FDA wants more data before approving C3's ReCell

Tissue engineering specialist Clinical Cell Culture's (ASX:CCE, C3) share price took a blow today, in the wake of a request by the US Food and Drug Administration (FDA) for more performance data before it can approve C3's ReCell for sale in the US.

C3's shares have fallen from AUD$0.29 on December 20 -- the day before the Australian Therapeutic Goods Administration (TGA) announced that it intended to reject approval for ReCell -- to $0.0215 at the time of writing.

ReCell is an autologous cell harvesting device used to treat wounds and other skin defects.

"I am afraid that the share price and the shareholder value in the company will take a beating today," said CEO Troels Jordansen. "It is incredibly unfortunate, but it's unfortunately also the name of the game for start-up biotech companies. You make a couple of steps forward and one step backwards, and that's the way it goes."

C3 applied to the FDA for approval to sell ReCell as a class II medical device using the 510(k) strategy rather than a full pre-market approval (PMA).

"Pre-market approval normally requires a significant clinical trial with several hundred patients, with a couple of years' follow-up," said Jordansen. But with a 510(k), "if you can prove you are 'substantially equivalent' to another product, you don't even need to have clinical data."

This makes the 510(k) route faster and more economic than PMA, Jordansen said.

Efficiency

C3 is attempting to prove to the FDA that ReCell is a 'substantial equivalent' to a product called the skin mesher, a much smaller version of the old-fashioned mangle -- a laundry device with two rollers -- which is used by surgeons to stretch skin.

"The skin is pulled through this machine, allowing for hundreds of small knives to cut into it," said Jordansen. "As these knives cut into the skin, they leave a pattern so that when you take the skin out, you can pull the skin in two directions and you can actually expand the skin."

This device has been on the market for about 30 years and can expand a piece of skin up to four times, said Jordansen. In comparison, ReCell can expand a piece of skin up to 80 times, making it 20 times more efficient, according to C3.

C3 will need to conduct a clinical study to provide the performance data requested by the FDA to determine 'substantial equivalence' to the skin mesher. The company is in discussions with the FDA to work out the details of the study.

"We don't know how many patients, we don't know how long a follow up they're interested in," said Jordansen. "We can obviously start speculating but we don't know."

The good and the bad

Jordansen said that the delay in TGA and FDA clearance was clearly disappointing.

"It means a delay in global rollout, which we had hoped would happen in the calendar year 2005. Now it seems that we will get into Australia in 2006, and hopefully in the US at the very end or early next year," he said. "Negatively, it means that we will have to delay revenues. Positively, it means that we can actually focus more on the markets where we are already present."

ReCell is approved for sale in 30 countries around the world, including the UK, Germany, Italy, France, Spain, Argentina and Japan.

"We have five months' market penetration experience from Europe right now, and things are going well. The technology is increasingly being picked up by burns centres, plastic reconstruction surgeons, the interest is amazing," said Jordansen.

"For all medical devices it takes time to launch the products and start seeing the significant revenues, but there is no doubt in my mind that it is happening and we will be able to prove this as we move forward quarter by quarter in our sales numbers."

Jordansen said C3 was in a strong cash position, with enough cash left for 18 months, "so we can pay for the additional clinical evidence that the FDA is looking for."

However, the company will need to adjust its cash burn. "We will take appropriate steps to minimise the investments we have to make on a monthly basis to stretch our cash as far as possible," he said.

Jordansen said he was confident C3's regulatory approval strategy for the TGA and FDA was "correct", with everything being submitted as required, despite both authorities requesting further information.

"Next time we have to do a product like this, I would hope we would be better funded up-front, which would allow us to tailor make our clinical evaluation data to each specific authority," said Jordansen. "But C3 has really never been substantially funded. We have had to renew our funding every single year. So for that reason we could never spend the $5-7 million necessary on all the clinical investigation."

Behind the market

Jordansen, while unwilling to criticise regulatory authorities, said their biological products departments had little expertise to handle enquiries on novel products like ReCell. "They are probably around five to 10 years behind market developments," he said.

Jordansen said C3 was working closely with the TGA, and is "very confident that we will be able to successfully meet the TGA's questions and requirements in a timely fashion". While it is possible that the TGA will approve ReCell for sale in March at its next meeting, Jordansen said that C3 "expects a final TGA decision in the first half of this year".