NDF Research provides independent research coverage of ASX-listed Life Science companies, Part 3 of their report on Orthocell is provided below:
Tissue repair often just needs a decent scaffold, like Orthocell’s. Scaffolds are a vital part of the stem cell and tissue engineering field today. As we’ve seen with Ortho-ACI® above, generally if one wants to grow new tissue at the site of a wound or tissue defect, it’s not sufficient to lay down new cells at the site. These cells often need to be scaffolded with a device that can mimic the natural three-dimensional environment in which those cells would ordinarily grow, with the scaffold eventually being replaced by the extracellular matrix. The last fifteen years has seen a lot of development activity around new scaffolds. Orthocell argues that it has one of the best, with a collagen scaffold that can encourage natural tissue regeneration with or without the use of stem cell implants.
CelGro® has an ideal structure to promote rapid cell proliferation at the site of tissue repair. Around 2008 or 2009 Professor Ming-Hao Zheng, experimenting with the collagen-based scaffold that he had earlier developed for Ortho-ACI®, came up with one that he argued had the ideal properties of a scaffold. CelGro® is simply a bio- derived collagen membrane comprised predominantly of type I collagen. Type I collagen is the type most commonly used in medicine, being the most abundant collagen type in higher-order organisms. It is a fibrillar collagen with high tensile strength and is a key component of tendons, skin, ligaments, fascia, bones and cornea. Zheng and his collaborators were able to harness type I to a membrane manufacturing process he developed, and that was later trademarked, called SMRTTM. As a result of this proprietary process, which Orthocell performs at its quality-controlled GMP facility in Perth, CelGro® scaffolds retain the natural collagen structure from the source material. The scaffold has one rough and one smooth surface. The rough surface enhances cell attachment and infiltration, while the smooth side repels fibrous adhesions that would form damaging scar tissue. CelGro® is arguably one of the best tissue repair scaffolds yet invented. The structure of the scaffold gives it mechanical strength and pliability as well as the right porosity so that cells infiltrating the scaffold can feel at home. The high purity of the collagen, the fact that collagen is a biocompatible (and bioresorbable) natural product, and the fact that CelGro® comes without cross-linking or chemical additives, all help avoid the problems that can come with synthetic scaffolds such as toxicity and cell incompatibility. Orthocell was able to make CelGro® under GMP by about 2012.
The clinical evidence so far for CelGro® has been encouraging. As with Ortho-ATI®, Orthocell has tested CelGro® clinically in multiple indications over the last three years. The evidence suggests that CelGro® can work in both soft tissue repair as well as bone regeneration:
- In November 2015, Orthocell reported favourable results for the first two patients in a study evaluating the use of CelGro® as a barrier membrane in dental implant procedure called ‘guided bone regeneration’.
- In June 2016, the company announced that CelGro®, was safe and tolerable, as a tool for the surgical repair of rotator cuff tears in three study patients.
- In February 2017 Orthocell reported similar safety and tolerability from three patients in a study of CelGro® to promote regeneration in severed peripheral nerves while in January 2018 Orthocell reported that the positive safety and tolerability profile had extended to ten patients.
There is plenty of data to come. There are currently four clinical studies of CelGro® ongoing which are expected to read out data over the next couple of years:
- Guided dental bone regeneration. The study designed to show that CelGro® is a good barrier membrane will recruit 30 patients in all. It gained ethics approval in March 2015.
- Rotator cuff surgery. Another 30-patient study is designed to show that CelGro® can speed the rate of surgical rotator cuff repair, thereby lowering the re-tear rate. The study was unveiled in December 2015.
- Osteochondral defects in the hip. ‘Microfracture’ is a common treatment for chondral defects in various joints including the hip. It involves making holes in the underlying bone, which brings a new blood supply to the surface, carrying with it marrow progenitor or stem cells that can repair the chondral defect. A 25- patient study, announced in May 2016, will see CelGro® used as the scaffold for the microfractures. This approach has proven safe and tolerable for the first three patients
- Nerve regeneration. The 20-patient study evaluating CelGro® in the repair of severed peripheral nerves of the hand and upper limb was announced in October 2016.
