C3 surprised by TGA thumbs-down for ReCell

Tissue engineering specialist Clinical Cell Culture's (ASX:CCE, C3) share price dropped by nearly 30 per cent today on news that the Therapeutic Goods Administration (TGA) intends to reject approval for its ReCell product in Australia.

ReCell is an autologous cell harvesting device used to treat wounds and other skin defects. The product received European CE Mark approval in March.

The TGA decision has puzzled C3. The company's CEO, Troels Jordansen, told an investor conference this morning that he would have expected "that a CE Mark [approval] would have been a great help in getting the TGA approval".

The TGA's committee met 10 days ago, said Jordansen, and C3 expects to be sent a list of questions from this meeting relating to ReCell approval by mid-January 2006. The TGA has indicated that it will confirm its position on the product at its next meeting in late March, 2006.

C3 has already provided further information in support of its dossier to the TGA, but "a lot of the information provided has been repeats of what have already submitted but in slightly different layouts," said Jordansen.

"We have not had any indication whatsoever that the TGA was moving in this rather negative direction," he said. "We are hopeful that at the end of March we would get approval instead of rejection."

C3 is currently conducting two clinical trials for ReCell, and Jordansen said that by March the company would have "six months' follow-up on the two clinical trials we have carried out".

"I would not expect the TGA to have concerns about our clinical data," he said, especially "after we have actually quadrupled patients in the clinical trial."

Jordansen said he was hopeful the TGA would approve ReCell in the first half of 2006. "We cannot imagine that [the TGA]...would actually reject what the CE Mark people approved," he said.

FDA submission

C3 has also submitted ReCell for approval by the US Food and Drug Administration, and expects a decision.

"The intent of rejection from the TGA is in no way connected with the investigation that the US FDA is going through," said Jordansen. "We believe the FDA is so advanced in its ruling for the product that whatever is happening anywhere else, from a regulatory point of view, it is too late for that to influence the FDA decision. We have had several questions from the FDA in connection with our submission and none of them have gone in the direction that the TGA has taken."

ASIC approach

One irate shareholder told the investor conference that he was "horrified" by C3's declining stock price, and that he would complain to the Australian Securities and Investment Commission (ASIC).

In response, Jordansen said that there had been a "strange reaction to C3 shares" since the company embarked on a national investor roadshow earlier this month.

"Clinical Cell Culture presented widely two weeks ago in Australia, at our AGM and at retail and institutional presentations about how C3 was going," he said. "The reaction to that was hardly any movement on our share price, then about three or four days later the price started to dive. I think what we have seen is people getting more and more nervous about what has happened."

Jordansen said the sharp fall in share price in the wake of the TGA's decision was a "very stark reaction to a press release which is concerned with [Australia which accounts for] about 2 per cent of revenues."

Within the next three to five years, C3 expects sales of ReCell worldwide to account for close to 90 per cent of the company's revenues, said Jordansen.

"Obviously with Clinical Cell Culture being a relatively high-profile Australian biotech company, and with TGA being the Australian approval body, this is obviously something that is hitting Australian shareholders much harder than, say, Brazilian," he said.

C3's shares were trading at around $0.34 in early December, falling to a low of $0.20 at the time of writing, and down from a close of $0.275 yesterday.