Human Tissue Engineered Products – Today's Markets and Future ...

Human Tissue Engineered Products –Today's Markets and Future ProspectsAnnex of the Final Report for Work Package 1:Analysis of the actual market situation � Mapping of industry andproducts

Dr. Bärbel HüsingDr. Bernhard BührlenDr. Sibylle Gaisser

Fraunhofer Institute for Systems and Innovation ResearchKarlsruhe, Germany

April 28, 2003

I

List of contents................................................................................................Page

List of tables ............................................................................................................... i

Experts interviewed..................................................................................................1

Description of selected European tissue engineering companies .........................3

A1. BioTissue Technologies .....................................................................................4

A1.1 Company overview...........................................................................4

A1.2 Product portfolio...............................................................................5

A1.3 R&D activities ..................................................................................8

A1.4 Financial summary..........................................................................11

A2. CellTec GmbH .................................................................................................12

A2.1 Company overview.........................................................................12

A2.2 Product portfolio.............................................................................13

A2.3 R&D activities ................................................................................13


A3. co.don AG 14



A3.3 R&D activities ................................................................................16


II

.......................................................................................................................Page

A4. Fidia Advanced Biopolymers..........................................................................17



A4.3 R&D activities ................................................................................19


A5. Genzyme Biosurgery .......................................................................................20



A5.3 R&D activities ................................................................................23


A6. Interface Biotech A/S ......................................................................................25



A6.3 R&D activities ................................................................................26


A7. IsoTis SA 28



A7.3 R&D activities ................................................................................34


III

.......................................................................................................................Page

A8. Karocell Tissue Engineering AB ....................................................................37



A8.3 R&D activities ................................................................................38


A9. Smith & Nephew..............................................................................................39



A9.3 R&D activities ................................................................................42


A10. Tetec Tissue Engineering Technologies AG...............................45



A10.3 R&D activities ................................................................................46


A11. Verigen...........................................................................................48



A11.3 R&D activities ................................................................................50


IV

.......................................................................................................................Page

A12. Vitrolife..........................................................................................52



A12.3 R&D activities ................................................................................53


A13. XCELLentis ..................................................................................54



A13.3 R&D activities ................................................................................56


i

List of tables .................................................................................................... Page

Table A1.1: BioTissue Technologies' product portfolio .................................5

Table A1.2: Financial results of BioTissue Technologies 1999-2001 ..........11

Table A3.1: co.don®'s product portfolio.......................................................15

Table A3.2 Financial results of co.don® AG, 2000-2002 ...........................16

Table A5.1: Financial results of Genzyme Biosurgery 2002-2001...............24

Table A7.1: IsoTis SA's product and development portfolio beforeand after the restructuring of ModexTherapeutics/IsoTis NV ............................................................31

Table A7.2: Sales of Isotis S.A. 2001 and 2002 (k�) ....................................32

Table A7.3: Financial results of IsoTis, 2002 and 2001................................35

Table A9.1: Sales of Smith & Nephew 2001 and 2002 ................................43

Experts interviewed

Prof. Dr. Clemens van Blitterswijkfounder of IsoTis and until recently its chief executive officerIsoTis SAPO Box 983720 AB Bilthoven, The Netherlands

Frédéric ChereauDirector Cardiovascular Biotechnology - EuropeGenzyme BiosurgeryGenzyme Europe BVTour Franklin100, Terrasse BoieldieuLa Defense 892042 Paris La Defense Cedex, France

Prof. Dr. Karl Gerd FritschFounder and CEOco.don AG | Biopharmazie + Biotechnologie + Tissue Engi-neeringWarthestr. 2114513 Teltow, Germany

Dr. Andreas ImmendörferEuroderm GmbH (formerly Modex Therapeutics GmbH)Weißenfelser Straße 6704229 Leipzig, Germany

Dr. Veronika KunertVerigen Transplantation Service International (VTSI) Aktien-gesellschaftHead Medicine and ScienceHemmelrather Weg 20151377 Leverkusen, Germany

Dr. Berthold NiesChief executive officerBiomet Merck Biomaterials GmbHDarmstadt, Germany

Kristine de RaafRegulatory affairs and operationsIsoTis SAPO Box 983720 AB Bilthoven, The Netherlands

2

Marco RadiceGenzyme BiosurgeryItalian OfficeVia Scaglia Est., 144I-41100 Modena, Italy

Prof. Rui L. Reis, MSc., PhD, CEngAsst. Professor of Mat. Sci. Eng. & BiomaterialsDirector of the 3B�s Research Group - Biomaterials, Biode-gradables and BiomimeticsDept. of Polymer EngineeringUniversity of MinhoCampus de Gualtar4710-057 Braga, Portugal

Eliane SchutteVice president regulatory affairs and operationsIsoTis SAPO Box 983720 AB Bilthoven, The Netherlands

Dr. Harald StallforthHead Research and DevelopmentAesculap AG & Co. KGTuttlingen, Germany

Dr. Erik TambuyzerGenzyme Corporate Affairs EuropeGenzyme EuropeIkaroslaan 331930 Zaventem, Belgium

Eszter Tánczos, M.D.Co-founder and Chief Scientific OfficerBioTissue Technologies AGEngesserstrasse 4a / 4b79108 Freiburg, Germany

Heidi de WitGenzyme Corporate Affairs EuropeGenzyme EuropeIkaroslaan 331930 Zaventem, Belgium

3

Description of selected European tissue engineering companies

In this annex European companies with tissue engineering products on the marketare described in more detail (e.g. size, turnover, product portfolio).

4

A1. BioTissue Technologies

BioTissue Technologie AGEngesserstraße 4a / 4b79108 FreiburgGermanyTel. +49 (0) 7 61 76 76-0Fax +49 (0) 7 61 76 76-180E-mail [email protected]://www.biotissue-tec.com

A1.1 Company overview

BioTissue Technologies AG, Freiburg, was founded in 1997 as a spin-off from theFreiburg University Teaching Hospital. The company pursues the goal to commer-cialise research findings in the field of tissue engineering by growing human tissuefrom autologous cells under Good Manufacturing Practice (GMP) conditions. InSeptember 1999, BioTissue is awarded permission to manufacture medicines underthe German Medications Act so that it could start production. Since December2000, BioTissue Technologies AG has been listed on the Neuer Markt segment ofthe Frankfurt Stock Exchange (SIN 618061). The BioTissue Group currently em-ploys 79 staff (status September 2002). Since 2001, BioTissue is the sole owner ofTransTissue Technologies GmbH, Berlin, the research subsidiary of BioTissueTechnologies AG which has close links with the Charité Medical Faculty of theHumboldt University in Berlin.

Patents

BioTissue owns several patents that protect the key technologies and the manufac-ture of autologous tissue transplants. These patents cover the German, European,US and, in part, the global markets.

Cooperations

BioTissue cooperates with two research groups which have accumulated experienceand know-how in the field of tissue engineering over a decade of intensive researcheffort. These research groups are at the Freiburg University Teaching Hospital andat the Charité in Berlin. Since June 2001 BioTissue cooperates with Cell-LiningGesellschaft für Zellkultivierung mbH, a Berlin-based biotech company specializ-ing in developing autologous vascular prostheses. The objective of the cooperation

5

is to achieve market maturity for the vessel protheses coated with autologous cellswhich have been developed by Cell-Lining. In August 2002, BioTissue Technolo-gies AG acquired a participation by taking a majority, 51-percent stake Cell-Lining.In April 2001, a distribution agreement with US company Baxter International Inc.was signed for BioSeed®-S. This cooperation agreement grants Baxter exclusiverights to sell BioSeed®-S worldwide while the product continues to be manufac-tured by BioTissue.

A1.2 Product portfolio

BioTissue currently has five autologous tissue engineering products in clinical useand on the market which can be used to treat skin, oral mucosa, bone and cartilagedefects.

Table A1.1: BioTissue Technologies' product portfolio

Product name Description Sector Clinicaluse since

On the market in coun-try

BioSeed®-S Autologous Kerati-nocyte Graft

Dermatology,Wound heal-ing

9/1999 Germany, Austria, theNetherlands, Switzerland

MelanoSeed Autologous Mela-nocyte Graft

Dermatology,Wound heal-ing

8/2000 Germany, the Nether-lands

BioSeed®-M Autologous OralMucosa Graft

Dentistry, Oralsurgery

5/2001 Germany

BioSeed®-Oral Bone

Autologous Jaw-bone Graft

Dentistry, Oralsurgery

11/2001 Germany

BioSeed®-C Autologous 3DChondrocyte Graft

Orthopedics,Surgery

12/2001 Germany, internationalmarket introductionplanned for 2003

Product principle

BioTissue follows a uniform product principle in producing its autologous (patient'sown) tissue replacement products. With the aid of tissue engineering, specific celltypes, such as skin, oral mucosa, bone or cartilage cells, are taken from the patientas a tissue specimen (biopsy), then cultured in BioTissue's GMP (Good Manufac-turing Practice)-certified laboratory in Freiburg. Once the required quantity ofnewly cultured cells is reached, the cells are combined with a biomatrix that is spe-cific to the cell type and resorbable (i. e. biodegradable) and then the cells are trans-planted into the existing defect.

6

BioTissue�s products are classified as not licensable medicinal products. As definedin the German Medicines Act (AMG, not licensable medicinal products do not re-quire marketing authorization or a product license but they are subject to a produc-tion permit being granted. In principle, this means a manufacturer is under no obli-gation to run clinical trials through the various phases required not for forced me-dicinal products. Quality control and production standards for such products areregulated by the German Medicines Act (AMG) and are monitored by the regula-tory authorities.

BioSeed®-S

BioSeed®-S is an autologous skin replacement product which is used to treatwounds of varying origin that are chronic or whose primary healing is poor, e. g. legulcers or burns. The product consists of autologous skin cells (keratinocytes) whichare grown for 2-3 weeks in the laboratory and are then suspended in a gel-like fibrinadhesive. The gel-like skin graft is applied to the patient�s wound with a syringe("skin out of a tube"), so that it is easy to handle. The fibrin adhesive fixes the cellsto the wound and allows better in-growth. The special feature of BioSeed®-S is thatthe cells are still capable of dividing, which means they continue to increase innumber after grafting and thus close up the wound. BioSeed®-S has been sold in anexclusive, worldwide joint venture with the US firm Baxter International Inc. sinceApril 2001. In order to obtain reimbursement of costs for BioSeed®-S from healthinsurers in the medium term, an international, multicenter, prospective and ran-domized clinical trial on BioSeed®-S was started in August 2001, and initial resultswere released in August 2002 after the evaluation of 62 patients with chronic, ve-nous leg ulcers who had been treated with BioSeed®-S. It is planned to expand thestudy to 240 patients who are to be treated at 27 different centers in Germany andother European countries. The final results are expected by summer 2003. The studyaims at assessing the medical data, the treatment costs, and the change in patients'quality of life. BioTissue continues to expect health insurance schemes will agree toreimburse treatment costs with BioSeed®-S as of 2004. As a bridging solution untilthe approval of statutory reimbursement, BioTissue and its distribution partnerBaxter are currently busy setting up special wound treatment centers in Germany.

MelanoSeed

MelanoSeed is an Autologous Melanocyte Graft for treating vitiligo (white patcheson the skin). Vitiligo is one of the most severe �harmless� skin conditions becauseof its disfiguring effect: melanocytes die off completely in the diseased skin sec-tions. The symptoms can be seen in the form of white, sharply delineated patches,which, depending on their size and scale, can be ugly. The prevalence of this condi-tion is estimated to be 2-4 % of the population worldwide. MelanoSeed is a newmethod for treating vitiligo. The patient's own healthy pigment cells are extracted

7

and cultivated outside the body and then transplanted onto the suitably pre-treated,depigmented areas of skin. With MelanoSeed in the majority of cases a natural andpresumably durable repigmentation of the affected sections of skin can be achieved.The application of MelanoSeed is done with a dual-chamber syringe.

Oral Mucosa BioSeed®-M

BioSeed®-M is an autologous oral mucosa replacement for the treatment of largesurface defects of the oral mucosa. These defects can occur in oral cancer surgery,in oral surgery following accidents, or prior to implant treatment in dentistry. Bio-Seed®-M supplies oral mucosa cells from the laboratory, thereby offering an alter-native to the standard surgical techniques of grafting of mucosa and palatal mucosato cover defects in the oral cavity. The doctor takes a small piece of mucosa fromthe patient's mouth and the mucosal cells are grown in the BioTissue laboratory forabout three weeks. The newly cultured oral mucosa cells together with a carrier foilare placed directly onto the wound surface in the oral cavity, where they form anatural oral mucosal structure. More than 70 patients have been treated with Bio-Seed®-M in the Clinic for Dental & Oral Surgery in Freiburg.

