Brett Johnson: This is Brett Johnson with OneMedRadio and I am here with Jerry Mezger, CEO of Harbor MedTech, a medical device company working in the wound care and surgical mesh space, that has developed some exciting new products that we hope to speak with him about today. Welcome, Jerry.
Jerry Mezger: Thanks for having me, Brett.
BJ: Jerry, you have a terrific history as a scientist and entrepreneur. Can you give us some background as to your involvement in Harbor MedTech, and why you started the company?
JM: I started Harbor MedTech a bit over five years ago. It’s my eighth medical device company that I’ve either started or turned around for venture capitalists. I ran a couple of heart valve companies. I’ve run some other companies that have been acquired by MedTronic, 3M and some other companies. In starting Harbor MedTech, I saw an opportunity in the United States and also globally in a better way, and a much more cost-effective way of treating chronic skin wounds.
BJ: Part of Harbor MedTech’s focus is on wound care. What spurred your decision to enter this space?
JM: Oftentimes, difficult-to-heal chronic wounds are linked to diabetes, which is a problem around the world. While certainly it’s a problem in the United States, 90% of the cases are outside of the United States, particularly in China and India. With diabetes, the most serious complications that one can face are the diabetic foot ulcers, that are very difficult to heal. If they don’t get healed, it’s the leading cause of amputation, at least in the United States.
What has emerged as a very popular and fast-growing therapy for treating these difficult-to-heal chronic skin wounds are products called “skin substitutes” in the United States. These are products made of animal, or human tissue, that can be put onto a wound, and they dissolve quite quickly. They deliver collagen and growth factors into these wounds, which is why they remain in a chronic state.
So, these skin substitutes of human or animal tissue go under these wounds. Again, they claim to deliver collagenic growth factors and they’ll eventually heal the wound. About half of them heal. That’s better than none of them.
The opportunity that I saw was that these products, as they go onto a wound and they dissolve within a week or so and require reapplication, represent a very inconvenient therapy. Because these products in the U.S. are very costly, something the size of a business card can cost $2,000.00, so if you put that on once a week for five, eight, or twelve weeks, you can see how it becomes a very costly therapy.
In part, that cost is driven by the reimbursement system, particularly Medicare, where they have a policy where if you see a Doctor, the Doctor gets paid. It’s a reimbursement model that has fed this market and resulted in a very costly therapy. The patient is required to come back to the clinic or hospital on a weekly basis, which makes it inconvenient to patient, and a hassle for the hospitals and clinics.
BJ: Can you tell us about your relationship to Pegasus Biologics, and how it relates to the opportunity you saw in the wound care space?
JM: Sure. We started out by identifying an opportunity wherein if there was a product that could heal these wounds, with fewer applications, it could be ideal. Pegasus Biologics was venture capital backed, as Baxter had bought it through a couple of acquisitions. They had a technology to treat animal tissue, which is cheaper to deal with than animal tissue.
Pegasus had a product to treat wounds quite rapidly with just one application, and so I acquired that business from Baxter.
BJ: Did you identify any drawbacks to the Pegasus technology, and if so, how did you set out to improve them?
JM: Yes, there were drawbacks to the Pegasus technology, so I also acquired some technology from Edwards Lifesciences – the world’s leading tissue heart valve company. I pulled all that together and received FDA approval and the CE mark for Europe.
What we are doing is taking animal tissue, treating it in such a way by cross-linking the collagen in the animal tissue. The result is that it is immune to the attack of the patient’s proteases, which are flooding these wounds so it does not dissolve. One published clinical study shows that we are healing wounds twice as fast as any dissolving skin substitute in the United States. That is very compelling.
BJ: Can you tell us a bit about Ohio State’s research into your wound care technology?
JM: Well, we really didn’t understand the method of action until we went to OSU and the Regenerative Center, a premiere center within OSU that studies mechanisms of action and how well they work. We went there about a year and a half ago, and they were initially quite skeptical. They said that everybody knows that the way to heal wounds is to put a collagen-based product in the wound that will rapidly dissolve. As it dissolves, it’s delivering collagenic growth factors. You have to replace it in a week or so, but we were told “that’s just the way it is”.
We reiterated that our product was healing wounds twice as fast as those products, but we don’t dissolve. They said they would study our technology. They studied it via animal studies over a year and came back to us last fall. They said that they were seeing things that they had never seen before. They said it was very exciting, and totally the opposite of what everybody thought about wound healing. They said that our product, instead of going into the wound with a collagen-based product, our technology attracts the patient’s own growth factors – the macrophages and keratinocytes to the surface of our product.
The other exciting thing that they cited was that our product was sitting on the wound in a moist environment for a couple of weeks. Many would ask, why didn’t it become infected? The answer is because it was also upregulating the patient’s own antimicrobial peptides, making it sterile and anti-infective. It prevented the formation of biofilm, and prevents any infection from happening in the wound.
Ohio State has said that they have studied all the various technologies out there, and they thought that they fully understood how they work. They told us that ours worked in an entirely different way and was very exciting, representing a breakthrough. They said it was similar to in the cancer world, when for many years, cancer was treated via chemotherapy and very powerful drugs to try to kill the cancer cells. The emerging therapy is immunotherapy – where instead of delivering toxic chemicals into the body – you are upregulating the patient’s own immune system, helping and teaching it to identify and cure cancer.
BJ: Can you explain how your wound care product works differently to heal the wound faster?
JM: Our product presents a very collagen friendly matrix to the wound. We are drawing the patient’s growth factors into the wound – concentrating them and nourishing them and so it proliferates in the wound. Because other products, as they’re dissolving, they’re losing healing power. Our product is gathering healing power as it attracts and proliferates growth factors on the surface. That is why our product was healing wounds twice as fast as other products.
