STOCKHOUSE: AmnioVisc™: a transformational breakthrough for Lattice Biologics

Jeff Nielson, Stockhouse
October, 13th 2016

Emerging medical technologies can be a difficult subject for investors to attempt to wrap their heads around. It starts with the underlying science, and then continues with a sometimes bewildering array of technical jargon.

However, there are some concepts which are universal in the world of investing. Among these are competitive advantage, a streamlined regulatory process, and blue-sky revenue potential. Lattice Biologics LTD (TSX: V.LBL, OTCQB: BLVKF, Forum) boasts all of these advantages with its business model. Its proprietary patents provide it with a competitive advantage versus its peers in the sector. Tissue-based therapies, in general, provide a streamlined regulatory process. And Lattice is building a client (and revenue) base in health-care niches which are under-serviced and/or huge markets.

Beyond this, the Company has developed a unique and highly efficient marketing strategy which further streamlines its operations. Typically, the marketing of new healthcare products is a cumbersome process. It begins with hiring an army of sales reps.

These sales people then begin approaching individual physicians, one at a time, often spending several months of lobbying to get a critical mass of customers. After that, begins the even longer process of endeavoring to get hospitals on board, to start adding an institutional client base. Then this long, slow process transfers to payment collection, which often eats up additional months.

Lattice Biologics has devised a direct marketing campaign where the Company markets its products direct to physicians, eliminating the need for sales reps and the whole, door-to-door marketing approach. Lattice targets “KOL’s” (Key Opinion Leaders) in the specific niche to which it is marketing a particular product.

Once it has contracted with a significant number of KOL’s, the Company then targets the hospitals, aided by the KOL’s it has already recruited. With its efficient marketing strategy and expedited regulatory process, Lattice is able to move its products from the R&D stage to commercial marketing much more quickly than competitors.

Part of the reason why Lattice Biologics has been able to adopt such a high-efficiency business model starts with experience in management. CEO Guy Gook has 25 years of start-up and operational experience in the MedTech and Biologics sector. Prior to purchasing Lattice (previously “International Biologics”), Cook led Bacterin International.

While there, that company went from a small, R&D-based start-up to a publicly traded multinational organization, with multi-million dollar revenue, 180 employees, and market penetration which extended to 15 nations. More specifically, 18 years of his experience has come in the field of tissue engineering, making him ideally suited toward taking the reins at Lattice Biologics.

The Company’s experience in management extends to the business side of operations as well. Chief Financial Officer Cheryl Farmer has 20 years of previous experience as a CPA. She also formerly served as Global Business Executive for the Greater Phoenix Economic Council, Arizona’s premier economic development organization.

Lattice Biologics began pioneering a variety of emerging cellular therapies and tissue engineering. Some of the applications of these therapies included:

  • Enhancing fusion for spine surgery
  • Enhancing post-mastectomy breast reconstruction
  • Sports medicine
  • Promotion of bone regeneration in foot/ankle surgery
  • Promotion of cranial healing  following neuro-surgery
  • Enhancing wound repair in burn victims
  • Subchondral bone defect repair in knees and joints

While all these previous initiatives have added to Lattice’s customer and revenue base, the Company is most-excited by the latest product it has brought to market: AmnioVisc™. The product derives its name from the source of the biological material from which it is produced: the amniotic fluid taken from healthy Caesarean births.

This fluid possesses several, superior medical properties. Among them are anti-inflammatory agents which are necessary to protect the fetus from (among other things) the antibodies and immune system of the mother. The Company saw an opportunity to develop products derived from this fluid, and thus AmnioVisc™ was born.

Lattice Biologics has developed several “composition of matter patents” in its development of AmnioVisc™. This is a key to the superiority of its product. The Company’s patents involve a unique method of removing contaminants from amniotic fluid, while concentrating the beneficial components of the fluid. It was such contaminants which had previously impaired the usefulness of this fluid in various medical applications.

Further strengthening the Company’s position in developing this product and capturing market-share is the nature of composition of matter patents. With a normal process patent, all that a competitor needs to do is to remove or alter one or more steps in the process, and patent protection for the original developer is lost.

Composition of matter patents, on the other hand, are similar to drug patents. They completely safeguard the Company’s proprietary rights, enabling unimpeded commercialization and marketing of AmnioVisc™.

This leads to the aspect of AmnioVisc™ which has Lattice Biologics and its management team most excited: the market itself. The Company has begun the marketing of AmnioVisc™ by targeting the osteoarthritis market, specifically involving the knee joint.

This is a $2.8 billion market for medical therapy, with 12 million knee patients presently in need of treatment. Current therapy options for these patients are limited. The first treatment option is the prescription of ordinary pain medications to seek to provide patients with suitable relief.

Where this initial option is inadequate, patients are then offered steroid injections, aimed at providing more extended relief from pain symptoms. For more advanced/serious conditions, this too is inadequate, leading to the most-dramatic, most-expensive option: knee replacement surgery.

This last approach to relief from osteoarthritis has several drawbacks, including an extended period of rehabilitation and a significant incidence of post-surgical complications. Enter AmnioVisc™. With this product, the Company aims to insert itself in the treatment process  before the need for knee replacement.

AmnioVisc™ is also an injection-based therapy. However, it boasts several advantages over more antiquated steroid injections. To begin with, the product offers a much more extended duration of symptomatic relief. Clinical trials have consistently demonstrated that AmnioVisc™ is capable of easing pain symptoms for up to six months.

Through the Company’s proprietary patents, this all-natural product also produces zero side effects in clinical trials to date. With the extended success from AmnioVisc™ therapy and the lack of adverse outcomes, management is confident that this product can capture a large portion of the market share in this niche, in a minimal amount of time. At best, the Company hopes that AmnioVisc™ injections can significantly delay the need for knee replacement surgery with recipient patients.

With this promising method of treatment, Lattice is currently aiming at generating $1 million in revenues per month. To further accelerate revenue generation, the Company is already in talks with the United States’ Department of Veterans Affairs (“VA”). At present, knee ailments constitute the single largest category of VA patients needing therapy. If AmnioVisc™ becomes the therapy of choice for VA knee patients with osteoarthritis complications, this will move the Company a long ways toward its revenue goal.

The Company already has the productive capacity to meet current and near-term demand for AmnioVisc™. Lattice is in advanced negotiations to acquire Liventa Bioscience, the acquisition of Liventa will add additional intellectual property protection.  Lattice Biologics currently has a cash position of approximately $350,000, and anticipates raising additional capital to a total of $750,000, in order to enable the Company to close on this acquisition.

Jeff Nielson, Stockhouse
October, 13th 2016
Read the full article here.

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Media Contact:
Melanie Battista, Public Relations, Lattice Biologics Ltd., (TSX-V: LBL) (OTCBB: BLVKF)
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