We interviewed Philip Young, CEO and Chairman of the Board of Exactus Inc., a company specializing in Point-of-Care diagnostics for measuring proteolytic enzymes in the blood based on a novel, proprietary detection platform. Joining Mr. Young is Dr. James Erickson, Chief Business Officer of Exactus.
Mr. Young has served as a Director and Executive Officer for public and private companies for the past 20 years where has had created significant shareholder value, built integrated commercial operations, directed successful M&A transactions and was responsible for generating more the $900M through acquisitions and equity financings.
Read below for a transcript of Mr. Young’s discussion on the latest updates at Exactus, and their lead product, the FibriLyzer™.
Brett Johnson: Why don’t we just go ahead and start with the technology. What is this technology and how does it work?
Philip Young: Sure. Well, it’s a handheld Point-of-Care device utilizing a drop of whole blood that delivers data within 30 seconds. It measures a specific component of the coagulation cascade in humans called fibrinolysis. What we’re looking to target is patients that are suffering from hyperfibrinolysis. Hyperfibrinolysis is a known contributor to excess mortality in every major surgical procedure and trauma procedure there is. As far as how it works, Jim, do you want to scientifically describe that?
BJ: Hyperfibrinolysis, is that excessive bleeding or excessive coagulation? What is the layman’s terms of what’s going on there?
James Erickson: So, fibrinolysis is the process by which a blood clot is dissolved. And so, in a hyperfibrinolysis state, the body is dissolving blood clots as fast as they’re formed which often leads to excessive bleeding and hemorrhage. The other cause of hemorrhage, of course, is the inability to form clots which are two very different pathologies that need to be resolved quickly so that the attending physician can make the correct therapeutic intervention. So, the way it works is that, if you’ve ever used a glucose meter, you put a little strip to the device and put a drop of blood on the strip which gets drawn into a chamber by capillary action. The FibriLyzer™ works very much the same way. At the business end of the strip is a synthetic clot that is made by by combining fibrinogen and the enzyme that converts fibrinogen into fibrin, thrombin. So, embedded in that that synthetic clot is a polymer that carries electrical current. As long as the synthetic blood clot is intact, the polymer, the electroactive polymer, which we call an elactimer cannot move, and so no current is carried. As enzymes that degrade the fibrin clot work on down there, the elactimer is freed up to carry current. So, the more fibrinolysis, the higher the reading on the meter. So, that’s basically how it works. And again, it takes 30 seconds, the doctor gets a number and then can act on how to treat one way or the other depending on how high the fibrinolysis score is.
BJ: It sounds fascinating. Any other thing you want to say about the technology and how it works?
PY: I think that the key component to this is that we mimic the native human clot, we mimic the native situation where a clot is undergoing lysis and the patented technology involves our ability to quantify and measure that and then reduce that to a score that will tell a physician, importantly, how to treat the patient. And that data is not available today in a timely fashion.
BJ: OK, that’s a nice segue into our next question; the clinical need. What is the patient situation today? What happens in the operating room, or where does this happen, in the operating room and in the emergency room?
PY: The major market total in the US is over 12 million potential patients annually. And you can break them down into very concrete, specific areas. The largest potential market would be the surgical market and that can be cardiovascular surgery, transplant, trauma, neurosurgery, orthopedic or OB-GYN. And, in every one of those situations, surgeons and the treating teams will encounter incidents of excessive bleeding. Currently when patients develop excessive bleeding, it’s a systemic stress response. So, it’s not as if somebody coming into an OR is going to give you something that you’re going to look for. Hip replacements are a prime example. They just start to bleed a lot. And if they go down the degradation process, and become hyperfibrinolytic, meaning they can’t maintain a clot, then the physician needs to know that sooner rather than later and direct the treatment modalities. In our slide deck that we sent to you, there are really two specific treatment paradigms that Jim described. If you can clot and just need help clotting, there’s one treatment paradigm. If you can’t clot, then there’s something else totally different that needs to be done. Currently, physicians have to make those treatment decisions empirically based on their historical exposure to bleeding patients, not knowing if they’re right or wrong, but they don’t have the time to wait. And what our what our product is doing is giving them the chance to evaluate in real time and react in real time.
BJ: So, what happens now?