BioSeed®-Oral Bone

BioSeed®-Oral Bone is a three-dimensional, cultured jawbone graft for strength-ening and replacing missing upper jaw bone material. It can be used in the treatmentof tooth loss with fixed dental prostheses. These fixed replacement teeth do requirean adequate stock of jawbone into which artificial tooth roots (implants) can befirmly anchored. If bone loss has already occurred in the upper jaw, e. g. due tofaulty pressure loading when chewing, BioSeed®-Oral Bone can be used to stren-ghten the inadequate bone material, so that the implants can be firmly anchored inthe bone substance. For this purpose, autologous periosteum cells are removed fromthe patient's jaw and the cells then cultivated in autologous blood serum. The com-bination of these autologous cells and a special matrix substance enables a 3D tissueto be cultivated. The technology used is patent protected.

BioSeed®-C

BioSeed®-C is an autologous 3D chondrocyte graft for damage to the knee carti-lage. Shortly before transplantation, the cultured cells are combined with a pre-formed three-dimensional carrier fleece matrix that gives the cartilage replacementits three-dimensional form and ensures that the fresh cartilage cells are accuratelyfitted into the defect. Unlike the ACT method, the use of a pre-formed 3D-cartilagecell graft does not require a periosteal flap to be removed to cover the defect. Thissimplifies the procedure for the surgeon. Initial operations on the knee cartilagehave actually been done via arthroscopy, without surgically opening up the knee. So

8

far, traumatological damage to knee cartilage affecting the ends of the femur, de-fects at the back of the patella and cartilage defects in the ankle joint have beentreated.

BioSeed®-C started on controlled trials in selected clinics in December 2001. Firstclinical data were published in February 2003: results for 42 patients with a total of51 different cartilage defects obtained six, nine, and in some cases twelve monthsafter the operation were reported. In all cases, a lasting filling of the cartilage defectwas achieved. The operating time in joint-opening procedures could be shortenedby up to 2/3 compared with the available methods used hitherto. Moreover, 1/4 ofthe cases were treated arthroscopically (without opening of the knee). Should thefurther clinical results back up the initial results, BioTissue is confident that it maybe possible later to use BioSeed®-C to treat conditions caused by osteoarthritis. ForBioSeed®-C, the same patented technology is used as for BioSeed®-Oral Bone.BioSeed®-C is currently available throughout Germany. In 2003, in co-operationwith industrial partners, its availability is to increase to include other Europeancountries.

A1.3 R&D activities

R&D at BioTissue rests on two pillars: The work of the company's own R&D divi-sion and research alliances with academic centers of excellence, other biotechnol-ogy corporations and the research arm of the pharmaceutical industry. In particular,BioTissue has intensive cooperation with the Freiburg University Teaching Hospitaland the Charité in Berlin. The company has concluded contracts with the FreiburgUniversity Teaching Hospital concerning the utilization of R&D findings in thedepartments of plastic and hand surgery, accident surgery and mouth, jaw and facialsurgery. These exclusive first-option contracts are valid world wide, guaranteeingfirst rights to future research findings in these departments. In addition to this closecollaboration on basic research at the university level, development projects areconducted with a number of industrial partners. The majority of these projects entaildeveloping products with a strong market focus, whereby industrial partners pro-vide the financing involved. The company's own R&D activities include

• Further development of existing products. This includes product development inthe more narrow sense, quality control measures for product manufacturing un-der GMP standards, constant optimisation of existing products, and observationand documentation of the products which are already in clinical use/being mar-keted.

• Turning results and findings of joint research into products which are ready forthe market. Once work has reached a certain stage of maturity, promising poten-tial products are transferred from the cooperation partners� research institutes tothe development labs at BioTissue which comply with good manufacturing

9

practice (GMP). Simultaneously, the manufacturing process is adapted to suitlarger throughput volume and is constantly optimized. Once a manufacturing li-cense has been obtained and the authorities have granted permission to marketthe product in line with the German Act on Pharmaceuticals, new products arelaunched on the market by way of controlled trials.

• Research into new tissue replacement products.

For this purpose, the company maintains an R&D laboratory in the BioTechParkFreiburg, and through TransTissue Technologies, an additional laboratory on thepremises of Charité in Berlin. The R&D activities focus on the following areas:

• Skin. In order to develop the skin replacement product BioSeed®-S further, Bi-oTissue works on the development of new, multi-layered skin grafts. A two-layerskin graft with dermal and epidermal components is a medium-term goal, as isthe development of a "complete" skin equivalent that also contains hair folliclesand is able to replace all the functions of the original skin. Regarding the productMelanoSeed, development work is focused on continually improving the cultur-ing conditions for melanocytes and the possibility of storing the cells in a frozenstate, then thawing them out again. The objective is to enable the patient to re-ceive as many treatments as possible from a single biopsy specimen. Work isalso being done on alternative ways of obtaining the melanocytes (instead of re-moving a small piece of whole skin).

• Bone. In the bone field, R&D goals are the treatment of larger bone defects, thedevelopment of implants with living cells capable of withstanding mechanicalstress and other indications with different demands on the individual systemcomponents. In order to achieve these goals, alternative materials are constantlybeing tested, methods of cell isolation and growth are being optimized and newsystems for culturing even large bone constructs are being developed. In coop-eration with Freiburg University, a novel, injectable bone substitute for new in-dications is developed. In cooperation with the subsidiary TransTissue Tech-nologies and the Tissue Engineering working group at Berlin Charité, the use ofmesenchymal stem cells and the effect of bone morphogenic proteins (BMPs) inthe construction of bone replacement is investigated. In addition, BioSeed®-OralBone is being optimised by shortening the production time and further simplify-ing taking the tissue biopsy from the patient's point of view.

• Cartilage. BioTissue is mainly concerned with hyaline cartilage - especially inthe knee joints. In order to improve BioSeed®-C, the culture conditions for thepatient's cartilage cells are optimized in order to make tissue collection moregentle for the patient and to make the period between biopsy and transplantationshorter and easier to plan. Moreover, the gel-like fibrin matrix and the resorbablefibrous material are continually being improved and adjusted to meet the differ-ent requirements for other indications. In collaboration with first clinical users,the handling and operation techniques are optimized with the goal of minimally

10

invasive use of the products. In addition, research is underway to expand theproduct range to other types of cartilage. Three-dimensional pre-formed ear andnose cartilage for plastic surgery has already been used experimentally by Bi-oTissue's university partner in Freiburg.

• Other products. Ohter products being researched are− Osteochondral constructs with a bony and cartilage component. Osteochon-

dral constructs for the treatment and reconstruction of deep-seated joint de-fects with a bony and cartilaginous component are under development in col-laboration with Freiburg University Teaching Hospital. A two-layer graft witha solid bony part of autologous bone cells contained in a biological matrix anda second part comprising autologous cartilage cells in a biological carrier, al-ready bonded together in vitro, is under investigation.

− In-vitro model of pannus tissue. An artificial pannus tissue as a model forrheumatism research is being developed in coopertion by BioTissue, the De-partment of Rheumatology at Charité in Berlin and TransTissue Technolo-gies. The model will make it possible to simulate the interaction betweenhealthy cartilage and chronically inflamed pannus tissue in vitro and to screenthe efficacy of drugs for the treatnemt of rheumatoid arthritis or osteoarthritisquickly and efficiently.

− Reconstruction of connective tissue from mesenchymal stem cells/Gene trans-fer. This project is still at the fundamental research stage. It aims at obtainingmulti-potent cells with high proliferation potential, from which different typesof connective tissue can be reconstructed. The research is carried out mainlyat TransTissue Technologies and the Charité, Berlin.

− Vessel prosthesis coated with autologous cells. Since June 2001 BioTissuecooperates with Cell-Lining Gesellschaft für Zellkultivierung mbH, a Berlin-based biotech company, specializing in developing autologous vascular pros-theses. BioTissue intends to further advance the vessel prosthesis coated withautologous cells that Cell-Lining developed, thus creating the preconditionsfor manufacturing the prosthesis as a medical product. First clinical use of thevessel prosthesis with patients is scheduled for 2002/2003.

• Clinical Research. Observational studies are currently under way for all theproducts BioTissue has on the market. Among them is a controlled clinical trialwith BioSeed®-C, started in 12/2001. Initial results have been published for 42patients with a total of 51 different cartilage defects obtained six, nine, and insome cases twelve months after the operation were reported. Moreover, an inter-national, multicenter, prospective and randomized clinical trial on BioSeed®-S iscarried out in 27 different centers in Germany and other European countries from8/2001-6/2003. It enrols a total of 240 patients suffering from an open ulcer forat least three months, and one month�s standard treatment has brought no visibleimprovement. 120 patients are treated with BioSeed®-S and compression treat-ment; and the control group of 120 patients is treated with wound dressings

11

without any special substance and compression treatment. Endpoints are thehealing of the venous leg ulcers, treatment costs, and changes in patients' qualityof life.

A1.4 Financial summary

Table A1.2 gives an overview of the financial results of BioTissue Technologies inrecent years.

Table A1.2: Financial results of BioTissue Technologies 1999-2001

Year 2001 2000 1999€ € T€

Sales revenues 1,126,088.39 388,620.39 17Products on the market BioSeedS

MelanoSeedBioSeed-MBioSeed-OralBoneBioSeed-C

BioSeedSMelanoSeed

BioSeedS

Loss before interest andtaxes

-5,804,519.34 -3,464,618.25 - 1,161

Loss before interest, taxes,and depreciation

-4,882,735.99 - 3,030,751.53 - 1,092

Net loss for the year -3,414,817.13 - 3,385,096.48 - 1,209Earnings per share -1.19 - 1.66 ---Earnings per share(DVFA/SG)

-1.17 - 1.19 ---

Balance sheet total 20,437,975.41 23,023,264.05 1,790Shareholders� equity 15,964,705.36 18,162,560.67 - 1,093Equity-to-assets ratio 78.11% 78.89% - 61.06%Cash and cash equivalents 8,026,950.49 14.861.303,78 582Investments 4,368,950.49 3,184,458.25 806Depreciation/amortization 921,783.36 433,866.72 69Personnel expense 2,840,373.94 1,225,423.35 399Payroll 60 36 10

Essentially, in Germany, the costs of using BioTissue products are currently reim-bursed neither by statutory health insurance companies (GKV), nor by privatehealth insurance companies (PKV), nor by employer's liability insurance companies(BG). Patients must consult their relevant insurance company to find out whether, intheir particular case, complete or partial reimbursement is possible. The outcome ofthis individual procedure varies, depending on the product and health insurer in-volved.

12

A2. CellTec GmbH

CellTec GmbHFrohmestraße 11022459 HamburgGermanyTelephone +49 (0) 40-55 90 5-7 23Fax +49 (0) 40-55 90 5-3 64E-Mail [email protected] www.celltec.de


CellTec, Centre for innovative cell and gene therapy, was founded in 1997. CellTecimplements the methods of biotechnology to develop and produce cell preparationsfor new, high-quality forms of therapy. CellTec's core areas of competence are inthe fields of orthopaedy (product: ChondroTec), virology, immunology (dendriticcells) and oncology. Relevant indications are chondral lesions of the knee, cancerand HIV infections . CellTec has a current staff of about 20.

Since July 1999, CellTec holds a manufacturing permit in compliance with §13AMG (German Drug Law) to manufacture pharmaceutical products on acommercial scale. Thus, CellTec is permitted to culture chondrocytes under GMPconditions. It also offers other services in compliance with GMP standards: cellseparations for cancer treatments, and cell transduction, and vector productionservices for gene therapy studies. It has a laboratory and production unit, complyingwith GMP standards, covering an area of 250 square metres. CellTec co-operateswith institutes and hospitals conducting fundamental scientific research, such as theHeinrich-Pette-Institute, the University Hospitals of Hamburg-Eppendorf,Heidelberg and Münster as well as the GSF in Munich.

13


CellTec has one chondrocyte product on the market, ChondroTec�. ChondroTec�comprises autologous chondrocytes used in the treatment of localised articulardefects within the scope of Autologous Chondrocyte Transplantation (ACT).CellTec's services comprise:

• expansion (culturing) of chondrocytes in clean rooms,

• Comprehensive tests for sterility and vitality, for the the ability of thechondrocytes to produce a cartilage-specific matrix,

• Execution of an application observation to prove the clinical success of theACTs executed with ChondroTec�.

