bioshares buy recommendation

Bioshares recommendation: Speculative Buy Class A (04/05/12)

Tissue Therapies – Approval & Product Launch Approaching

A pivotal time in Tissue Therapies’ commercial development is approaching. The company is awaiting European CE Mark approval, with a decision expected by the end of
May. If approved, the company will launch the product in Europe at the end of June, in the UK and Germany.

Not only are the launch countries in Europe the same as for Pharmaxis with its cystic fibrosis treatment Bronchitol, but the two companies are also using contracted sales and
distribution parties to sell their products into continental Europe, rather than going through distributors or licensing to a major partner.

Tissue Therapies’ VitroGro wound healing product is made by two manufacturers in Belgium. It currently has 120 pallets of the product stored in a warehouse in Europe. It’s likely the product will sell for around €100 for one treatment. This equates to about half the price of existing animal based products.

Tissue Therapies will start selling its products into the specialist wound clinics. In the UK these are Primary Care Trusts, with 70 major PCTs being the initial target in the UK. The VitroGro product is very easy to apply, being a small clear liquid that is placed on the wound. The results have been very consistent, according to CEO Steven Mercer, even in end-stage patients.

In the company’s major clinical trial which will support the company’s regulatory approval application in Europe, 44 patients with chronic wounds were enrolled. These
patients had not responded to current standard of care therapy for three years. After treatment with VitroGro for 10 weeks (one treatment per week mostly), a remarkable 82%
of patients showed partial or complete healing.

Tissue Therapies believes it has a complete commercial package. At a recent wound care conference there was very strong interest in the product from key opinion leaders according to Mercer. That the product is approaching commercial reality appears to be driving this interest, together with the excellent clinical data. Mercer said the company has strong clinical data, strong scientific data to support the product and strong health economic data, which has not been previously required for existing wound care products.

The company will maintain an on-line patient registry on its new multi-lingual website and this data will contribute to its health economic data package, important for negotiating reimbursement. Once the company receives CE Mark Approval it will start the reimbursement process.

At the end of March Tissue Therapies had $8 million in funds. The company expects this will be sufficient to commercialise its product. These funds may be used to start a trial in the US on venous ulcers, although this will likely start once European approval is received. That trial is expected to take 18 months to complete. The company will start a second trial in the US in patients with diabetic ulcers, however this trial, and any other subsequent trials
or commercial launches will be funded from European VitroGro revenue.

Tissue Therapies listed on the ASX in 2004. Like may biotechs, its been a long road to commercialsiation endpoints, with delays along the way. However, as with an increasing number biotechs in Australia, Tissue Therapies is on the cusp of commercial success. Tissue Therapies is capitalized at $95 million.