PY: They just guess, and they throw a lot of blood and blood products at the patient. So, currently, let’s say a trauma patient comes in. Blunt force trauma, they’re a 40 year old guy that’s been in a car wreck and there is evidence of significant bleeding internally. Well, they’re going to try to replace the blood and they’re going to try maybe platelets and they’re going to maybe give clotting factors. If that’s not working then they’ll try the other side of the spectrum, and maybe give cryoprecipitate. And really, right now it’s experience-based but it’s also hunting and pecking because they have a protocol, and all major trauma centers and surgical centers have a blood-use protocol that they’re supposed to use, but they’re just going after it sequentially. And what happens with our device is that they can go after it directly, because if they’re hyperfibrinolytic you clearly don’t worry about giving them whole blood and platelets upfront. You want to give them therapeutic intervention, TXA or cryoprecipitate to help them reverse the hyper-anticoagulation that’s going on in their bodies, and they just don’t have the data now. Now they’ll have the data and they’ll be able to do something more directed about it.
BJ: To summarize, these guys are basically making their best guess going left or right. And they don’t really know which, just based on their own historical sort of experience?
PY: Correct. The only FDA approved test takes hours to give you data on hyperfibrinolysis. The tests that are done nowadays, just because there is nothing else and they give them analogous data, take 20 minutes in the best case scenario. And they require specialized operators trained to use those devices. This device is going to be a clear way for anyone in the world to use it.
BJ: OK. In terms of the marketplace, what are the economics of this method in terms of the cost for the different sorts of treatment, such as the cost of whole blood, platelets, clotting factors or TXA? What are the financial impacts?
PY: There’s direct and indirect costs, as with everything in a hospital is measured. Just to do a platelet transfusion, the hospital cost is about $1200 to $1400 a pop. Blood is running at about half that. It’s very expensive to use the wrong thing and do it repeatedly. Transuranic acid is a 30 year old drug, originally approved for treating excessive menstrual flow. It’s been around forever, but there’s a lot of concern about using it too widely in patient populations when you’re not really sure what it is that you’re trying to treat the patients for. So, if they use our test, which will be very cost efficient compared to the existing tests, and I’ll tell you about those costs in a minute, saving one bag of platelets or two bags of blood or some cryoprecipitate, the test will pay for itself many times over. So that’s a value proposition that we will prove in a post-marketing situation once we’re on the market. That’s too big of a project for us to undertake while we’re getting ready to go to market. But, if you look at the globulin license test, that’s a central laboratory based test that is done by special operators in the lab, who have to be skilled at running the test. And it takes time, it doesn’t cost that much, probably the billable amount is anywhere from $25 to $100. But it’s really useless in the critical care situation or acute care situation. The other tests that I was talking about, the thromboelastography tests, TEG and ROTEM, those devices cost $25,000 to $80,000 to acquire. They require specially trained technicians, they require a lot of maintenance, and they’re expensive to run. They take several vials of blood and they require a tech to sit there and do it and then they require somebody who actually can read and interpret the data. So what we’ve done is we’ve taken all the convoluted TEG and ROTEM data, we’ve taken the data that you would normally get from ELT and combined it into a very simple numeric scale that you get in 30 seconds.
BJ: Wow, that’s quite impressive. So, I guess that leads to the next question, what evidence do we have that this actually works?
PY: Well, we’ve tested ourselves and all of us generate normal data. There was an experimental study done with prototype devices over in Europe. Basically, what we wanted to do was to say ‘can we go and test patients with known bleeding issues or known coagulation issues and can we differentiate the normals from the abnormals, and can we do it in a repeated fashion?’. So, this was done, as I mentioned using a prototype device, and the guts are still the same. So, the biosensor strip is the same and the algorithms and all that stuff is the same. We’ve just turned it from something that looks like an old TV remote control to a sleek white device. But everything else, the guts of it are still the same. And so what we were able to do is to reproducibly test patients in the cardiovascular ward. In triplicate, the data was reproduced very tightly, demonstrating that the folks who were in the high end, with known coagulation problems, tested in the high end. The patients that were normal in the unit, as well as the healthy controls, which you would hope they would test in the normal range, all tested in the normal range. We didn’t know the diagnosis at the time, we looked at the diagnosis later. So, we were able to definitely separate the folks who were “bleeders” against the folks who were normal, and then the variation on the spectrum. So, fibrinolysis definitely was able to be measured across the spectrum of patients, which is great. So this is the data we took to the FDA, along with our clinical development plan, and said that not only do we believe that we’ve got a better way to measure fibrinolysis, but we believe it’s a 510(k) class II device. And that’s what they agreed to with us.
