(MENAFN- ProactiveInvestors - N.America) With intricacies of the US health system little understood on this side of the Atlantic, followers of Tissue Regenix (LON:TRX) could be forgiven for missing the huge commercial importance of a regulatory clearance it received recently.
The announcement, on March 6, revealed America's largest third-party Medicare payor, an organisation called Novitas, was ready to reimburse clinics and hospitals that used the AIM-listed group's breakthrough wound care product, DermaPure.
The first step in the process was the granting of what's called a Q-code, which happened last year. But without the official sanction of Medicare Administrative Contractors (MACs) such as Novitas, it would be an uphill struggle to make sales Stateside.
Now Novitas, whose jurisdiction spans from New Mexico in the south to New Jersey on the north-eastern seaboard, is one of handful of MACs.
However, it does account for 8.9mln people who are part of the national health insurance scheme.
And earlier today Tissue Regenix revealed it had gained further traction in the States as CGS said doctors in Ohio and Kentucky serving 1.9 Medicare users would be reimbursed for using DermaPure.
Tissue Regenix chief executive Antony Odell told Proactive Investors: "We have an equation that says coding plus coverage equals reimbursement.
"Novitas makes that equation work. It also gives us 25% of the Medicare market. It means we now have a market we can address in the US."
January's share placing, which brought in £20mln, means Tissue Regenix is funded to go out and aggressively market DermaPure.
It will do so with a "15 to 20" strong sales team based in Novitas states.
Getting out and meeting physicians and convincing them of the benefits of DermaPure over the current gold standard artificial skins is "only half the battle", Odell points out.
Clinics and hospitals have what are called VACs (value analysis committees), gatekeepers that sanction which products can be stocked by these health care institutions.
Luckily DermaPure has a number of advantages over the existing treatments that make up the US$1.4bn wound care market that should convince these VACs of its worth.
Its unique selling point is that it can be stored at room temperature, which means it fits seamlessly into a hospital's logistics chain because there is no need to for special storage such as freezers.
DermaPure is also very easy to use, with the procedure taking 40 minutes with the skin applied in one go. Most of DermaPure's rivals require three or four attempts before the product knits with the surrounding tissues.
Importantly, this should ensure DermaPure is a cheaper alternative to the wound care products currently out on the market.
The next 12 to 24 months will reveal whether these arguments resonate with doctors and more importantly those hospital committees.
If Tissue Regenix is successful at convincing America's MACs and VACs of DermaPure's advantages over the competition, then it is only a matter of time before the industry's big players take an interest.
According to analysts, Tissue Regenix's corporate structure makes it relatively easy to strip out DermaPure for a trade sale.
Understandably, Odell won't comment on this directly. Although he told Proactive: "Our goal here is to show there is a business opportunity."
The 24% rise in the share price over the past fortnight reveals that investors are starting to tune into the potential of DermaPure.
However, Tissue Regenix is more than a one trick pony € it is developing orthopaedic, cardiac and vascular innovations too.
And there's a strong argument these other component parts have yet to be included in the company's current £134mln market capitalisation.
Two of its most exciting products are in the area of sports medicine.
On April 28 it took a critical step towards regulatory sign-off for Orthopure XT, a decellularised tendon device for the reconstruction of torn anterior cruciate ligaments.
It did so after the UK's Medicines and Healthcare Products Regulatory Agency gave the green light to start first clinical trials on the product.
Success would pave the way for EU clearance, and a coveted CE Mark required of medical devices, which would then kick-start full commercialisation of the product throughout Europe.
A torn anterior cruciate ligament, or ACL as it has become known, is the bane of the competitive sports man and woman.
And while surgeons have been skilled in rebuilding the ligament and rehabilitating athletes, there are still around 900,000 people a year who don't have dedicated medical teams or the funds to fly abroad for the best reconstructive surgery.
Exciting Odell is OrthoPure XM, a regenerative medical device that was used to successfully replace part of a knee meniscus, a piece of cartilage in your knee that cushions and stabilises the joint.
Given the progress made to date, it could be out on the market in the second half of next year.
Tissue Regenix's products, particularly in the orthopaedics area, offer the big beasts of medical devices a method of diversifying from plastic and metal knee and hip replacements into biologics and regenerative medicine.
And it is clear the likes of Johnson & Johnson, Stryker and Smith & Nephew, need to rationalise their product lines.
For while more hip and knee ops are being carried out as the baby boomer generation heads into old age, the amount these companies are paid is declining rapidly and this has been driving the recent wave of consolidation.
Odell points out: "What the big companies don't have is the technology platforms that allow them to look at biologic solutions.
"Yet the trend is for earlier interventions with biologic solutions. We have these platforms."
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.