A2.3 R&D activities

In the field of tissue engineering, the simplification of ACT by Matrix-BoundChondrocyte Transplantation (MACT) is an ongoing research project of CellTec. Inthis method of treatment the chondrocytes are cultured on a collagen matrix prior tosurgery to later transplant chondrocytes and matrix together into the cartilagedefect.

The MACT procedure is tested in collaboration with research institutes andhospitals of repute, in order to apply it subsequently within the scope of amulticentre clinical study.


No financial data are available.

14

A3. co.don AG

co.don® molecular medicine+biotechnology+tissue engineeringWarthestr. 2114513 Teltow, GermanyTelephone: +49-3328-43 46 0Telefax: +49-3328-43 46 43E-mail: [email protected]://www.codon.de


co.don® is an independent, research-oriented, biopharmaceutical manufacturingand research firm. co.don® develops, manufactures and distributes autologous celltransplants, used to repair damaged cartilage, bone and intervertebral disks.co.don® has specialized in the application of its products in the following medicinalareas: orthopaedics, trauma, neurosurgery and cardio- and vascular surgery. It is notactive in the field of skin replacement products.

co.don® was founded in 1993. Its headquarters are located in Brandenburg, Ger-many. co.don® currently has 54 employees (status: June 30, 2001) in three subsidi-aries: its headquarters in Teltow, Brandenburg, and subsidiaries in the USA(co.don® Tissue Engineering Inc., since 2000) and in Singapore. In 2000, co.don®AG founded the co.don® surgery GmbH to distribute minimal invasive instrumentsfor use in cell transplantation procedures.

Since 1997, co.don® has a manufacturing licence according to § 13 of the GermanDrug Act (AMG) for the manufacturing of autologous cartilage and bone cell trans-plants and meets the GMP regulations (Good Manufacturing Practice). All areas ofthe company and processes are certified according to DIN EN ISO 9001. In 2000,co.don® developed and put into operation a new manufacturing plant on the basisof the Integrated Isolator Technology (IIT) for standardized and reproducible manu-facturing and quality control systems for cell-based drugs in cooperation with Nor-wig GmbH.

Patents

co.don® has several patent families that apply to cell cultivation, cell surface coat-ing, cell constructs, diagnostics, parts of the manufacturing plant and surgical in-

15

struments. Moreover co.don® has applied for trademark protection for the differentproducts.

Cooperations

Regarding its distribution strategy, co.don® co-operates with physicians in hospitalsand physicians in private practices, who were organized as �Centers of Excellence�in order to enhance quality and economic effeciency of the treatments. A �Center ofExcellence� is defined as a group of physicians in hospitals and private practicesthat join together in order to provide efficient medical support for conducting celltransplantation. co.don® is in intensive information exchange with the physicians inthe areas of development, manufacturing and distribution of cell transplants anddevelops common quality criteria. The number of reimbursed cartilage cell trans-plants could be increased continuously by this distribution strategy in the form ofcontracts with the hospitals and the health insurance companies since 1997.co.don® AG's Integrated Health Management System persues to surmount bureau-cratic impediments to classification, registration and reimbursement of cell basedtherapeutics for human medicine.


Table A3.1 gives an overview of co.don®'s product portfolio.

Table A3.1: co.don®'s product portfolio

Productname Product description Remarks

co.donchondro-transplant®

autologous cartilage cell transplant to regener-ate joint cartilage, suitable for a treatment ofautologous chondrocyte transplantation(ACT).

manufactured since 1997;transplants produced ca. 210in 2000, and 350 in 2001;reimbursement rate 46 % in2000, 75 % in 2001

co.donosteotrans-plant®

autologous bone cell transplant for AutologousOsteoblast Transplantation ("AOT"); is indi-cated in complicated fractures, tumour basedbone damages, pseudoarthroses, sarcomataand calcifications in loosening or change ofprostheses. Further indications are the recon-structive and plastic surgery, jaw bone surgeryand bonechip blocking of spine segments incase of severe degenerated disks.

manufactured since 1997

co.donchondro-transplant®

autologous disk cell transplantation for thetreatment of the prolaps of disks and the pre-vention of secondary instabilities. It is used in

co.don® is the world's firstsupplier of autologous inter-vertebral disk transplants

16

Productname Product description Remarks

DISC autologous intervertebral disk cell transplanta-tion (ADCT) which is indicated in acute, her-niated intervertebral disks

according to GMP guide-lines.

osteo-code®pro

cell-based test for early diagnosis of osteopo-rosis, indicates cellular and molecular patho-logic alterations of the tissue-generating cellsof the bone.

osteocode®pro and osteo-code®med are offered asservices for specialists inosteoporosis and to pharma-ceutical companies.

osteo-code®med

patient-specific test, which investigates theeffect of drugs against osteoporosis, allows forthe comparison of certain drugs' ability tostimulate bone cells in patients.

A3.3 R&D activities

With an internal research and development department, and an external network ofpartners, co.don® AG has the R&D objective to fashion three-dimensional tissue invitro, with and without support material, and to substitute it for damaged interverte-bral disks, cartilage, bone and muscle tissue, skin, vessels and epithelium. The strat-egy is to carry out interdisciplinary research projects by interlinking basic researchand clinical research through an application-oriented concept.


Table A3.2 gives an overview of the financial results of co.don® AG in recentyears.

Table A3.2 Financial results of co.don® AG, 2000-2002

€Q3 2002 Q3 2001 2001 2000

Revenues 564,222 1,048,834 1,358,435 772,767- Product 564,222 937,884 1,061,903 579,340- Research 0 110,950 296,532 193,427Costs and expenses 3,552,890 4,673,113 7,871,454 3,036,475- Cost of product revenues 336,047 413,725 457,450 264,839- Research and development 604,051 911,404 1,381,927 218,512- General and administrative 2,261,718 3,496,767 4,351,708 2,060,468- Marketing and sales 915,909 900,051 1,491,588 467,720- other operating expenses 188,781 24,936

17

A4. Fidia Advanced Biopolymers

Fidia Advanced Biopolymers s. r. l.Via Ponte della Fabbrica 3/a35031 Abano Terme, PadovaItalyTel. +39 049 8232 111Fax +39 049 8232 859http://www.fidiapharma.ithttp://www.fidiapharma.it/site/html/barrasup.htm


FIDIA is a pharmaceutical company founded in 1946.The Fidia Group operatesinternationally with the aim of developing and bringing to market innovative humanhealthcare products (Medicinal Products, Medical Devices and Nutraceuticals) thatare mainly based on naturally occurring hyaluronic acid and its derivatives. Fidia'sactivities are run by specialised health business divisions covering diversified corebusiness areas:

• Rheumatology/Orthopedics,

• Tissue Repair,

• Neuroscience, and

• Ophthalmology.

Moreover, Fidia has established several specialized subsidiaries:

• FIDIA Pharmaceutical Corporation (1985) in Washington, DC (U.S.A.), for theclinical and regulatory development of Fidia's products in North America, Aus-tralia and New Zealand

• FIDIA Research Sud (1987) in Siracusa, Italy, for production of fine chemicalsand enzymes by means of fermentation processes

• FIDIA Advanced Biopolymers (1992) in Brindisi (operating headquarters inAbano Terme), to develop biomaterials, based on hyaluronan derivative technol-ogy, for advanced wound care, tissue engineering, general and orthopedic sur-gery

• FIDIA Oftal (1994) in Catania, Italy, to develop and market ophthalmic products

18

The Divisions operate synergically with Fidia's subsidiaries Fidia Advanced Bio-polymers (FAB) and Fidia Oftal, and are supported by corporate facilities:

• Development Support Units

• Manufacturing and Technical Management

• Domestic Sales

• Licensing and International Sales

Fidia Advanced Biopolymers is the business unit which is most relevant for tissueengineering within Fidia. Fidia Advanced Biopolymers Srl (FAB) was founded inJuly 1992 and is a wholly owned subsidiary of the pharmaceutical company FidiaSpA. FAB develops, manufactures and markets innovative medical devices de-signed for skin repair, soft tissue repair, skeletal tissue repair and advanced surgicalspecialities. The Company's products are based on modified forms of the naturally-occurring polymer hyaluronic acid. The company is active in the following fields:

• Chemical modification of hyaluronic acid: novel interactive biodegradable mate-rials

• Processing of chemically modified hyaluronic acid: design and production ofunique configurations of hyaluronic acid.

• Tissue Engineering expertise: advanced cell-polymer constructs

• Plasma-coating technology: significant improvement of surface properties ofconventional synthetic biomaterials

FAB has attained European Registration for 18 Medical Devices designed for skinrepair, skeletal tissue repair and for the development of advanced surgical speciali-ties. Three of FAB 's products have attained FDA clearance. FAB is a ISO 9001certified company. Fidia Advanced Biopolymers Srl is the only company in Italyauthorized by the European Community for the culture and grafting of autologouscells derived from skin and from cartilage. The Company's marketing strategy in-cludes a direct marketing activity, as well as the use of distributors and licensees.


Besides surgical products, adhesion prevention products, and advanced wound careproducts, FAB has four tissue engineering products:

• HYALOGRAFT 3D� autologous dermal replacement. HYALOGRAFT 3D�is a tissue engineered dermal replacement, consisting of autologous fibroblastsseeded onto a tridimensional scaffold, composed of HYAFF®. HYAFF® is abiopolymer derived from hyaluronic acid. HYALOGRAFT 3D� is specifically

19

indicated for the treatment of deep dermal lesions: non healing ulcers (vascular,diabetic, pressure sores III/IV stage, post traumatic ulcers), deep II degree and IIIdegree burns. HYALOGRAFT 3D� has at least 48 hours of cell viability.

• LASERSKIN® autograft autologous epidermal replacement. LASERSKIN�autograft is a transparent, biodegradable membrane, consisting entirely of an es-ter of hyaluronic acid (HYAFF®), a major component of the extracellular ma-trix, with orderly arrays of laser-drilled microperforations. The microperforationsallow to transfer onto the wound bed actively proliferating, preconfluent autolo-gous keratinocytes, ready to take and to ensure a rapid re-epithelialization.LASERSKIN® has at least 48 hours of cell viability.

• TISSUEtech autograft system�: autologous skin replacement. TISSUEtechautograft system� is a two-step skin substitute made of autologous fibroblastsand keratinocytes, grown on scaffolds made of a hyaluronic acid derivative(HYAFF®). A skin biopsy is separated into dermis and epidermis, so that twoseparate cultures of keratinocytes and fibroblasts are derived. The keratinocytesare cultured on LASERSKIN, the fibroblasts are cultured on HYALOGRAFT3D�. On day 16 after the biopsy, HYALOGRAFT 3D� is grafted onto thewound bed, and one week later, the LASERSKIN® autograft is grafted onto theHYALOGRAFT 3D� neo-dermal bed.

• HYALOGRAFT� C: autologous cartilage replacement. HYALOGRAFT® C isa cartilage substitute made of autologous chondrocytes delivered on a biocom-patible tridimensional matrix, composed of HYAFF®, a derivative of hyaluronicacid. HYALOGRAFT® C is suitable for the treatment of symptomatic andasymptomatic defects of femoral chondyle, knee cap and tibial plate caused byacute or recurred injuries. HYALOGRAFT® C has at least 72 hours of cell vi-ability.

A4.3 R&D activities

FAB is the Co-ordinator of four Research Projects of the European Community inthe field of Tissue Engineering.


At the beginning of 1999 Fidia has been acquired by a consortium of shareholdersheaded by SIR Industriale s.p.a. 40.6%, Efibanca s.p.a. 28%, Fidia Finanziaria s.p.a.20%, and a minority shareholder for a total of 11.4%. No other financial data areavailable.

