Avastra discontinues Benz Stent project

Sydney biomaterials company Avastra (ASX:AVS) has decided not to exercise its option to acquire the global rights to the Universitaetsklinikum Freiburg's Benz Stent technology.

A device to reduce post operative complications, the Benz Stent was being developed to sit inside and adjacent to a rejoined deep colorectal resection to prevent leakage and assist in healing.

With the suspension of its Australian BioWeld Tube clinical trial and the postponement of European clinical trails, the Benz Stent program had been seen by Avastra as one way to broaden and lower the company's technology risk profile.

However, after exploring the technical and market feasibility of the Benz Stent over the past several months under its option agreement with the German university, Avastra found that the potential market size was smaller than originally envisaged, the clinical benefits may be less than claimed, and the development time for a commercial product longer than anticipated.

"It just didn't look like it was going to be a winner for us. And you really need winners in this game," said Avastra's managing director Paul Ralph.

"You don't want to just get involved in a project that's going to have a marginal return at the end of the day. You want the odds stacked up on your side, because technology is a high risk business."

A greatly expanded clinical trial number than initially anticipated would also be needed to show the statistically-validated clinical benefits required for market acceptance by surgeons.

Following these findings, Avastra decided that ongoing research and development of the Benz Stent was not likely to provide the company with a significant commercial benefit.

"If we have something that shows that it doesn't live up to expectations or doesn't look like it's going to be of significant importance to the company we're quite prepared to cut it very quickly. We don't want to spend shareholders funds just chaing a project for the sake of it," said Ralph.

However, the company is still looking for other projects within its area of expertise - surgical and medical devices, said Ralph.

Avastra is also continuing R&D into its BioWeld drug delivery systems, BioWeld end-to-side and the BioWeld end-to-end projects, said Ralph.

"We have no reason at the moment to discontinue that," said Ralph.

The company's direction regarding its BioWeld Tube technology -- which uses a protein solder which is activated by laser light to join arteries and veins -- will be decided following the recommendations of the expert panel scheduled for September.

"Considering we had this technical problem, and we are looking to see where we should go forward, I think in the interest of shareholders we need to get some independent guidance on that," said Ralph.