November 29th, 2016
ONEMED NEWS CENTER
As the CEO of Lattice Biologics, Guy Cook has a substantial amount of experience in growing businesses. Brett Johnson interviewed him to find out how Lattice is changing the playing field for osteoarthritis patients seeking pain relief treatment and the larger effect that the company’s product could have on the opioid abuse epidemic.
Brett Johnson: Today we are with Guy Cook, CEO of Lattice Biologics, a Scotsdale-based firm in the field of cellular therapies and tissue engineering. They have a focus on bones, skin and cartilage regeneration. The company is making significant advances in the treatment of osteoarthritis. Prior to joining Lattice, Guy was founder & CEO of Bacterin International – a firm he grew into 150 employees and took public. It was traded on the AMEX. Thanks for joining us today, Guy.
Guy Cook: Thanks, Brett.
BJ: First, tell us a bit about Lattice. What is your business?
GC: We are tissue bank. So we take donated tissues or tissue fluids, clean them up and process them to a point where a surgeon would use them for a variety of surgical procedures. The primary areas of focus are in spinal fusion. You would use our products if you needed to have your back fused.
We also sell into the breast reconstruction market. So, women who have mastectomies and need an implant, our product would hold that implant as a sling, and our product would eventually remodel into the patient’s own host tissue. More and more, we are also becoming focused on sports medicine, where we are trying to help the advance of osteoarthritis, in addition to working with ACL-repair, or any type of soft tissue injury.
BJ: The ACL and sports injury market is large. What are your thoughts on this market?
GC: Sports injuries and ACL are rapidly-moving into a more interventional therapy where we try and jump into these markets before the patient would need a knee or hip replacement. We have one product focused on this, called AmnioVisc. It’s a gigantic market, with approximately, 7.8 million injections in the U.S., with $1,000 per injection makes it about an $8B market.
If you have OA of the knee, you will normally be given pain medication as a form of treatment, like opioids. If that fails, you’ll be given a steroid injection, which only typically lasts for about 7-10 days. If that fails too, then you will move onto other injections, which is the category that AmnioVisc falls into. It’s in that market where they’re doing injections of the knee, shoulder or any sort of arthritic joint.
BJ: Let’s talk about AmnioVisc. It’s a new technology that you recently licensed. Tell us about it’s most exciting properties.
GC: Sure. The background technology that we take healthy, scheduled cesarean sections, where the mother donates the amniotic fluid. When a mother’s “water breaks” – the “water” is actually the amniotic fluid. We know it’s rich in growth factors and cytokines and most importantly, it’s rich in immunosuppressant properties.
The one way to think about it, is to ask why the mother’s immune system doesn’t attack the baby. The reason is that it’s encased in fluids and membranes that down-regulate that inflammatory response. We can harvest those proteins, intact, and inject them directly into a knee, and we see immediate down regulation of inflammation. We are hearing great stories, anecdotally, that this is working very well.
The technology came to us intact with a great clinical study involved with 275 patients, where the end points were pain medication for three months and six months, with 80% of patients who benefited with more a than 40% level of pain relief. The study is well-powered at 275 patients, down at our western IRB.
It’s a great study that we are really proud of and we are seeing great traction because of the clinical data that’s already been generated with this product.
BJ: How long has this product been on the market? Is it a new development?
GC: It is a new development. It was originally released for the clinical study, around 2015-2016. As the clinical data was being gathered, the company ran into difficulty. So the CEO contacted me (we had been friends for 20 years) and we made a deal to bring the company in-house to Lattice. We just recently launched it approximately 2-3 weeks ago, and we are seeing a fantastic response in the marketplace.
BJ: What do you attribute this response to? Are people seeing immediate results.
GC: Yes, we are seeing immediate results. The competition that is out there, such as MonoVisc or SynVisc, shows a lack of clinical data that these types of products have any efficacy. In fact, the American Academy of Orthopedic Surgeons has recommended against their usage. Based on the data we have generated and the results we are seeing, the time is right for a new product to come in and offer a new alternative.
BJ: Who is the typical physician that is using this injection?
GC: Orthopedic surgeons, foot and ankle surgeons, pain management physicians. We do see some soft tissue applications. They are injecting it post-surgery for rotator cuff repair. The data was primarily generated in our study, was for OA in the knee, and that is typically going to be an orthopedist or a pain physician that will treat that ailment.
BJ: Can you tell us about the economics of the treatment?
GC: It’s a new product, so we are still getting our feet wet, to some degree. We have priced it approximately to what the course of the treatment for pain medication would be. If we are seeing pain relief for up to a year, with a single injection of AmnioVisc, to treat that patient with opioids would be approximately $2,000-$2,500 per year. We are trying to get it to the patient for that price point.
BJ: There are some downsides to taking medication, like pain meds, for these ailments, based on the high rate of addiction.
GC: The damage to the liver, all sorts of side effects. I was just speaking with a physician last night, who told me that a patient who is put on a course of opioids, they will not necessarily come back from that. They will have a difficult time getting off the drugs, because they are constantly in pain, so Lattice’s ability to offer an alternative has lots of benefits for everybody.
BJ: It seems like a more natural approach. Is this injection as good as a full regime of opiates?
GC: That’s what we are hearing. Anecdotally, one of our investors was a hockey payer with a frozen thumb, that had been frozen for two years. He had a single injection. and within days, he had full mobility back, and he has been pain free for a year.
Another patient had an injection into her arthritic hip, and the pain went away. She was able to be more mobile, she lost 25 pounds in six months. It’s definitely a natural alternative to opioids and drugs that can be addictive.
BJ: Is this a reimbursable treatment?
GC: Its a new product, we are getting some headway with private payors. We have heard that these types of products are getting reimbursed, but it’s a slow process right now. The vast majority of our clients are using cash pay.
BJ: What do you see as the challenges for the firm now, and what is the distribution model?
GC: We are having great success here in Phoenix. We have several physicians who are using the product. We have national contracts in place, who are starting to offer it throughout the country. We are signing up between 5-10 physicians a day. We hope to be able to give a physician reference to patients who want to come to our website and identify a physician in their area who is capable and able to do the injection.
BJ: Do you hope to provide the product national wide within the next 6 months.
GC: Yes – we don’t have any scaling issues with respect to this product so we can ramp-up rather quickly. We just need to identify distributors and physicians throughout the U.S. who are capable and interested in doing this type of injection.
BJ: What do you see as the milestones for the firm in the next year?
GC: Currently, we are listed on the Canadian exchange, the TSXB. We do expect to have a dual listing through the OTC, which should be happening before the end of the year. We expect to be cash flow positive and profitable here in the next 60 to 90 days. As we start to grow, we would expect to announce revenue milestones of $1M a month or so. I think that’s the key catalyst for shareholders are we move forward
BJ: Can you give us some information about your background?
GC: This is my second public company. I was the founder of a company called Bacterin. We had a high water mark of $400M in market cap. Essentially, I started it in my basement and took it to a company of 180 employees and sold it to over 30 countries around the world. I had a great run with that company, and tried to retire a few years ago, and I failed retirement, so I started focusing on Lattice.
I put about $2M of my own money into the company. The CFO has put about half a million of her own money into the company. We have 24 employees now. W are focused on some really innovative products, like AmnioVisc and some other stem cell based technologies. If you visit our webpage, you can see more of the stem cell based technologies that we are working on.
BJ: Thanks for joining us today, Guy.
GC: Thank you, Brett. I appreciate the time.
This interview has been edited and condensed.
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Melanie Battista, Public Relations, Lattice Biologics Ltd., (TSX-V: LBL) (OTCBB: BLVKF)
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