20

A5. Genzyme Biosurgery

Corporate HeadquartersGenzyme BiosurgeryOne Kendall SquareCambridge, MA 02139Tel: 617-252-7500Fax: 617-252-7600

European HeadquartersGenzyme BiosurgeryGooimeer 101411 DD NaardenThe NetherlandsTel: +31-35-699-1200

with European subsidies in Denmark, Finland, France, Germany, Greece and Cy-prus, Italy, Norway, Spain, Sweden, Switzerland, United Kingdom


Genzyme has three divisions, each targeting a specific area of expertise:

• Genzyme General. Genzyme General (Nasdaq: GENZ) Genzyme General devel-ops and commercializes innovative solutions for patients with genetic andchronic, debilitating diseases. It includes the following businesses: DiagnosticProducts for diagnostic manufacturers and clinical laboratories; Genetics - aworldwide service for genetic testing and counseling; Pharmaceuticals - drugdelivery materials; Therapeutics � five therapeutic products for the treatment ofgenetic diseases as well as other chronic, debilitating disorders on the market andseveral in development.

• Genzyme Molecular Oncology. Genzyme Molecular Oncology (Nasdaq:GZMO) develops solutions in the treatment of cancer by combining functionalgenomics and antigen-discovery technology with Genzyme's biotechnology ca-pabilities. Its product pipeline is focused on cancer vaccines and angiogenesisinhibitors. New therapies are to be developed through the integration of ge-nomics, gene and cell therapy, small-molecule drug discovery, and protein thera-peutics.

• Genzyme Biosurgery. Genzyme Biosurgery (Nasdaq: GZBX) develops andcommercializes implantable biotechnology products by developing sophisticated

21

biotechnology products used in surgery. It is focused on three medical areas -orthopaedic disease and injury, serious heart disease, and improving the out-comes of surgery. Within these areas, the portfolio includes a range of marketedbiotherapeutics, biomaterials and medical devices, and more in the pipeline.

Technology Platforms

Genzyme uses and integrates the following technology platforms:

• therapeutic proteins

• Therapeutic Polymers

• Gene Therapies

• Cell Therapies (especially Epicel® (cultured epidermal autografts for burntreatment), Carticel® (autologous cultured chondrocytes) to replace damagedcartilage in the knee, and a cell therapy approach to repair heart tissue damagedby a heart attack).

• Surgical Biomaterials, especially sodium hyaluronate-based products

• Small Molecule/Drug Discovery

• Diagnostics

• Genetics and Genomics

Genzyme's Patents

Genzyme owns over 100 unique patents that cover an array of technologies, meth-odologies, and devices.

Cooperations

Genzyme works closely with academic researchers, physicians, patients, and corpo-rate partners. Genzyme works with the entire spectrum of health care organizations- from biotechnology start-ups, universities, and hospitals to large pharmaceuticalcompanies.

At present, most of Genzyme's tissue engineering activities are carried out withinGenzyme Biosurgery, which will therefore be described in more detail here.

Genzyme Biosurgery

Genzyme Biosurgery was formed through the recent combination of Genzyme Sur-gical Products, Genzyme Tissue Repair and Biomatrix, Inc.. The focus is primarilyon orthopedic and cardiothoracic surgery, although products in other surgical fields

22

are also developed (e. g. adhesion prevention into several surgical specialties).Within these areas, the portfolio includes a range of marketed biotherapeutics, bio-materials, and medical devices with more in the pipeline.Genzyme Biosurgery isdivided into three business units:

• Biosurgical Specialties. This business unit has developed a suite of biomaterialproducts used to improve the outcome of surgeries, e. g. Sepra product family ofanti-adhesion products and Epicel® (cultured epidermal autografts), a cell ther-apy treatment for severe burns.

• Cardiothoracic. This business unit develops products specifically designed forcardiothoracic surgery. Among its marketed products are FocalSeal®-L to pre-vent air leaks in lung surgery and devices for minimally invasive heart bypass.Genzyme Biosurgery is actively engaged in research into the use of gene and celltherapies to treat heart disease, and currently has a gene therapy product inphase 1 trials for ischemic heart disease and peripheral vascular disease.

• Orthopaedics. Products include Synvisc® (Hylan G-F 20), a biomaterial de-signed to reduce the pain of osteoarthritis of the knee, and Carticel® (autologouscultured chondrocytes), a cell therapy treatment to repair cartilage injuries in theknee.


The tissue engineering product portfolio of Genzyme Biosurgery currently com-prises the following two products:

• Carticel® (autologous cultured chondrocytes), marketed in the United States andEurope by Genzyme Biosurgery, employs a commercial process to culture a pa-tient's own (autologous) chondrocytes, for use in the repair of symptomatic car-tilage defects of the femoral condyle (medial, lateral, or trochlear) caused byacute or repetitive trauma in patients who have had an inadequate response to aprior arthroscopic or other surgical repair procedure. It is not indicated as atreatment for people suffering from osteoarthritis. Carticel® (autologous culturedchondrocytes) is covered by most healthcare plans in the USA, in fact, four ofthe five largest HMOs now routinely reimburse fully for this treatment option.

• Epicel® (cultured epidermal autografts). First introduced in 1987, Genzyme Bio-surgery's Epicel cultured epidermal autografts are used as permanent skin re-placement for patients with life-threatening burns. To produce the skin grafts,cells from the biopsy of healthy skin are isolated, placed into culture in individ-ual flasks, nutritionally supported, and allowed to grow together to form sheetsof tissue about the size of playing cards. Once the culturing process has beencompleted after about 16 days, the skin grafts are attached to a piece of surgicaldressing material and delivered to a burn center where they are transplanted onto

23

the patient. A 24-hour shelf life allows these grafts to be delivered anywhere inthe U.S., Europe or Japan from Genzyme Biosurgery's laboratories in Cam-bridge, Massachusetts. Genzyme Biosurgery treats approximately 75 burn pa-tients a year with Epicel. Over 600 patients have been treated worldwide sincethe product was introduced in 1988. Epicel skin grafts are used routinely at ma-jor burn centers in the United States, France, and Germany. The product has alsobeen used in Japan and Canada. Genzyme maintains an Epicel® database con-taining patient information supplied by the treating physician or attending burnteam as the source for the data. The database contains patient information from552 patients collected from 1989 to 1996.

A5.3 R&D activities

In December 2002, Genzyme Biosurgery launched a phase II clinical trial in cardiaccell therapy. The trial is based on the preclinical and clinical research of PhilippeMenasche, who presented evidence in a phase 1 clinical trial that myoblast trans-plantation may help halt or slow the progressive deterioration of heart function thatis common among patients with congestive heart failure. The technique involvesharvesting a patient's own ("autologous") skeletal muscle cells prior to bypass sur-gery through a small biopsy in the leg, multiplying the cells over the course of threeweeks in the laboratory, and injecting them into a scarred region of the heart duringa coronary artery bypass operation. The phase II clinical trial will test the safety ofcardiac myoblast cell transplantation and its effectiveness in preventing the progres-sion of heart failure in patients who have had a heart attack.

The randomized, double blind, placebo controlled trial will enroll up to 300 patientsin 30 medical centers throughout Europe and North America. Cardiac surgeons willadminister the myoblast transplant or placebo during bypass surgery. An independ-ent team of cardiologists will conduct blinded assessments of safety and efficacymeasures of the treated and placebo groups. Measures to be evaluated includemonitoring the area into which the cells were injected to determine whether the en-grafted cells restore the heart's ability to contract in that area; changes in left ven-tricular ejection fraction; and a comparison of the incidence of Major Adverse Car-diac Events (MACE) between treated and non-treated groups. MACE is a com-monly used measure of the clinical effectiveness of new therapies in heart failurepatients. Monitoring of all patients will continue for up to two years after treatment.This trial is being principally funded by Genzyme Biosurgery, with support fromAssistance Publique - Hôpitaux de Paris. It is being conducted in partnership withMyosix SA of Paris.

24


Table A5.1 gives an overview of the financial results of Genzyme Biosurgery inrecent years.

Table A5.1: Financial results of Genzyme Biosurgery 2002-2001

mio. €2002 2001

Revenue (total division) 240.1 217.2Revenue Orthopedics 110.2 101.8- Synvisc® 89.8 83.4- Carticel® 20.4 18.4Revenue Biosurgical Specialities 58.2 47.6- Sepra line® 39.1 28.8- others 19.1 18.8Revenue Cardiothoracic 71.7 67.8Expenses (general, administrative, selling) 107.0 122Expenses for R&D 52.3 47.2Cash end 2002 32.7

Source: Genzyme Biosurgery, March 5, 2003

25

A6. Interface Biotech A/S

Interface Biotech A/SNordre Ringvejc/o: KAS Glostrup Universitets HospitalOpgang 8, 4.sal., Forskningsafd2600 GlostrupDenmarkPhone: (0045) - 43 23 32 98Fax: (0045) - 43 23 32 96E-mail: [email protected]://www.aci.dk


Interface Biotech A/S is an orthopaedic oriented biotechnology company focused inthe field of cartilage and bone repair. It is localised in the Research and Develop-ment Department at a major Danish University Hospital. It has special expertise inthe field of tissue and cell culturing, and has developed methods for obtaining au-tologous cells from various tissue, for autologous cell implantation treatment. TheCompany presently offers its services in Autologous Chondrocyte Implantation(ACI) for the treatment of cartilage defects in the knee joint.

The company uses proprietary cell culturing methods.

The Company has been inspected by the Danish Medicinal Agency both in regardsto its cGMP system, its Quality Assurance system and its development of its class100 clean room laboratories for cell culturing in 2001. The company has the capa-city to receive cartilage biopsies from Scandinavia and Northern Europe. It is invol-ved in clinical trials with various hospitals to thoroughly test the concept of ACI instudies approved by the Ethical Review Board (The Danish Investigational ReviewBoard).


Interface Biotech A/S currently offers two products

26

• Cartilink™-1. Cartilink�-1 are autologous chondrocytes to be used in autolo-gous chondrocyte implantation (ACI) using a periosteal cover. Cells isolatedfrom cartilage of a patient are cultured at the company�s Class 100 laboratories.When the number of cells is expanded into several millions (usually after 3 to 5weeks), the cells are ready for implantation to repair the injured cartilage in theknee. This method comprises the use of a "periosteal" flap taken from the shin-bone used as a cover to entrap the chondrocytes to be implanted in the knee. Thisproduct is incorporated in a hospital sponsored randomised comparative clinicalstudy. The study seeks to evaluate ACI (using cultured chondrocytes injectedinto the cartilage defect under a periosteal flap used as the cover) compared tothe current best orthopaedic treatment alternatives.

• Cartilink™-2. Cartilink�-2 are autologous chondrocytes to be used in autolo-gous chondrocyte implantation (ACI) using a collagen membrane cover. Thismethod is based on the same chondrocyte culturing methods as used for Carti-link-1. However, instead of using a periosteal flap as the cover, Cartilink�-2 isused with a resorbable, non-cellular collagen membrane cover. This product isintended for use in patients, mainly with large cartilage defects, where a suffi-cient size of a periosteal flap that could cover the cartilage defect, cannot be ob-tained. This ACI kit entered a multi-center clinical trial in mid 2001.

A6.3 R&D activities

The company has R&D activities in the following fields:

• Cartilage. Interface Biotech A/S is developing a diagnostic service intended toguide physicians in evaluating the condition of cartilage in articular joints. Thisdevelopment exploits the company's expertise in histopathologic and cytopatho-logic evaluation methods of cartilage, examining cartilage biopsies and culturedchondrocytes. The Cartilage Diagnostic System is currently being tested in a cli-nical setting of hundreds patients from 3 major Danish Hospitals over a 12-months period starting in 2000/2001. It is the purpose of this diagnostic systemto categorise patient's cartilage material and to predict the harvested material�s a-bility to produce a successful implant in patients. Thus, those patients will be i-dentified who are likely to benefit from ACI treatment. In addition, the di-agnostic system can be used to test e.g., many drugs and drug candidates for theireffectiveness as well as testing them for their potential side effects.

• Osteoarthritis. The company intends to expand its expertise in the treatment offocal chondral lesions to the repair of osteoarthritic defects in the knee. For thispurpose, treatment methods are developed which combine chondrogenic andosteogenic precursor cells, and two different membranes. The first membranefulfills a similar function as the periosteal flap in ACI, the second membrane is

27

an "interface membrane" to be placed in the plane of the osteoarthritis defect thatdefines the interface zone between the cartilage and bone tissues. The osteoblastsuspension is injected into the cavity defined by the bone tissue bottom and theinterface membrane. The chondrocyte suspension is injected into the cavity defi-ned by the interface membrane and the membrane cover. In 2002, the methodwill be tested in pre-clinical studies in large animal models. If the pre-clinical tri-als provide satisfactory results, both in regard to healing and to safety, clinicaltrials in patients will be started in 2003/2004.