BJ: Basically, you’ve been able to go to people and use the device to verify people you already knew were bleeders or non-bleeders, and the data shows up that you were accurate in your assessment?
PY: Yeah, and the key is that we did it with different operators in triplicate. So, it was not only just done one time, it was done by three different people and the data clustered extremely tightly together, and then the scale was the scale and so the ones that were that were later identified by reviewing their charts as patients with bleeding issues, they showed up, and I use bleeding issue as a broad term. But, certainly patients that have had hemorrhaging issues and that’s probably the right way to say it.
BJ: So what do you think the clinical trial pathway is going to need to be to get this thing approved? How big a trial, what’s the strategy on that?
JE: What we’re going to do, and this was also vetted with our pre-submission document to the FDA, what we’re planning to do is to go into multiple clinical settings, different surgical settings, outpatient settings and obviously we have to test normals. We’re probably going to do anywhere between 600 and 1000 subjects, and the number really is just going to vary based upon how many settings we want to go into. For me, the more the merrier. So, currently we’re using a number of around 800 because that was the easiest to budget and forecast for with the CRO. So, we have a contract with the CRO, we’ve got a study outline pretty well organized that we had to have it that way because we had to go to the FDA with it. And the good news is it’s a very fast study because there is no follow up required, all we’re doing is getting patients’ blood and we’re not directing anything in the hospital setting, we’re just getting their blood. We’re testing it with our product and we’re testing it and comparing it to the predicate product, ELT, and we’ll also test it against the other two test devices I mentioned, the TEG and ROTEM devices with the desire of showing us that: 1. we correlate totally with the ELT and we’re able to rapidly predict and diagnose patients’ levels of fibrinolysis and 2. our data correlates with the TEG and ROTEM tracings, so that not only if physicians like to use those analogous datas, they can do that, but ours delivers the same thing. So once again, 30 seconds versus 20 or 30 minutes to hours, we’ll deliver that data. So, that’s the one study that we have to do. It’s called a pivotal study, but we call it 510(k) enabling study. We then have to do some traditional device studies, usability studies, we have to just get a man on the street and do that type of stuff, which everyone does. And also, we’re talking with two major universities about entering into some quick physician sponsored studies that we’ll be doing here in the U.S. and we’ll be doing those assuming we raise enough capital, this fall or early winter so that we can start generating data out early next year and all that will go towards the 510(k) support.
BJ: So, in terms of the intellectual property, can you talk a little bit about the defensibility of this, the trade secrets, where it’s patented? What threats might there be that someone is going to learn about this and compete with you?
PY: I’ll give you an overview, Jim knows specifics if you want to get into specifics on IP. We have gone after patent protection globally, we’ve had patents issued, we have patents pending. The core technology is involving the synthetic clot, as Jim called it, and the elactimer and our ability to create a synthetic clot mimicking the human condition but also read “the amount” of fibrinolysis going on in the patient. As far as trade secret goes, I think everything we’re doing is pretty well protected in that we licensed the core technology and we’ve made significant improvements on it already, and everything we own completely.
BJ: OK, good. So, in terms of the stage of the company now and your status, how would you describe what’s next and the critical milestones and the timeline?
PY: Well, as soon as we raise the capital, the first thing we do is we initiate our GMP production of our devices and strips. That’s key for us in initiating our clinical trials, so milestone number one is initiate GMP production ASAP and get that done within six months at the outside, and then initiate the 510(k) enabling study. In concurrence with initiating the GMP production and starting the 510(k) enabling study, we’ll be kicking off one or two, depending on the timing of it, of those physician sponsored studies here in the United States which will also generate data that we’ll be able to use to support our efforts moving forward next year. And while we’re going about that, we’ll begin setting the groundwork for getting the 510(k) put together. So, all of the quality systems, audits and everything that has to be done, and Jim is a quality systems guru, will begin to take form and take shape so that, as we’re tracking down and doing the 510(k) enabling study, all the other data that’s necessary for the 510K will be done in parallel. And so, our goal is now to have the 510(k) filed in Q4 next year and then go from there.