Just as immunotherapy upregulates the patient’s own immune system, helping and teaching it to identify and cure cancer, our technology works in the same way. It is far more natural in the way it helps the patient heal itself. This is the technology that we have employed.
We have a published study showing that we are healing wounds twice as fast as any other product. In doing so, with only one application, making it far more cost effective in the U.S. It also makes it extremely attractive internationally, because the international marketplace will not tolerate the expense of skin substitutes – that’s why they aren’t used outside of the U.S.
BJ: Let’s switch gears now and discuss the other product franchise that Harbor MedTech is pursuing: surgical mesh.
JM: We believe that surgical mesh could potentially offer an even greater opportunity.
The company we acquired, Pegasus Biologics, had two products: a wound care product and a surgical mesh product. The surgical mesh product was a biologic, with a material that was equine pericardium – which is emerging as a superior biologic compared to bovine pericardium for use in tissue heart valves because the horse is a more athletic animal.
Pericardial tissue here is very pure – unlike dermis it does not contain hair follicles or many other things that you wouldn’t want in a biologic. It’s about 95%+ Type 1 Collagen. Equine pericardium is thin, half the thickness of dermis. It’s very strong as well.
With their technology, Pegasus was cross-linking the equine pericardium and using that as a surgical mesh to repair Achilles tendon tears and to reinforce the repair of rotator cuffs. They were starting to step into hernia repair as well. So, when we acquired the Pegasus technology, we converted over to our technology.
BJ: Did Ohio State also study your surgical mesh product?
JM: Yes. Ohio State told us that our surgical mesh, based on equine pericardium but using our cross-linking technology, would be the first surgical mesh to not only reinforce the repair of the surgical soft tissue injuries and defects, but would be the first surgical mesh to draw growth factors right to the repair site, and also, upregulate the patient’s infection defenses right at the repair site. All of this is far more important and desirable than systemic drugs to fight infection and things like that.
BJ: Can you give us some more detail into how the surgical mesh product works?
JM: Sure. We figured out how to partially cross-link this equine pericardium. When you think about surgical mesh products, the surgical mesh industry utilizes very inexpensive plastic mesh, which is a permanent implant that is not very desirable. It is a frequent source of infection and very uncomfortable for the patient because the mesh never goes away.
What has become even more popular in the U.S. – is the use of biologic meshes – based upon cadaver dermis or animal dermis. It will be surgically implanted to reinforce surgical repair of hernia or Achilles tendon or rotator cuff. Because of the way that these products are treated – they begin losing strength right away. They are not protected from the patient’s immune system, so they start dissolving right away.
The drawback is that they aren’t permanent implants – they are more biodegradable than plastics, but they lose strength rapidly. They lose strength so rapidly in the body that the surgical repair has not completed, so there is a re-tear of the tendon or muscle or some other of the initial surgical repair.
BJ: That being said, what type of features do you envision the most effective form of surgical mesh as having?
JM: The Holy Grail for surgical mesh products is clear: a surgical mesh that is very highly bio-compatible that not only delivers or provides a high strength or durability to reinforce the repair for the entire healing period, but ideally, it will last quite a long time and still go away. It not only performs that surgical repair reinforcement function, but somehow accelerates the healing of the repair and prevent infection.
The Ohio State study, who had an unrestricted grant to study our technology, came back to us on their own to report what they found. They reported that we have the only technology they’ve ever seen that accelerates healing and prevents infection. Because we cross-linked the biologic tissue, it has high strength and durability in the body, instead of going away in 4-6 weeks, it goes away in 6-12 months. These are very important findings.
BJ: What is the status of FDA approval on the surgical mesh product?
JM: We put an application into the FDA for approval of our surgical mesh products. The FDA said that the application looks good, but they would like us to do an animal study of 5-10 goats as a safety study. Once we do that study, we will have no problem getting FDA approval. We think that while the wound care market is very attractive in the U.S. and globally, the surgical mesh market is extremely important and can be a blockbuster product.
Right now, we are a small company. We have gotten to where we are spending only $10M to develop our technology, to get FDA approval on the wound care products, reimbursement approval in the U.S. for the wound care products, and we’ve developed a technology, and patented it.
BJ: Do you plan to see patents outside of the U.S.?
JM: Yes. We have patents now just issued in China for our technology. We have coverage there. So now we are looking for partners in China and broader in Asia that can take our technology forward.
We have been flooded with potential Chinese distribution partners. We have a verbal proposal for a significant investment and distribution deal in China. We will know in a week or so whether it will move forward. We have one other company who is doing significant due diligence and will come forward as well. That’s where we are on the wound care side.
BJ: What are your approaches for further development of your wound care and surgical mesh products? What is your business strategy?
JM: The surgical mesh opportunity is quite attractive and available to us, and going back to the wound care side, there are a couple of different approaches .
One is taking our current product architect – which is a high priced product in the U.S. – a collagen matrix for healing these chronic skin wounds. We have also figured out how to take the wound healing properties of our technology and put that into a band-aid that can be used and very inexpensive.
We can also put it into a gel or liquid that can be applied to wounds that can be very inexpensive as well. To the extent that the Chinese market can utilize products of a high price, we have it to the extent that the Asian market needs low-cost products with powerful healing properties. It will take a bit more R&D for us to do that, that’s where we are on our technology and our business strategy.
BJ: Thanks for chatting with us today, Jerry. Appreciate you taking the time.
JM: My pleasure. Thanks, Brett.
Note: This interview has been edited and condensed.