• Arthroscopic methods for autologous cell implantation. It is the aim of this R&Dactivity to expand the arthroscopic procedure to be used in combination withAutologous Chondrocyte Implantation (ACI) in joints that otherwise are inacces-sible by conventional surgery, such as the ankle, shoulder, elbow, and hip. Pre-clinical studies in larger animal models are scheduled for 2001/2002. If the pre-clinical trials provide satisfactory results, both in regard to healing and to safety,clinical trials in patients will be started in 2002/2003.

• Mesenchymal stem cells. Interface Biotech A/S investigates whether human au-tologous mesenchymal stem cells can be exploited for the regeneration of humanstructural tissues, focusing on cartilage and bone. The R&D department of thecompany studies stem cell growth control in vitro by means of proper cell sepa-ration techniques and defined cell culture conditions. Several selection criteriahave been identified and selection media developed which allow the propagationand differentiation of human marrow cell populations into chondrogenic and/orosteogenic progenitor cells in culture.


No information on financial data is available.

28

A7. IsoTis SA

IsoTis SAProf. Bronkhorstlaan 10-D, PO Box 98,3720 AB BilthovenThe NetherlandsT +31 (0)30 229 52 29F +31 (0)30 228 02 55E-mail: [email protected]: www.isotis.com

Modex Therapeutics Ltd18-20, Avenue de SévelinCH-1004 LausanneSwitzerlandPhone: +41 21 620 60 00Fax: +41 21 620 60 60http://www.modextherapeutics.ch


IsoTis S.A. (SWX/Euronext Amsterdam: ISON) was created in the fourth quarter of2002 through the merger between Modex Therapeutics S.A., a Swiss biotechnologycompany with a focus on skin management (founded in 1996, listed on the SWXNew Market since June 2000), and IsoTis N.V., a Dutch biomedical company witha focus on orthopaedics (founded in 1996, listed on Euronext Amsterdam (ISO)since October 2000). The new company is named IsoTis S.A. It combines IsoTisN.V.'s strength in research and development and GMP manufacturing with Modex'expertise in clinical development and marketing. With a combined cash balance of� 81 mio by the end of 2002, a substantially higher pro-forma market capitalizationand a staff of approximately 125 people, the combination is one of the largest dedi-cated tissue engineering companies. During the merger process, a strategic reviewwas carried out. The priority during the product selection process was on maintai-ning only those programs which generate profitable results and/or have the highestrevenue and profit potential. The aim was to create a strong position to capitalize oninternal and external growth opportunities. In addition to the strategic benefits fromthe merger, significant cost reductions had to be achieved.

It is the goal to create a profitable sustainable mid-sized biosurgery business whichis expected to generate between � 15 to � 20 million revenues by 2006. Priority will

29

be given to building a quality product pipeline and distribution network. This is tobe achieved on the one hand by internal growth through turning the existing deve-lopment pipeline into approved and profitable commercialised products. On theother hand, external growth is planned by adding product acquisitions leveragingthe company's substantial cash reserves of approximately � 81 million at the end of2002. Another priority is to maintain a tight cost control, in order to cut the lossessignificantly.

Within the field of biosurgery, IsoTis S.A. will strategically focus on two areas:

• Osteobiology (bone and cartilage),

• Wound management (skin).

The main long-term focus of the company will be on osteobiology. Osteobiology isthe field that operates on the interface between medical devices and biology to de-velop a new generation of advanced orthopaedic devices. IsoTis has expertise inbiomaterials science, cell biology and product development to consolidate and ex-pand its medical devices business. Aware of the regulatory environment, the com-pany prioritizes programs that are likely to qualify as medical devices to facilitatemarket approval. The focus will therefore be on those biomedical devices with pro-ven unique qualities and therefore high value added (namely OsSatura and SynPlug;see Product chapter). In addition, the company wants to achieve a strong position inthe cartilage repair market. Therefore, it plans to further develop PolyActive BCP, afully synthetic bi-layered osteochondral repair product, and to develop VivesCart,IsoTis' tissue engineered autologous cartilage product. Furthermore, the companywill leverage in-house capabilities by selecting a number of other short term bio-materials development opportunities including "liquid bone" cements, injectablebone, and porous titanium.

IsoTis intends to pursue external growth in the area of osteobiology by in-licensingproducts or aquiring companies acquired if they meet a strict set of requirements;above all the company is looking to biomaterials with strong profit and growth po-tential.

In the area of wound management the company intends to leverage its current in-vestment without having to commit significant additional funding. IsoTis' lead pro-duct candidate in this area is Allox, an "off-the-shelf" allogenic cell-based productfor hard to heal wounds. In the short term therefore, the company is committed toseeing through the completion of its Allox Phase II multicenter trials, expected bythe end of 2003. In the longer-term, IsoTis is looking at sharing development costsand profits of Allox and its non-core skin products AcuDress and EpiDex, with lar-ger industry players. Regulated as drugs, these products require sizeable, lengthyand thereby capital intensive human clinical trials.

30

The restructuring of the company resulted in a sharply refocused product and R&Dpipeline, in a 50 % loss reduction (approximately � 14 mio instead of � 28 mio. for2003), and a 31 % cut in personnel (12 FTE in Lausanne, 36 FTE in Bilthoven),with a remaining workforce of approximately 125 persons. The focus at IsoTis isshifting, from achieving technological superiority as a goal in itself, to applyingthese competences to orientation towards marketable products and profitability.

The outline of this extensive program and company restructuring will be describedin the following paragraphs.

IsoTis NV established Chienna as a separate company in July 2002 to better capita-lize IsoTis' technology for drug delivery applications. All contracts for drug delive-ry projects and the associated broad patent portfolio were transferred from IsoTis toChienna at that time. The company currently has 13 employees. In February 2003,IsoTis S.A. announced that it intends to sell its 92.46% participation in ChiennaB.V. to OctoPlus, based in Leiden, NL. OctoPlus develops several innovative drugdelivery technologies and is an established provider of pharmaceutical developmentservices and GMP manufacturing to pharmaceutical and biotechnology companiesworld-wide. IsoTis and OctoPlus anticipate reaching a full agreement in the firstquarter of 2003.


IsoTis N.V. and Modex S.A. had several products in development or in early stagesof commercialisation. During the merger, the product and development portfoliowas critically reassessed and significantly streamlined. Table A7.1 gives an over-view of the fate of the different products and programmes after the restructuringprocess. In addition to substituting or terminating the CellActive Skin, VivesCutan,Oxyscav, and SCF programs, the company will cancel the development of Vives-cOs, an autologous bone program, and the associated bioreactor production plat-form. The company will also stop the commercialization of CellActive Cartilage inSpain, and of EpiDex in Switzerland, and reconsider the construction of its manu-facturing facility in Heerlen, the Netherlands.

On the commercial front, the company has recently launched OsSatura BCP, a newbiomaterial bone substitute with unique properties; replaces CellActive Skin withAcuDress for burn wounds and reconstructive surgery; and strengthens the distri-bution of SynPlug, an orthopedic medical device.

31

Table A7.1: IsoTis SA's product and development portfolio before and after therestructuring of Modex Therapeutics/IsoTis NV

Program-me/Product

Com-pany

Salesin 2002

(k€)Assessment Conclusion Further action

OxyScavModexThera-peutics

relevant fordermatology

Stopped or Re-vised

License back toEukarion

Stem Cell Factor(SCF) Modula-tor

ModexThera-peutics

relevant fordermatology

Stopped or Re-vised

Potential licen-sing end 2003

EpiDexModexThera-peutics

157

not profitable;negative decisi-on by SwissFederal Officefor Social Secu-rity regardingreimbursement

Stopped or Re-vised

To be outlicen-sed (to Euro-derm, Germany)

CellActive Skin IsoTisNV 545 not profitable Stopped Replaced by

AcuDress

CellActive Cart IsoTisNV 187 not profitable Stopped -

VivescOs IsoTisNV negative NPV Stopped Replaced by

OsSatura

AcuDressModexThera-peutics

better COGS Retained

AlloxModexThera-peutics

Retained Licensing afterPhase II

SynPlug IsoTisNV 646 profitable, best

seller in 2002 Retained

VivesCart IsoTisNV

potentialbreakthrough Retained

PolyActive BCP IsoTisNV

potentialbreakthrough Retained

OsSatura IsoTisNV

very favourableCOGS; salesexpectations> 10 mio. � by2005/2006

Retained

Distribution ofOsSatura�Dental throughBEGO

Source: Isotis Presentation "Strategy and full year results 2002", Zurich, 17 Febru-ary 2003

COGS = cost of goods sold; NPV = net present value

Table A7.2 gives an overview of the sales in 2001 and 2002.

32

Table A7.2: Sales of Isotis S.A. 2001 and 2002 (k�)

Product 2002 2001SynPlug and related products 646 162CellActive Cartilage 187 0CellActive Skin 545 17EpiDex 157 253Calcium Phosphate Coatings 168 0Other 141 71Total Sales 1,844 503

Source: IsoTis Press Release, February 17, 2003

In the first quarter of 2003, Isotis S.A. had the following products on the market:

• OsSatura� (osteobiology business)

• SynPlug (osteobiology business)

• Epidex (wound management)

It intends to replace CellActive Skin with AcuDress for burn wounds and re-constructive surgery. These products will be described in more detail below:

OsSatura™

OsSatura is is a porous biomaterial which is used as a synthetic bone substitute. It iscomposed of approximately 80% hydroxyapatite (HA) and 20% ß-tricalcium phos-phate (ß-TCP), similar to human bone in both structure and chemical composition.Its unique feature is that it is osteoinductive i.e., actively induces bone to grow inand on the scaffold, as well as osteoconductive i.e., it guides bone formationthrough its macroporous structure. There is currently no other synthetic bone sub-stitute on the market with this property. Therefore, the company hopes that this pro-duct will capture a substantial slice of the synthetic bone filler market, and will alsobe able to compete with other allograft and demineralised bone matrices segmentsof the bone filler market. OsSatura was launched in February 2003, after receivingthe CE mark for commercialization in Europe, thereby replacing an earlier productlaunched in late 2001, OsSatura PCH. In March 2003, IsoTis S.A. signed a distri-bution agreement for OsSatura� with the familiy-owned, dental technology com-pany BEGO (Bremen, Germany). The agreement covers exclusive distributionrights of OsSatura� Dental in Europe, and, potentially, in the US, and rest of theworld. The exact terms of the agreement were not disclosed. IsoTis has filed for510(k) approval with the US Food and Drug Administration in January 2003, andanticipates to launch OsSatura in the US later in 2003. To support its marketingactivities, the company will initiate marketing trials in Europe. The sales expectati-

33

ons are > 10 mio. � by 2005/2006, equivalent to 15-20 % of the synthetic bone sub-stitute market.

SynPlug

SynPlug is a cement restrictor for cemented hip replacements. It is CE certified andhas 510(k) FDA approval. It was launched in the second quarter of 2001 and is pre-sently being sold through orthopaedic companies such as Smith & Nephew, Center-pulse France, and ScandiMed (Biomet Merck), as well as through a range of natio-nal distributors. Sales for the SynPlug in Europe amounted to � 646,000 in 2002.These sales will be consolidated, and efforts will be stepped up to widen the distri-bution of the product in the US.

EpiDex

EpiDex is a cultured autologous epidermal equivalent made from keratinocyte pre-cursor cells. These precursor cells are isolated from the patient's own outer roothsheath of hair follicles. The autologous graft has no matrix. It is used for recalcitrantleg ulcers. EpiDex' activities in Switzerland have been put on hold after it becameclear that the product would not be reimbursed as of January 1, 2003, contrary toearlier pronouncements in 2002. The company still has a minimal capability to pro-duce EpiDex, which it will keep in order to leverage the Humanitarian Use Devicedesignation received from the US Food and Drug Administration at the end of 2002.Negotiations are underway to outlicense EpiDex to the Germany-based companyEuroderm, located in Leipzig, which has a staff of 7 FTE.

AcuDress

AcuDress is a Cultured Epithelial Autograft grown on a fibrin substrate. which canbe applied to burn wounds. Qualitatively superior, it will replace IsoTis' CellActiveSkin in the German and Swiss burn wound market (CellActive Skin's sales for2002, first year of commercialization, amounted to � 545,000). Due to the fibrinmatrix, AcuDress overcomes limitations of no-matrix cultured epithelial autografts,such as high Cost of Goods (COG) due to intensive manual handling, short shelf-life due to the absence of a matrix, and difficult handling due to the thickness of thegraft. AcuDress is characterised by a reduced culture time with fewer operationsresulting in a better COG, a shelf-life of several days allowing easier scheduling andlogistics, and a stronger structure allowing better surgical handling. The AcuDresstechnology is protected by patents issued in North America, Europe and Japan.