Orthocell has achieved its first approval for CelGro®. On 9 November 2017 the company announced regulatory approval (CE Mark) for the marketing and distribution of CelGro® in various dental bone and soft tissue regeneration procedures in the EU. This is the first product of a diverse suite of collagen medical devices to be commercialised from Orthocell’s CelGro® platform.
The CE Mark also validates the potential of the entire technology platform by endorsing CelGro®’s clinical performance and quality manufacturing, which will ultimately enable new applications, including:
- neurological: peripheral nerve repair;
- orthopaedic: tendon, ligaments, cartilage and bone; and
- other: general surgery (including hernia repair) and urogynecology.
For the 510(k) filing, Orthocell is using data from its guided bone regeneration and tendon repair studies and will use various existing scaffolds for its predicate device.
Why Orthocell believes CelGro® can be better than the alternatives. CelGro® will not be the only scaffold on the market when it gains approval. Indeed, there are multiple scaffolds already on the market:
- Bio-Gide, from a Swiss company called Geistlich Pharma and BioMend Extend, from the US medical devices company Zimmer Biomet, are dental barrier membranes;
- TissueMend, from Stryker and GraftJacket from Wright Medical are routinely used in tendon repair;
- AxoGuard, from a US biotech company called Axogen, and Neuroflex from Stryker are nerve repair scaffolds.
Orthocell believes that CelGro® is superior to these products. As we noted above, it can retain the natural collagen structure from the source material but doesn’t have the associated baggage of lipids, DNA and other non-collagen components. Moreover, it has mechanical strength without the need for cross-linking that can reduce pore size and thereby impede cell infiltration into the scaffold. Given that many large and emerging orthopaedic device companies have approved scaffolds, we see potential for CelGro® to gain licensing interest from other major medical device companies looking to enter this space.
The early indications – multiple opportunities for this versatile platform. Obviously, there are multiple indications that Orthocell can pursue with CelGro® once it gains approval. We see five in particular:
- Dental implants. A big problem in dental implants is that once a tooth disappears from gums, the bone that formerly anchored that tooth in place disappears over the next few months. When the dentist then puts an implant in place, he needs to place a bone graft substitute at the site of the implant to regenerate that bone. Trouble is, non-bone tissue will invade the area as well, hence the need for a barrier membrane. If Orthocell can show that CelGro® is a superior barrier membrane, the commercial upside is significant – more than 500,000 dental implant procedures are carried out every year in the US.
- Rotator cuff repair. We noted above the massive market opportunity for this indication.
- Pelvic organ prolapse. In this female health condition, the organs inside the pelvis protrude into the vaginal wall. Prolapse is treated via a pelvic floor reconstruction where scaffolds would be ideal to speed up healing. Possibly 6% of women over the age of 40 have experienced prolapse.
- Bone regeneration. In America, there are estimated to be >500,000 fractures p.a. where union of the bone is delayed or where there is no union.
- Nerve regeneration. Annual US incidence of nerve injury is around 1.4 million, of which 0.9 million will require surgical intervention.
- ACL replacement. Anterior Cruciate Ligament injury is a common orthopaedic problem with annual US incidence of >20,000 cases.
Six trends that can make CelGro® a significant commercial success. We believe that six factors that are becoming significant in modern medicine can help to grow the market for CelGro®:
- The rise of stem cells. Since the first embryonic stem cells were isolated in 1998 there has been a significant amount of academic and applied clinical research devoted to identifying stem cells of all kinds, including autologous and allogeneic adult stem cells and, more recently, induced pluripotent stem cells, that are capable of either differentiating into specific tissue types or producing growth factors that could facilitate tissue regeneration. As this work translates into approved therapies – and companies like Mesoblast and TiGenix are now close to the market with their leading products – interest will grow in scaffolds that can place those stem cells at the required regeneration sites for optimal treatment outcomes.
- The rise of growth factors. While more and more stem cells are being identified and characterised, the individual growth factors many of these cells produce are being isolated and harnessed for clinical use. An early example was bone morphogenic protein, a product commonly used for the last 15 years in an orthopaedic procedure called spinal fusion. As with stem cells, growth factor products are likely to be employed alongside scaffolds.
