Wound Management Technologies hopes to be stronger player in growing diabetic space Print E-mail
By Deborah Sterescu, ProactiveInvestors.Com   
Friday, 14 October 2011 00:00
FDA CalendarWound Management Technologies (OTCBB:WNDM) is a company set for rapid growth, and has so far accomplished just that, bulking up its distribution channels for its core CellerateRX wound care product, and boosting revenues to record highs, with a forecast $12 million in sales expected next year.
Cleared as a medical device for all types of wounds except for third degree burns, and reimbursed by Medicare Part B, CellerateRX's activated collagen product provides the essential benefits of the collagen protein to a wound immediately, where other forms of native collagen require time for the body to break down the collagen for use in the wound healing process.

In people with compromised health or circulation, the difference in wound healing time can be significant. Because the product reduces pain, does not need to be removed from the wound, may not need additional dressing, and can be combined with other products if required, the cost savings with the use of CellerateRX alone provides meaningful competitive advantages.

"Because of its superior performance, low relative cost and ease of use, CellerateRX has too many market opportunities to enumerate. We are of the opinion that CellerateRX ought to be standard issue in every hospital, emergency rooms, every soldier’s field kit; it should be in the medical supplies of schools and Universities; every student’s back pack, and every mother’s purse," cited Mithra Research in a research report in July 2010.

The product, which is available in both powder and gel forms and is manufactured on a contract basis, in fact has multiple target markets, and is distributed through five channels, including through partners such as the Military Shopping Channel, as well as through government initiatives, major healthcare service providers, biotech distributors and the international market.

 

With new president Deborah Jenkins-Hutchinson taking the lead in 2010, the company brought experienced managers on board to join the staff to oversee a direct sales effort, and to build out its distribution channels, both direct and indirect.

In September 2009, the company, whose product margins are now greater than 60%, acquired BioPharma Management Technologies, one of its now four subsidiaries, to distribute the company's wound care products in the Middle East through Pharma Tech International, a joint venture between BioPharma and A&Z Pharmaceutical.

Later that year, Wound Management signed a distribution agreement to launch its European sales, with a network that includes over 1.5 million patients in England, Italy, France, Germany and Spain. Similar agreements are now in place in Central America, and are in development for markets in South America, Mexico, Israel, the Philippines, and elsewhere internationally.

In 2010, deals took off with health care product and services providers in the US, with the company signing McKesson in April of last year, the largest domestic health service company. Another deal with a home and nursing care company is on tap for the coming weeks, Jenkins-Hutchinson said.

Last month, the company announced that one of its distributors has entered into an agreement with the Military Shopping Channel, an exclusive online retailer specializing in products for active and retired Military personnel, to offer CellerateRX to over 10 million eligible servicemen and women, military dependants and military retirees.

According to BCC Research, the domestic wound care market alone was approximately $3.2 billion in 2007, and is projected to double by 2013, giving the company significant near-term growth potential.

Even more, the company's growth strategy is focused, with its eye on the diabetic market as 19 to 20 percent of diabetics will develop at least one ulcer, with diabetics being at high-risk for wound infection due to their varying blood sugar levels, circulation changes, and impaired local immune defenses, all of which predispose them to delayed healing and infection.

"Wound Management Technologies...has wisely targeted the largest markets where superior wound treatment is urgently needed and existing commercially available products have faced their biggest challenges and are, in many cases, failing: Diabetic Wound Care and Long Term Care," commented Mithra.

Indeed, the number of diabetics globally is expected to grow from 285 million in 2010 to 360 million in 2030, according to the International Diabetes Federation, with 60 percent of non-traumatic lower limb amputations now associated with diabetes.

While the company's focus is on critical problems in wound care and chronic disease management, it still operates four subsidiaries, including the core Wound Care Innovations, which owns the exclusive worldwide license to CellerateRX for the entire patent life that expires in 2018; Resorbable Orthopedic Products; BioPharma Management Technologies; and Secure eHealth, a provider of secure health data and messaging alert solutions between health care providers, insurers and patients.

Resorbable Orthopedic Products is another near-term potential revenue stream, as the subsidiary owns the rights to several patented technologies, including a resorbable bone wax and a delivery system for orthopedic bone void fillers, among others. The 510k regulatory filing for the resorbable bone wax and products is expected to be filed in the next few weeks, with the company currently in the process of final testing.

When bone is subjected to surgical trauma, it has the potential to bleed as the blood vessels are damaged, and control of this bleeding during surgery is important to maintain blood pressure, and reduce blood loss. Bone wax is used to apply pressure to control the bleeding, but because these products are not resorbed or metabolized by the body, they delay the healing process. The biggest complication is when not all of the wax is removed during surgery, often requiring another operation for removal.

The company's product, however, which is expected to come onto the market within the next year, is made of polyethylene glycol, which handles and performs identically to the beeswax formulation used in many of the bone wax products available today, but due to its water soluble nature, it is resorbable by the body, meaning a reduced risk for post-surgical infection.

Barry Constantine, project consultant and one of the developers of the bone wax products, has more than 30 years of healthcare industry experience, including tissue engineering, wound healing and skin care, having worked for Johnson & Johnson's Research Foundation, Convatec BristolMyers Squibb, and Integra Life Sciences.

According to the latest research, the total domestic orthopedic biomaterials market is currently approximately $3.5 billion, projected to grow at a compound annual growth rate of 9% through 2016, with growth driven by improved patient benefits, a shorter FDA approval cycle, and an aging population ever more aware of biomaterial benefits.

As such, Jenkins-Hutchinson said she expects the company to benefit with additional revenue from the resorbable bone wax subsidiary in 2013.

With the holding company having around $0.6 million in cash on hand at the end of the second quarter, it does not anticipate needing to raise additional funds anytime soon, with cash coming strictly from its products.

Mithra Research gave the emerging growth business a bullish price target, with the firm believing the wound management company can achieve its target of growing its nascent sales base to $100 million over five years.

"We believe this is achievable in the CellerateRX product line alone: though CellerateRX is highlighted in this initial report, the company has synergistic product, service, and technology offerings... [which] offer further upside potential," Mithra concluded.

The company announced Wednesday that its CellerateRX has been accepted as a poster at the Fall 2011 Symposium on Advanced Wound Care in Las Vegas, Nevada. The posters will be available for viewing in Wound Management subsidiary Wound Care Innovations’ booth 107 on Friday, October 14 from 8:00 am – 4:00 pm and for the poster reception occurring from 5:30 pm – 6:15 pm on Friday at the Rio-All Suite Hotel.

Many physicians, podiatrists, nurses, physical therapists and allied health professionals are expected to be in attendance, Wound Management said.

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