In addition to the burn indication, AcuDress targets the market of reconstructivesurgery. Used in conjunction with a dermal reconstruction template, AcuDress willbe indicated in the management of full-thickness skin loss injuries such as re-

34

constructive surgery following plastic surgery (burn scars, hypertrophic scars), andacute wounds due to surgical excision (tattoo removal, skin cancer, nevi). Modexand Johnson & Johnson Wound Management, a division of Ethicon, have agreed toco-sponsor a combined AcuDress-Integra Dermal Regeneration Template pilot cli-nical trial for reconstructive surgery. The objective of the study is to clinically vali-date the use of AcuDress on Integra Template reconstructed dermis for the treat-ment of burns, plastic reconstructive surgery, and other wound conditions.

A7.3 R&D activities

IsoTis SA will focus its R&D resources on the clinical validation of Allox, an allo-geneic product for recalcitrant skin leg ulcers, currently in Phase II clinical trials,and on the development of PolyActive BCP and VivesCart, two cartilage repairprograms.

PolyActive BCP

PolyActive BCP is a fully synthetic bi-layered product under development for parti-cularly difficult to treat knee lesions in which both cartilage and bone are implica-ted. These so-called osteochondral knee defects arise when cartilage has been da-maged to such an extent that in some area's of the joint an even more damaging andpainful bone-on-bone movement results. PolyActive BCP is in fact an OsSaturablock covered by a layer of PolyActive1. While OsSatura is designed as a bone sub-stitute, PolyActive can be made at almost the exact specifications of natural cartila-ge's flexibility and mechanical strength. It is expected that PolyActive BCP with itscombination of unique properties can make a real therapeutic contribution to thetreatment of osteochondral defects. In addition, as is the case for OsSatura, it is de-fined as a medical device meaning that its regulatory pathway is relatively simple.As the available options for cartilage repair are not ideal, IsoTis is confident thatthis product will meet a favourable situation for the acceptance and reimbursement.

VivesCart

VivesCart is IsoTis' tissue engineered cartilage repair approach, a PolyActive BCPscaffold seeded with autologous cartilage cells. VivesCart is earmarked to be used

1 Polyactive are biocompatible and biodegradable poly(ether ester) multiblock copolymers which

consist of hydrophilic poly(ethylene glycol) blocks and hydrophobic poly(butylene terephthalate)blocks. The properties of this polymeric system, like swelling in water, elasticity, and strength,can be tailored for a wide range of applications by changing the proportions of the two buildingblocks. Polyactive is in clinical use and EC accreditation as an orthopedic device, distributed byOsteotech, has been obtained.

35

in other, more difficult, cartilage repair indications, or to replace PolyActive BCP(cell-free) if this product proves insufficiently efficacious during animal and clinicaltrials in the coming years.

Allox

Allox is an "off-the-shelf" allogenic cell-based product for hard to heal woundswhich is currently in Phase II multicenter clinical trials. Results are expected in thesecond half of 2003. A total of 96 patients will be enrolled at 15 medical centers, inEurope, and the Dutch Antilles. On the basis of a positive outcome of these trials,IsoTis will submit an Investigational New Drug application (IND) to the US Foodand Drug Administration (IND), a requirement to take Allox into Phase III trials inthe US with a larger industry partner.


As the effective date of the merger of IsoTis N.V. and Modex S.A. was December3, 2002, pro forma financial results were calculated which assume the merger oc-curred on January 1, 2001, to facilitate comparison of the combined company's ope-rating performance over a two year period. Table A7.3 presents the key proformafinancial figures.

Table A7.3: Financial results of IsoTis, 2002 and 2001

Amounts in € 2002 2001 Change (%)Product sales 1.8 million 503,000 up 267%Total revenues 4.3 million 3.3 million up 30%Total costs and expenses 34.6 million 29.0 million up 20 %Net loss 28 million 21.6 million up 30 %Burn rate 23.5 million n.a. n.a.Cash position on Dec. 31, 200x 81.3 million 104.8 n.a.n.a. data not available

Source: IsoTis Press Release, February 17, 2003

In 2002, total revenues for the group increased approximately 30% to � 4.3 million.The increase in total revenues was primarily driven by substantially higher productsales. Total cost and expenses increased to � 34.6 million compared to � 29.0 milli-on in 2001, primarily related to � 3.5 million of restructuring costs recorded in2002. Research and development costs increased marginally from � 14.4 million in2001, to � 14.6 million in 2002. Marketing and selling costs were � 4.2 million, upfrom � 3.8 million in 2001. General and administrative costs stayed almost flat at �

36

7.5 million. Net loss for the year ended December 31, 2002 was � 28.0 million, ver-sus a net loss of � 21.6 million for the year ended December 31, 2001. As at De-cember 31, 2002, IsoTis had cash and cash equivalents of � 81.3 million, comparedto � 104.8 million at 31 December 2001. The burn rate for 2002 was � 23.5 million.

37

A8. Karocell Tissue Engineering AB

Karocell Tissue Engineering ABKarolinska SjukhusetForskningscentrum M3:01S-171 76 StockholmTel +46 8 441 49 88Fax +46 8 441 49 89http://www.karocell.com


Karocell Tissue Engineering AB is a spin-off company from the Karolinska Insti-tute. The company was founded in the beginning of 2001. Karocell Tissue Enginee-ring AB is based on research from the Karolinska Institute since 10-15 years, and itintends to develop methods to repair and regenerate autologous tissue and promotethese to hospitals and clinicians. In addition, Karocell will produce and managecells for scientific purposes to academic institutions and companies. The companybases its cell production and the application of cells on internally developed me-thods and procedures to regenerate human tissue and organs.


• Skin cells. Karocells skin product consists of autologous keratinocytes combinedwith a collagen template. Thus, also the dermal part of the skin can also be rege-nerated. The increased quality resulting from this improvement of the methodshas resulted in the possibility to use regeneration of skin in other groups of pati-ents than large burns such as minor burns, scar revisions, chronic wounds andskin cancer and other skin diseases that need excision.

• Cartilage cells. Karocell cultivates autologous chondrocytes for autologouschondrocyte transplantation, as a treatment method for localised cartilage injuriesin the knee joint.

• Melanocytes. Karocell is the only company in Scandinavia which has the exper-tise to culture the sensitive melanocytes and is aiming at using the melanocytesclinically. Indications are de- or hypo pigmented areas of the skin which are dueto autoimmune conditions such as vitiligo or due to trauma to the skin as in su-perficial burns.

38

• Urothelial tissue. Initially Karocell has focused on reconstruction of the urethra.The company has shown that urothelial cells can be obtained from bladderwashand stimulated to form colonies and proliferate to a continuous urothelial mucosain vitro. Furthermore, methods were developed to transfer the cultured urotheli-um to the patient by the use of a biodegradable matrix. These methods are pre-sently used when performing female to male gender surgery at Linköping Uni-versity Hospital and Karocell is aiming to expand these methods to be used inpatients with hypospadia.

A8.3 R&D activities

Being a company focused on research Karocell has established close contacts withthe academic world and leading companies in related areas in order to create asound platform for the development of new processes.

The R&D activities of the company comprise the following areas:

• Development of fresh normal human cells for research purposes,

• "Cellfree dermis". The goal is a technology to create regeneration of strong,functional skin even in large areas,

• Creating specialised cell and tissue banks for various purposes,

• Autologous chondrocytes. For further development of cartilage defects in theknee by autologous chondrocyte transplantation a research program was startedwith Medicarb AB together with the Artro Clinic at St Gorans Hospital,

• R & D in the areas of skeletal muscle, breast tissue, fat, elastic cartilage, bones,blood vessels, chronic ulcers.



39

A9. Smith & Nephew

Corporate headquartersSmith & Nephew plc15 Adam StreetLondonWC2N 6LAUKTel: +44 (0)20 7401 7646Fax: +44 (0)20 7930 3353http://www.smith-nephew.com


Smith & Nephew is a global medical device company. It develops, manufacturesand markets sophisticated medical devices. It has operations in 34 countries andemploys approximately 7,500 people. Smith & Nephew plc is quoted on the LondonStock Exchange (symbol SN). In the USA Smith & Nephew plc is quoted on theNew York Stock Exchange (symbol SNN).

Smith & Nephew has three Global Business Units:

• Orthopaedics. Smith & Nephew Orthopaedics is a global provider of joint repla-cement systems for knees, hips and shoulders; trauma products to help repairbroken bones (e. g. nailing systems) and a range of other medical devices to helpalleviate pain in joints and promote healing.

• Endoscopy. This business unit focusses on arthroscopy, minimally invasive sur-gery for articulating joints. The product range comprises instruments for accessto joints, cameras for visualization inside the joint, blades for resecting tissue andspecialized devices to repair damaged tissue.

• Wound Management. Smith & Nephew Wound Management provides broadrange of treatments for difficult to heal wounds. Products range from hydrocel-lular foam dressings to bio-engineered temporary skin substitutes for burns. Itdevelops solutions to chronic and acute wound management problems, such asdifferent ulcers, burns, scars and surgical wounds. Smith & Nephew Wound Ma-nagement provides the products and techniques for the assessment of the woundto decide on the best treatment; the preparation of the wound bed to provide op-timum healing; and stimulation to provide active healing and full wound closure.The company has a large wound management sales force, and also provides nur-ses and clinicians with education programmes.

40

Each business unit is responsible for researching, developing, manufacturing, mar-keting, selling and distributing their products globally.

Tissue Engineering products are of relevance primarily for the Orthopedics andWound Management Business Units, while the Endoscopy Business Unit couldsupply instrumentation required for the surgical application of the products. In ad-dition to own research (see below), Smith & Nephew had joint ventures with thetissue engineering company Advanced Tissue Science, based in La Jolla, USA,from 1994 on.

In 1994, Advanced Tissue Science and Smith & Nephew formed a 50-50 joint ven-ture for the worldwide development of human tissue engineered cartilage for ortho-pedic applications. This venture focussed on the repair or replacement of damagedarticular and meniscus cartilage in knee joints. Advanced Tissue Science wasresponsible for the manufacture of cartilage tissue products, Smith & Nephew fordeveloping and manufacturing the instrumentation for the arthroscopic insertion ofthe products, and for providing its international selling and distribution network.The joint venture had an initial capitalization of $ 20 million, with Smith & Nephewcontributing $ 10 million in R&D funding and ATIS contributing technology licen-ses valued at $ 10 million. Further product development expenses were shared e-qually.

In 1996, Advanced Tissue Sciences and Smith & Nephew formed another 50/50joint venture to commercialize worldwide Advanced Tissue Sciences� Dermagraftto treat diabetic foot ulcers. In 1998, the disease indications and products coveredunder the 1996 50-50 joint venture were expanded from Dermagraft for the treat-ment of diabetic foot ulcers, to all wound care. As part of this agreement, Smith &Nephew invested $20 million in Advanced Tissue Sciences' common stock. An ad-ditional $15 million in cash were paid to Advanced Tissue Sciences over the folo-wing 12 months to be followed by $16 million payable if regulatory and reimbur-sement milestones were achieved in 1999 and 2000.

In 2002, Advanced Tissue Sciences had to file for bancruptcy. Smith & Nephewacquired the remaining half of the Dermagraft and TransCyte joint arrangementsfrom Advanced Tissue Sciences, Inc., in order to gain full strategic control of thoseproducts.


Tissue Engineering is of relevance primarily for the Orthopedics and Wound Mana-gement Business Units. However, only in the Wound Management business unit,tissue engineered products are already on the market. These products are

41

• TransCyte, and

• Dermagraft.

They were initially developed and produced by Advanced Tissue Sciences, Inc., anddistributed by Smith & Nephew. Since 2002, Smith & Nephew has taken over theseproducts completely.

TransCyte*2

TransCyte is a human fibroblast derived temporary skin substitute providing a tem-porary protective barrier. It is used as a temporary wound covering for surgicallyexcised full-thickness and partial-thickness thermal burn wounds in patients whorequire such a covering prior to autograft placement. TransCyte is also indicated forthe treatment of mid-dermal to indeterminate-depth burn wounds that typically re-quire debridement and that may be expected to heal without autografting.