- The push towards allogeneic therapies. We noted previously that, as a general rule, autologous therapy means ‘higher cost’ and allogeneic therapy ‘lower cost’. Given the cost pressures in First World healthcare systems we think the economics of regenerative medicine will converge on scaffold-type therapies that can be delivered ‘off-the-shelf’ and draw the endogenous stem cells and growth factors to the site of tissue repair.
- The interest of orthopaedic device companies at moving into biologicals. The orthopaedic devices sector is dominated by around a dozen large, mostly US companies, including Medtronic, Stryker and Zimmer Biomet. In recent years the orthopaedic majors have become very interested in developing or acquiring ‘orthobiologic’ products that would improve patient outcomes, as well as help them grow faster in an environment where there is less emphasis, and therefore less growth, in new ‘hardware’. Platelet-Rich Plasma is an example of this trend, as is hyaluronic acid.
- Greater understanding of what works in bioscaffolds. It’s fair to say that understanding of the in vivo microenvironment that would allow optimal tissue regeneration is still sketchy. As the science builds up around issues such as biomaterial-host interaction, the role of the immune system in tissue repair, and the mechanisms of stem cell recruitment, growth, and differentiation, we expect that better kinds of scaffolds with, say, a tunable pore size will be developed.
- Greater interest in natural product implants. For a long time, the orthopaedics companies used synthetic materials in various implantable devices. There is now greater interest in natural products, where the material is biodegradable, in the expectation that these materials would better promote natural healing as against man-made polymers. Collagen is a natural beneficiary of this trend given its important role in tissue structure throughout the body, and the ease with which medical-grade collagen can be sought.
Nerve repair is a >US$500m market for Orthocell. A HCUP search suggested that in the US around 200,000 peripheral nerve repairs are performed annually. Assume a similar rate of nerve procedures per head of population across Orthocell’s target markets, and further assume that only 50% of those procedures are successful, allowing Orthocell to address the other 50% with CelGro®. At US$1,500 per procedure for CelGro®, this suggests a market opportunity of >US$500m.
Dental implants are a >US$600m market for Orthocell. We noted above the estimate of 500,000 new dental implants in the US every year. The American Academy of Implant Dentistry doesn’t release annual figures but assume that 500,000 is a reasonable estimate. Assume a similar rate of implants per head of population across Orthocell’s target markets. At US$400 per procedure for CelGro®, this suggests a market opportunity of >US$600m.
Orthocell is growing its pipeline of regenerative medicine opportunities
In addition to developing Ortho-ATI® and CelGro®, Orthocell has also seeded two other intriguing early-stage opportunities:
- ‘Lab‐Grown Tendons’. In November 2014 Orthocell announced that it had been part of a collaboration in which human tendons had been grown in a bioreactor100 without the need for scaffolds. Orthocell has filed for patent protection over this work. This opens up the potential for a future allogeneic tendon repair product. A grant worth A$430,000 was received in July 2015. Lab-Grown Tendons could potentially be a new treatment solution for many tendinopathies.
- ‘Cell Factories’ ‐ Orthocell’s move into the allogeneic space. Led by Orthocell director Lars Lidgren, who is Professor Emeritus in the Department of Orthopaedics at Lund University in Sweden, Orthocell has built a solid body of knowledge that tissue-specific growth factors from cultured cells can work as off-the-shelf therapies for tissue repair. The company, along with a network of academic collaborators, showed in vitro in July 2015 that such growth factors would work in cartilage repair while in April 2016 came in vivo evidence that the product would also work in bone repair (although the scaffold used wasn’t CelGro® but a gelatin-based scaffold104). In October 2016 the Cell Factory researchers generated further in vitro evidence of bone repair, this time with muscle as the scaffold.
Obviously both projects are early stage. However, we think that the novelty of both will find commercial appeal given the large market opportunities and, in the case of Cell Factories, the opportunity to be able to sell product ‘off the shelf’.
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