Skin replacement opens million dollar markets
Joan M. Diekman
Treatment for severe burns is moving out of the Dark Ages and providing multimillion dollar market opportunities as advances in biotechnology spawn the first generation of permanent, living skin replacement products.
Sources estimate that at least 100,000 patients are admitted to the nation’s 170 burn clinics annually. Of those, 25,000 are burned severely enough to require extensive skin grafting. Smith, Barney, Harris Upham and Co., New York, estimated market potential for all severe burn treatment products at $750 million annually.
New technologies are promising to revolutionize traditional burn treatment paths. One company, BioSurface Technology Inc., Cambridge, Mass., has a permanent skin replacement product on the market. Two more companies, Advanced Tissue Sciences Inc., (formerly Marrow-Tech Inc.), La Jolla, Calif., and Organogenesis Inc., Cambridge, Mass., have burn products in clinical trials.
The actual size of the burn care market is not increasing because the number of victims has held steady for several years, sources said. But advances in treatment are expected to open new markets and provide substantial revenue opportunities.
Also, there are many potential niche markets because each burn center has its own care protocols.
Permanent skin replacements are predicted to have widespread use in other treatment therapies as well. Possible applications range from oral wound healing to cosmetic surgery.
Modern therapy “almost barbaric”
One source described current treatment for third-degree burns as “almost barbaric.” The gold standard for treatment is the split-thickness skin graft, which is a piece the victim’s own skin containing both epidermis and a portion of dermis.
In third-degree burns, both the epidermis and dermis are destroyed. The dermis cannot regenerate. The epidermis can regenerate in the wound bed if the hair follicles and sweat glands, found in the dermis, are intact. Without them, the epidermis can only regenerate from the sides, a process that can take months.
Also, skin from any source except the burn victim has always been rejected by the burn site.
Skin grafting has been the best way to address these problems. However, harvesting the graft creates another second-degree wound. Patients who have been burned over 60% of their body surface run a 50% risk of death, and the risk escalates quickly if a larger percentage of the body is burned. That makes grafting all the more undesirable due to the additional trauma it creates. Furthermore, the limited amount of undamaged skin may necessitate repeated harvesting from the same area.
A variety of temporary replacement skins and synthetic products are available for use at many stages of treatment to cover burn and graft sites. Cadaver and porcine skin are options for living tissue bandages, but they will eventually be rejected by the wound bed.
BTI cultures patients’ epidermis
BioSurface Technology’s product is AUTOgraft, an epidermal tissue cultured from the victim’s own epithelial cells and surgically applied to the burn site, according to David Castaldi, president.
Patients burned over 60% of their bodies are candidates for the technology due to the limited availability of donor sites. Once AUTOgraft therapy has been indicated, a postage-stamp size biopsy is sent to BTI. In three to four weeks, it is cultured into enough 25 cm squares to cover the wound. It is then shipped back to the burn center and applied to the patient.
Besides eliminating the need for a skin graft, other advantages of AUTOgraft include an unlimited supply of skin and an equivalent or better cosmetic outcome than skin grafts offer, Castaldi said.
BioSurface does business with about half of the burn centers in the U.S. and some in Europe, according to Castaldi. Sales were $6 million in 1991 and $17 million total since the company released the product in 1988.
Sales have increased every year, Castaldi said, and should continue to rise as more physicians accept the technology. A small direct sales force calls on burn center surgeons in the U.S. and Europe.
About 1,000 patients with 60% surface burns live to receive treatment annually. This segment is small but significant because such patients need extensive care. Market potential is $20 million to $25 million a year in both the U.S. and Europe, Castaldi said. AUTOgraft has been used on more than 300 victims to date.
Additional sales of $25 million to $30 million may be realized if AUTOgraft applications are found for patients with less severe burns, Castaldi continued. BTI agrees that patients with less than a 60% burn area usually have enough skin for grafting, so skin grafts are the current treatment of choice for those patients.
“AUTOgraft will have to be judged superior to skin grafts to be used for lesser burns,” Castaldi said.
Convincing surgeons of this superiority will be a challenge for BTI. Although AUTOgraft replaces the epidermis, it does not replace the dermis. Most skin tissue is composed of dermis, which provides pliability and strength.
Without the dermis, the cultured epidermis is more fragile and more prone to loss due to infection in the first several weeks than traditional skin grafts, Castaldi said. However, after several months, the tissue beneath the AUTOgraft has strength and pliability comparable to that of skin graft tissue, he said.
BTI also is addressing this concern through a technique called the allodermis method, in which a cadaver dermis is used in conjunction with the cultured epidermis, Castaldi said.
Another hurdle for BTI is the cost of AUTOgraft. The average cost per patient for the tissue is $30,000 to $40,000 ($375 for 25 sq cm), while skin graft tissue doesn’t cost anything. However, third-party reimbursement is favorable so far and may permit AUTOgraft to be used for treating smaller burns.
BTI also is studying additional applications for AUTOgraft at the request of physicians, Castaldi said. One is for grafting after the removal of giant moles covering 30% to 70% of the body; these moles must be removed in childhood due to cancer risks.
Another application is treating hypertrophic scars that inhibit normal joint functions. Also, AUTOgraft has been shown to heal year-old chronic skin ulcers. Finally, the technology is being used to culture oral tissue for treating gum disease and healing mouth wounds.
Although AUTOgraft has been purchased for the above applications, BTI will not promote those uses until they have been studied, Castaldi said.
Food and Drug Administration approval may not be required for the indications because the agency has chosen not to regulate the technology at this time, Castaldi added.