TransCyte consists of a polymer membrane and newborn human fibroblast cellscultured under aseptic conditions in vitro on a nylon mesh. Prior to cell growth, thisnylon mesh is coated with porcine dermal collagen and bonded to a polymer memb-rane (silicone). This membrane provides a transparent synthetic epidermis when theproduct is applied to the burn. As fibroblasts proliferate within the nylon mesh du-ring the manufacturing process, they secrete human dermal collagen, matrix prote-ins and growth factors. Following freezing, no cellular metabolic activity remains;however, the tissue matrix and bound growth factors are left intact. TransCyte istransparent and allows direct visual monitoring of the wound bed.

TransCyte is an aseptically processed product and grown in a cassette under asepticconditions. It is supplied in the cassette it was grown in. TransCyte must be storedat frozen between -70°C and -20°C. Stored correctly it has a shelf life of 18 months.Typically TransCyte requires only one application, avoiding the need for multiple,painful dressing changes and therefore may reduce the patient's length of stay orattendance at a healthcare facility.

DERMAGRAFT*3

DERMAGRAFT* is a cryopreserved human fibroblast-derived dermal substitute. Itis composed of fibroblasts, extracellular matrix, and a bioabsorbable scaffold.DERMAGRAFT is indicated for use in the treatment of full-thickness diabetic footulcers greater than six weeks duration, which extend through the dermis, but

2 *Trademark of Smith & Nephew

3 *Trademark of Smith & Nephew

42

without tendon, muscle, joint capsule, or bone exposure. DERMAGRAFT shouldbe used in conjunction with standard wound care regimens and in patients that haveadequate blood supply to the involved foot.

DERMAGRAFT is manufactured from human fibroblast cells derived from new-born foreskin tissue. During the manufacturing process, the human fibroblasts areseeded onto a bioabsorbable polyglactin mesh scaffold. The fibroblasts proliferateto fill the interstices of this scaffold and secrete human dermal collagen, matrixproteins, growth factors and cytokines, to create a three-dimensional human dermalsubstitute containing metabolically active, living cells. DERMAGRAFT does notcontain macrophages, lymphocytes, blood vessels, or hair follicles.DERMAGRAFT is supplied frozen in a clear bag containing one piece of approxi-mately 5 cm x 7.5 cm for a single-use application. DERMAGRAFT has been classi-fied by the Food and Drug Administration as a medical Device, and by the USCenters for Medicare and Medicaid as a Biologic. DERMAGRAFT is availabledirectly from Smith & Nephew. Sales of Dermagraft in its US launch year achieved� 4.4 mio. (£ 3 mio.).

A9.3 R&D activities

Smith & Nephew invests approximately 5.5% of sales into R&D. This correspondsto an annual R&D budget of ca. ₤ 60 mio. Goals of its R&D activities are

• maintaining competitiveness by scientific and technical leadership in its businessunits,

• development of unique new products which provide distinct advances in clinicalperformance and cost-effectiveness (near term market needs),

• identification of radical new technologies and fundamental scientific work thatwill deliver new products up to 15 years ahead.

Smith & Nephew's Global Business Units are responsible for the direction andcontrol of the R&D process, drawing upon their own on-site resources together withthose offered by the purpose-built Group Research Centre located in the YorkScience Park adjacent to the University of York in England. In addition, the compa-ny maintains links with pioneering research being conducted in academic centresand external research organisations around the world.

Currently Smith & Nephew is running key research programmes in the followingareas:

• Tissue repair

• Orthopaedics

43

• Endoscopy

• Wound management

• New materials

The primary route for product development is an R&D strategy which is based ongaining a biological understanding of problems and applying materials and designexpertise to provide solutions. In addition, Smith & Nephew is now increasinglyseeking solutions based on biotechnology, with materials and design expertise focu-sed more on providing the means of delivering them.

The purpose of the tissue repair research programme is to identify novel approa-ches to the repair of tissues such as bone, cartilage, ligament, tendon and skin, toevaluate the technology, and to ascertain its suitability for driving or initiating newproduct development. In addition intellectual property through innovative and in-vestigative science is to be generated. A key aspect of the research programme isdeveloping a understanding of the degenerative and reparative processes involved inspecific tissues. Specific areas of interest include improving the understanding ofthe relationship between wound inflammation and the repair process, innervationand angiogenesis in repair, and repair using stem cells and the role of material sur-face properties on cell and tissue responses. R&D in tissue repair is carried out ininterdisciplinary teams. Very novel projects in tissue repair are carried out in colla-boration with universities, supported by government funding. Specifically Smith &Nephew holds 3 major grants (over � 1.4 mio. each) in the areas of cartilage repair,scaffold design and novel cell culturing technologies.


Table A9.1 gives an overview of the total sales in 2001 and 2002, as well as for thedifferent business units.

Table A9.1: Sales of Smith & Nephew 2001 and 2002

2001 2002Sales mio € mio € % of total Change

2001-2002(%)

Orthopaedics 595 690 43 16Endoscopy 371 429 27 15Advanced Wound Management 418 473 30 13Total 1,384 1,592 100 15

Source: Data from Smith & Nephew Annual Report 2002

44

In 2002 Smith & Nephew had sales from ongoing business of � 1,592 mio., cor-responding to an average sales growth of 15 %, compared to 2001. The businessunit "Advanced Wound Management" contributed 30 % of the overall sales(� 473 mio.). However, only a small share of these sales are due to the tissue engi-neered products TransCyte and Dermagraft. Sales data for TransCyte have not beenpublished. Sales of Dermagraft in its US launch year 2002 achieved � 4.4 mio. Ac-cording to Smith & Nephew, reimbursement for Dermagraft progresses, with 88 %of the outpatient population covered in the USA in 2002.

Towards the end of 2002, Smith & Nephew secured 100% ownership of the Der-magraft and TransCyte arrangement by acquiring Advanced Tissue Science's 50%share. In addition, � 11.7mio. of revenue were invested into the Dermagraft pro-gramme in 2002. However, the whole of Smith & Nephew's holding of AdvancedTissues Sciences, Inc. (ATS) shares following its filing for bankruptcy had to bewritten off in 2002, which was equivalent to a total of � 25 mio.

45

A10. Tetec Tissue Engineering Technologies AG

TETEC®Tissue Engineering Technologies AGAspenhausenstraße 2572770 ReutlingenGermanyTel.: +49 (0) 7121 / 514 - 87 60Fax: + 49 (0) 7121 / 514 - 87 61E-mail: [email protected]://www.tetec-gmbh.de


TETEC® AG was founded in 2000 as a spin-off of the BerufsgenossenschaftlicheUnfallklinik, partly financed by a regional biotech fonds. It develops and manufac-tures autologous cell transplants for cartilage repair which are distributed by its co-operation partner AESCULAP® AG. TETEC® has a manufacturing permit for theautologous chondrocyte product NOVOCART® in accordance with the FederalFood, Drug and Cosmetic Act and thus completely fulfils the statutory stipulations.Parts of the manufacturing process developed by TETEC® have been registered forpatents throughout Europe. TETEC®'s manufacturing and development teams arecomprised of physicians, pharmacists, biologists, biochemists, materials scientistsand engineers. R&D cooperation partners are the neurological university hospitaland the Naturwissenschaftliche und Medizinische Institut (NMI) Reutlingen.

TETEC®'s distribution partner is AESCULAP® AG, a division of B. Braun, basedin Reutlingen. AESCULAP® AG is a medical device company with the strategy"All it takes to operate". It is system supplier in the surgical area, providing surgicalinstruments, catheter systems, motor systems, endoscopes, high frequency equip-ment and navigation systems, as well as sutures and various container and storagesystems for the operating theatre and cath lab. Moreover, its products compriseimplants for orthopaedics, neurosurgery as well as for cardiovascular and spinaltherapies. It has an established distribution system and an own training centre whereit offers lectures, seminars and workshops for intensive user training. In 2001,AESCULAP® AG had sales of � 672.9 mio.

In the cooperation of TETEC and AESCULAP®, TETEC makes use of AESCU-LAP's distributional network and offers special training courses regarding the surgi-

46

cal techniques and everything about indications, advantages and disadvantages aswell as the limits of the autologous chondrocyte transplantation.


TETEC® AG has one product on the market, NOVOCART®. NOVOCART® arecultured autologous chondrocytes, to be used in Autologous chondrocyte trans-plantation (ACT), sometimes also referred to as autologous chondrocyte implantati-on (ACI) for the treatment of full-thickness articular cartilage defects of the knee.

In order to ensure successful application of NOVOCART®, TETEC® AG also of-fers comprehensive training of physicians. In the so called SFA-ACT workshops,which take place several times a year, the participants practice the OP technique anddiscuss indications, advantages and disadvantages as well as the limits of the auto-logous chondrocyte transplantation with an expert. These courses comprise the the-ory and practice of ACT, the indications and correct diagnosis, the performing ofthe transplantation and of secondary treatment. Moreover, TETEC® AG supplies abiopsy instrument set for both cartilage removal as well as transplantation surgery.In this way, TETEC® AG has standardised the removal process to ensure high bi-opsy quality.

A10.3 R&D activities

TETEC® AG is working on the development of new procedures to treat complexdamage and diseases in the field of the human locomotor apparatus with an inter-disciplinary research team. R&D is carried out in the following fields:

• Arthroscopic ACT. In the near future TETEC® AG plans to introduce a scaffoldimplant technology for ACT which can be applied by arthroscopic surgery.

• Treatment of larger articular cartilage defects. Medium-term TETEC® AG aimsat developing treatments for larger articular cartilage defects including meniscallesions, degenerative arthritis or even osteoarthritis. For this purpose, differentscaffold materials are investigated to generate biocompatible menisci or bone-cartilage replacement materials. Human cells are seeded onto the different bio-compatible scaffold materials and the physiological reaction of the cells is beingtested.

• Intervertebral disk (IVD) lesions. TETEC® AG also focusses on developing theACT techniques to treat certain intervertebral disk (IVD) lesions, including forinstance discogenic disorders, degenerative processes, or prolaps. Autologous

47

transplantation of IVD chondrocytes may reduce the risk of hight loss of the discas they may develop occasionally upon surgical treatment of IVD.



48

A11. Verigen

Verigen Transplantation Service International (VTSI) AktiengesellschaftHemmelrather Weg 20151377 LeverkusenGermanyPhone: +49-214-876 35 0Fax: +49-214-876 35 12E-Mail: [email protected]: www.vtsi.de

VTS ApS DenmarkOliefabriksvej 452770 KastrupDenmarkPhone: +45 32 52 96 14Fax: +45 32 52 96 12E-Mail: [email protected]

VTS Italy SRLVia Macedonio Melloni, 2820129 MilanoItalyPhone: +39 02 / 7 49 00 52Fax: +39 02 / 76 11 51 72E-Mail: [email protected]: [email protected]

VTS Australia PTY LTDc/o Hollywood Private HospitalMonash AvenueNedlands, 6009Perth, W. A.AustraliaPhone: +61 8 / 63 89 02 73Fax: +61 8 / 63 89 02 78E-Mail: [email protected]

Verigen Transplantation Service Ltd.Suite 9, 305 Great Portland StreetLondon W1W 5DDUnited KingdomPhone: +44 (0) 20 7580 4325

49

Fax: +44 (0) 20 7323 1897E-Mail: [email protected]: [email protected]


Verigen is a service provider in the field of health care, specialised in the field of"tissue engineering". The objective of Verigen is to carry out research, develop-ment, production and marketing of effective treatment options for diseases of carti-lage, bone, and connective tissue. Current commercial activities are focused on therepair of articular cartilage. The company currently provides the MACI® (A) ad-vanced articular cartilage repair system in Europe and Australia, along with an opensurgical version of the product sold under the trademark MACI®, and a first gene-ration, collagen covered ACI product. Verigen has several issued patents and a pen-ding patent application pertaining to MACI®(A).

The company was founded in January 1999 by the acquisition of the intellectualproperty rights associated with CACI, MACI® and MACI® (A), by a team of ma-nagement and venture capital investors. At present Verigen employs a staff of ap-proximately 50 people worldwide. Verigen is headquartered in Leverkusen, Germa-ny with offices in the United Kingdom, Denmark, Italy, and Australia.

