CytoSorb™ is much easier to use than dialysis, the most
widely used blood purification technology. Very little training is necessary
since it uses standard dialysis equipment and a technician can easily run
the treatment. We call it ‘plug and play’. Yet CytoSorb™ is state-of-the-art
technology. It is extremely efficient at removing cytokines and has massive
capacity. For example, in comparison with a standard hemodialyzer that has
the surface area of roughly two to three square meters, or about the size of
your kitchen table, on which to bind cytokines, a single CytoSorb™ cartridge
has the surface area of seven football fields. This is one of our major
competitive advantages and is a major reason why we have the potential to
impact cytokine storm when others cannot. Another major advantage is that
whole blood can be treated with our hemocompatible resin directly, while
other technologies need to separate blood first. This makes treatment
elegantly simple. CytoSorb™ also has great logistics. Because it contains no
biologics, cells or antibodies, it can be stored at room temperature on a
shelf until needed. We currently have three years of shelf-life stability.
This, by the way, adds to the profitability of our device. One of the
reasons that antibodies or cell-based therapies are so expensive is that
they degrade and expire and then have to be remanufactured. We don’t have
that problem. We manufacture CytoSorb™ at our manufacturing facilities in
New Jersey under strict, highly reproducible and well-documented standards.”
CEOCFO: In
closing, address potential investors; what makes MedaSorb stand out?
Dr. Chan:
“First, our CytoSorb™ approach is based on excellent science, the reduction
of cytokine storm, widely accepted as the root cause of organ failure and
often death in sepsis. No therapies have been approved to specifically treat
cytokine storm because previous technologies have been inadequate. MedaSorb/CytoSorbents
is a pioneer in cytokine removal from blood and CytoSorb™ represents a
superior solution that has the potential to finally impact cytokine storm.
We have strong, peer-reviewed, published, pre-clinical data that
demonstrates this approach works to improve survival in animals. The
technology is broadly patented with 26 issued patents and multiple
applications pending. And the technology and manufacturing process has been
the beneficiary of approximately $65 million in invested capital. Secondly,
we address an estimated $6 to 8 billion dollar market in the US and Europe
alone. This is an underserved market with relatively few competitors
compared to other medical fields. Even a small commercial success could
result in a great investment. Third, as a critical care therapy that treats
a costly, major unmet medical need, CytoSorb™ has the ability to command
premium pricing. Coupled with our low manufacturing cost, and the fact that
we are a plug and play, high margin ‘razorblade’ disposable that works in
others’ ‘razors’, we have an extremely profitable business model. Fourth, we
believe there is strong overall near and long-term potential for investors
based on a number of targeted milestones. The first is the successful
completion of our European sepsis trial, anticipated by the end of 2009,
which could be an inflection point for our business. The second is our
efforts in business development. We believe we have a compelling technology
and business model that are valuable to a number of companies, many of whom
we have been and are currently talking to. Historically in the medical
device and pharmaceutical industries, the value of a strategic partner has
been to provide credibility and third-party validation of the technology,
provide capital to offset financial needs, provide co-development funding to
carry out clinical studies, and to drive sales through their established
sales and distribution channels. Another milestone would be CE Mark approval
and initial European commercial sales of CytoSorb™ that is anticipated in
2010. This would transform the company from a pre-revenue development-stage
company to a commercial revenue-stage company with a significantly different
risk profile. We also plan to leverage our FDA Investigational Device
Exemption protocol approval obtained in 2007 to run a larger pivotal trial
in the US. We hope to start such a study in late 2010. Next, CytoSorb™ is
based on a broad polymer platform technology and is only one of a number of
different resins that we have developed for a variety of clinical
applications. We actually have a number of proof-of-concept studies for many
of these applications that we are actively looking to out-license to
potential partners. This represents a potential near-term revenue stream for
MedaSorb. Also, our technology has a potential role in both military and
homeland security applications, something that we are actively pursuing.
Finally, we believe we have a strong story that will hopefully continue to
get even better. As such, we will continue to work to create greater
awareness of our company and its prospects in the investment community – an
initiative that should benefit all shareholders. Our goal is to build a
successful, highly profitable and lasting business that can help save the
lives of many people across the world with sepsis.”
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