Finally, BTI is developing another cultured tissue product for burn applications. The product, ALLOgraft, is grown from skin cells from a donor unrelated to the patient receiving treatment.
Unlike AUTOgraft, ALLOgraft will be available as a stock item because it can be frozen and thawed while retaining replicative and metabolic functions.
It is being studied for five applications, four of which are burn-related, according to Castaldi. One potential application is in healing skin graft donor sites on burn victims and other dermatological patients. Clinical trials began in April, and BTI hopes to have that use approved by 1995, Castaldi said.
Another experimental indication is healing deep, partial thickness wounds, which are currently treated with skin grafts and leave scars, Castaldi said.
The other two burn-related applications under study are uses in reducing scars from partial-thickness burns and covering meshed skin grafts to enhance healing and cosmetic appearances. The final ALLOgraft procedure under study is its application for healing chronic wounds and ulcers.
The potential U.S. market for all possible ALLOgraft applications is $750 million, and the European market potential is the same, according to Castaldi.
ATS is betting on Dermagraft
Another company planning to enter the skin replacement market is Advanced Tissue Sciences. The company’s product, Dermagraft, is a living dermal replacement tissue cultured from neonatal foreskin, according to Ron Cohen, M.D., vice president of medical affairs.
Foreign dermis is more acceptable to the body than foreign epidermis. Once the replacement dermis is in the wound bed, a very thin graft of the patient’s epidermis may be placed on top of it, creating complete skin, he said.
Besides providing a living dermis, Dermagraft offers consistent quality and immediate access because the manufacturing process is more controlled. Variables such as disease cannot be controlled when using a patient’s cells for culturing. Using a different source enables ATS to eliminate such factors.
“Dermagraft technology does not rely on the victim’s own skin cells,” Cohen said. “Quality can be checked on each batch before shipment. Also, the burn center can store the product in-house, so there is no waiting period for the dermis.”
Clinical trials began at 12 burn centers in January 1991. Approval has recently been granted to extend studies to another 24 centers, Cohen said. More than 75 patients are enrolled so far, and early results indicate that Dermagraft consistently merges with the patient’s own tissue and permits permanent wound closure without rejection or infection, he said.
ATS expects to complete enrollment for trials by the end of this year. Patients will be tracked for a year to determine healing and cosmetic outcomes. Results will be submitted to the FDA for approval in 1993 or 1994, he said, and the projected release date for Dermagraft is early 1995.
Cohen does not consider BTI to be competitor. He said that Dermagraft and cultured epidermal tissue (such as AUTOgraft) provide complementary functions. In fact, ATS in planning to do clinical trials using cultured epithelial cells on top of Dermagraft. The technique may reduce the need to harvest epidermal grafts used with Dermagraft.
“ATS wanted to provide a product-oriented business,” Cohen said. “We wanted our dermis to have a shelf life, which is impossible if you’re waiting for the victim’s own skin to culture.”
Dermagraft is projected to cost between $30,000 and $65,000 to treat the most extensive burns (those with total treatment costs ranging from $100,000 to $200,000), according to Smith Barney.
The firm’s “conservative revenue model” predicted first-year Dermagraft sales of $37 million and 1998 sales of $125 million. An aggressive model estimated sales of $280 million by 1998.
PaineWebber Inc., New York, predicts that first-year sales of Dermagraft could reach $26.3 million and rise to $120 million by 1996.
Another potential Dermagraft application being studied is healing venous skin ulcers, according to Cohen. Clinical trials for studying indications in pressure and diabetic ulcer treatment are scheduled to begin this year.
U.S. market potentials for these indications are $180 million and $750 million respectively, according to Smith Barney. Dermagraft applications in cosmetic surgery also will be studied eventually, Castaldi said.
GRAFTSKIN to be complete tissue
The third company with sights on skin replacement is Organogenesis. Its GRAFTSKIN is a full-thickness skin designed to replace both the epidermis and dermis, according to Jennifer Pierce, director of corporate communications.
GRAFTSKIN consists of human dermal connective tissue cells and human epidermal cells seeded in a matrix of collagen, a protein accounting for about 33% of all protein in the human body. The tissue may be sutured into the wound, or may adhere by itself in some cases, Pierce said.
The mixture forms a scaffold of tissue, which eventually is supplemented, replaced and reconstructed to more closely resemble natural tissue. Rejection is avoided by removing cells that provoke the immune response prior to application.
The tissue allows physicians to quickly cover a burn wound bed with a full-thickness skin that will not be rejected, Pierce said. The tissue that forms in the wound will be skin, not scar tissue, she said.
GRAFTskin has no pigmentation and may appear much lighter than the rest of the victim’s skin, Pierce said. The company plans to add pigments later. Also, the patients’ own pigmentation cells occasionally move into the area, she added.
Like Dermagraft, GRAFTSKIN may be regulated more during the manufacturing process since it does not depend on the victim’s cells. It also may be stored at the burn center until needed.
GRAFTSKIN should be marketed for permanent skin replacement applications in late 1993 or early 1994, Pierce said. It will cost $5,000 to $10,000 per patient and generate first-year sales of $2 million, according to Gerard Klauer Mattison & Co. Inc., a New York investment firm. GRAFTSKIN will hold 65% of the permanent skin replacement market from 1994 to 1996, with sales topping $92 million in the third year, the firm predicted.
The product also is being developed as a temporary graft or wound dressing. Market release for that indication is expected this year. A 50% share of that market is anticipated, for sales in excess of $20 million by 1995, Gerard Klauer Mattison predicted. The firm also anticipates $16 million in sales by 1995 for a third application in treating skin ulcers.
Organogenesis plans to move in August to a location in Canton, Md., that is twice the size of their current facilities.
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