In 2001, Verigen AG completed its GMP-certified cell culture laboratories in Le-verkusen and received its manufacturing licence in accordance with § 13 AMG. Theclean room laboratories cover an area of 800 m2, and are able to serve 2,000 pati-ents a year. The company has state-of-the-art GMP approved tissue culturing facili-ties in Germany, Denmark, and Australia. Also in 2001, Verigen was awarded aEuropean Tender to supply the Royal National Orthopaedic Hospital (RNOH) atStanmore, England with Verigen's Autologous Cartilage Implantation (ACI) servi-ce. The contract has a duration of ten years, and a minimum of fifty patients will betreated annually. To service the UK more effectively, the company is proceedingwith the construction of a production facility on the campus of the RNOH.


The company currently provides the MACI® (A) advanced articular cartilage repairsystem in Europe and Australia, along with an open surgical version of the productsold under the trademark MACI®, and a first generation, collagen covered ACIproduct. Therefore, the product portfolio of Verigen comprises

50

• CACI. CACI is collagen-covered autologous chondrocyte implantation. Whenimplanted, the chondrocytes are covered with a collagen I / III membrane, whichreduces the need for a time-consuming dissection and a second incision for deri-ving a periosteal flap, thus reducing the operative time and postoperative recove-ry time.

• MACI®. MACI® is matrix-induced autologous chondrocyte implantation. It is afurther improvement of the CACI method. Here, the membrane, already coatedwith chondrocyte suspension, is glued into the defect with fibrin adhesive.

• MACI® (A). MACI® (A) is the minimally-invasive variant of MACI®, inwhich the implantation is done by arthroscopy. Verigen AG provides MACI®(A) in Europe and in Australia. In June 2002, Verigen AG and Mitek Wordwide,a medical device company specialised in surgical sports medicine and soft tissuerepair, announced an agreement that Mitek will market MACI® (A) throughoutthe United States and Canada. Under the terms of the agreement, Mitek will firstconduct clinical trials and then seek marketing approval from the respective re-gulatory authorities.

By 2002, more than 800 patients in Europe and Australia have been treated withVerigen products.


Verigen's R&D activities comprise:

• Repair of articular osteochondral defects leading to osteoarthritis. In December2002, Verigen AG and the Scandinavian biotech company Bone Support AB e-xecuted a Letter of Intent. The agreement includes a collaboration project to de-velop a product for the repair of articular osteochondral defects leading to osteo-arthritis. In osteoarthritis, commonly the damage also involves the subchondralbone. In the collaboration project the injectable, porous, resorbable bone materialdeveloped by Bone Support AB, which allow the addition of active substances,will be combined with Verigen's chondrocytes. Preclinical tests will start in2002, with patient studies scheduled for 2004.

• Injectable, growth factors releasing, osteoinductive bone material. In December2002, Verigen AG and the Scandinavian biotech company Bone Support AB e-xecuted a Letter of Intent to develop an injectable, growth factors releasing,osteoinductive bone material which induces bone formation and promotes bonehealing in fractures that do not heal. Bone Support provides a biphasic injectablebone substitute material with a bone-like porosity. Verigen will supply growthfactors which are released by cartilage cells during in vitro cultivation. Thesegrowth factors will be used as an additive to the resorbable phase of Bone Sup-

51

port�s injectable bone materials. Preclinical tests will start in 2002, with patientstudies scheduled for 2004.


No financial data are available.

52

A12. Vitrolife

Vitrolife Head OfficeVitrolife AB (publ)Mölndalsvägen 30412 63 GöteborgSweden

Tel: +46-31-721 80 00Fax: +46-31-721 80 [email protected]://www.vitrolife.com


Vitrolife AB is an international biotech corporation which develops, produces andmarkets a range of high-quality products and systems for the preparation, cultivati-on, preservation and support of cells, tissues and organs for certain applications.

Vitrolife, founded in 1993, has its head office in Gothenburg, Sweden. It conductsits business through several wholly owned subsidiaries with geographical responsi-bilities and functions:

• Vitrolife Sweden AB (Sweden),

• Vitrolife Inc. and A-Life Inc. (USA),

• A-Life Ltd. (Edinburgh, Scotland).Its competence centre for Transplantation Systems and Cell Therapy / Tissue Engi-neering is located in Gothenburg (Sweden). Since 2001, Vitrolife is listed on the O-List of the Stockholm Exchange, under the ticker VITR. The Company currentlyhas over 65 employees and sells its products in over 80 countries.

The majority of revenues comes Vitrolife's business unit of fertility. Long-term pro-fitability is expected to come from technology and strategic raw materials for TissueEngineering. Vitrolife is concentrating its efforts on products and system solutionsfor transplantation, freeze-dried media and modified hyaloronic acid based pro-ducts.

53


Vitrolife operates through four product areas:

• Fertility Systems. Media and systems for assisted reproduction

• Cell Therapy and Tissue Engineering Systems. Products for cartilage repair andstem cell technology

• Transplantation Systems. Media and systems for organ transplantation

• A-Life. Development of Hyaluronan-based products for aesthetics


Vitrolife's investment in R&D amounts to over 25% of annual sales. Vitrolife's re-search area Cell Therapy and Tissue Engineering Systems is engaged in developingmedia and other products for researchers and clinicians using new methods forrestoring, maintaining or improving function of tissues. Its R&D areas comprise

• Chondrocyte cryo-preservation

• Serum-free tissue engineering media

• Wound healing / Tissue repair / Tissue engineering

• Systems for stem cell differentiation. In 2001, Vitrolife AB acquired 10,7 % inCell Therapeutics Scandinavia AB and entered into a research and co-operationagreement with the company Cell Therapeutics, based in Göteborg, with affilia-tion to the universities in Göteborg and Uppsala, Sweden and Sahlgrenska Uni-versity Hospital. Cell Therapeutics is engaged in stem cell R&D (isolation ofstem cells, clinical applications for cardiac infarction and heart failure, diabetestreatment). Vitrolife initially delivers media to Cell Therapeutics�s stem cell re-search and later, on an exclusive basis, commercialise media for clinical cultiva-tion of stem cells and tissues.


Vitrolife is listed on the O-List of the Stockholm Exchange since the 26th of June2001, under the ticker VITR.

During the latest five-year period, sales have steadily increased by and totalled mo-re than � 11 mio. for the fiscal year 2002. Approximately 25 % of Vitrolife�s turno-ver is reinvested in research and development.

54

A13. XCELLentis

Innogenetics (Headquarters)Technologiepark 69052 Gent, BelgiumTel.: +32-9 329 13 29Fax: +32-9 329 19 [email protected]

with subsidies in Alpharetta (USA), Heiden (Germany), Barcelona (Spain), Rome(Italy) and Lille (France)


XCELLentis is a wholly-owned subsidiary of Innogenetics. It was founded inFebruary 2001 as a result of a spin-off of Innogenetics� wound care business. It fo-cusses on the discovery and development of advanced approaches for the improve-ment of the wound healing process, especially �difficult to heal� wounds. XCEL-Lentis has its headquarters in Gent, Belgium and currently employs 20 people.

In Belgium, XCELLentis is currently marketing epithelial sheets derived from hu-man keratinocyte culture. Moreover, Fagron, (a 100% owned subsidiary of OmegaPharma) exclusively markets the epithelial sheets under the XCELLentis label inthe Netherlands.

Innogenetics, founded in 1985 in Gent (Belgium), is an established biotechnologycompany engaged in the discovery, development, and marketing of diagnostic pro-ducts for the detection of human diseases, as well as the discovery and developmentof new therapeutic products and vaccines. Innogenetics targets five areas: infectiousdiseases (AIDS, hepatitis C, tuberculosis), tissue repair, and immune, neurodegene-rative, and genetic disorders. The Company�s wound care activities are being run byXCELLentis.

Innogenetics has been listed on the NASDAQ Europe since November 1996 and onEuronext Brussels since December 2002. The Company has its headquarters inGent, Belgium, with sales affiliates located in France, Germany, Italy, the Nether-lands, Spain, and the USA. It employs 600 people worldwide, including 200 inR&D.

55


The product portfolio of XCELLentis currently comprises three wound care pro-ducts:

• Ceal platform (cultured keratinocytes grown into epithelial sheets), productsAutoDerm, CryoCeal

• LyphoDerm

• UlcoDress Plus

The LyphoDerm phase II trial for the treatment of venous leg ulcers will start inApril 2002.

XCELLentis has developed a number of innovative wound care products such asepithelial sheets derived from human keratinocyte culture, and is developing Ul-coDress Plus, a hydrogel dressing, as well as LyphoDerm, a biological product,which entered into a phase II trial in April 2002.

Ceal platform

For the treatment of burns and chronic skin wounds, XCELLentis, has improved theestablished technique of using cultured keratinocytes grown into epithelial sheets(Ceal). XCELLentis is currently servicing burn centers directly or through skinbanks. It supplies both the autologous (patients� own cells � AutoDerm) and theallogeneic (donor-derived) epithelial sheets for the treatment of patients with seri-ous burns. Allogeneic sheets are also applied for the treatment of chronic ulcers andchronic otorrhea (e.g. after middle ear surgery). To facilitate access to the burn andchronic ulcer market, a cryopreserved allogeneic epithelial tissue (CryoCeal) hasbeen developed with a 6 month shelf life. Although the regulatory status of thisproduct varies from country to country throughout Europe, ranging from transplantto medical device, there is a trend to characterize them as medicinal products. ForCryoCeal, a clinical Phase II study in chronic leg ulcer patients is currently on-going. On average, patients enrolled in this trial had open ulcers with a mean dura-tion of 21 months and an average ulcer size of 11 cm2. The final results of thesetrials are expected in the course of the first quarter of 2003.

LyphoDerm

LyphoDerm is XCELLentis� lead development product. It consists of freeze-driedkeratinocytes and contains growth factors which excert a wound repair-stimulatingeffect. The advantages of LyphoDerm are its easy storage, long shelf life, easy re-constitution, and user-friendly delivery system. Global patent protection has beenobtained in the USA, Europe, and Japan for this proprietary process and product.

56

LyphoDerm is categorized by the American and European agencies as a medicinalproduct. The registration of this product and the optimal design of the trial programhave been extensively discussed with several European agencies to prepare for acentralized application for marketing authorization in Europe. A pre-InvestigationalNew Drug (pre-IND) meeting with the U.S. Food & Drug Administration (FDA)has also taken place.

In September 2002, a Phase II randomized, open-label, parallel-group study wasinitiated which will investigate both the safety and efficacy of LyphoDerm during10 weeks of product application followed by 14 weeks of follow-up. The incidenceof �complete wound closure� within 24 weeks is defined as the primary endpoint.180 patients with hard-to-heal leg ulcers in several study centers in the UnitedKingdom, Poland, Germany, and Belgium are participating in this Phase II trial.Final results of the Phase II study are expected by the end of 2003.

UlcoDress Plus

UlcoDress Plus is a hydrogel dressing which is classified as a medical device. Itconsists of a biocompatible and biodegradable polymer matrix which provides amoist environment promoting wound healing, has bacteriostatic properties, protectsgrowth factors and decreases protease activity. UlcoDress Plus was developed inclose collaboration with the University of Gent (RUG). The CE marking process isongoing. A market introduction is expected for 2003 in all 15 member states of theEuropean Union.


The R&D activities mainly focus on the LyphoDerm phase II clinical study and inusing UlcoDress Plus as a matrix for more advanced wound care products.


For 2002, Innogenetics posted an operating loss of � 16.4mio., compared to� 11.6 mio. for the same period of 2001. As of December 31, 2002, Innogenetics�cash position was � 39.1 mio. compared to � 57.7 mio. at the end of 2001. Totalrevenues, including R&D income (� 6.9 mio.), amounted to � 62.4 mio. in 2002.Overall product sales, including Therapeutics, increased by 16% to � 47.6 mio..Therapeutics only contributed � 0.2 mio., while diagnostic product sales reached� 47.4 mio. in 2002. In 2002, Innogenetics� Diagnostics activities made an opera-

57

ting profit of � 1.0 mio., which occurred across all diagnostics fields: infectiousdiseases, genetic testing, and neurodegeneration.

R&D expenses reached � 28.7 mio. in 2002, representing a 20% increase comparedto the same period in 2001. Diagnostics R&D efforts remained stable at a level of� 12.1 mio., while the Therapeutics R&D expenses increased by 50% to reach� 16.5 mio. in 2002. This increase compared to 2001 was mainly due to expandingclinical efforts in the fields of hepatitis C and wound care, and further investmentsin preclinical programs.

Human Tissue Engineered Products – Today's Markets and Future ...

Documents

Transcript of Human Tissue Engineered Products – Today's Markets and Future ...