July 2018

What happened? Today (2018.07.02), Mölnlycke Health Care announced its acquisition of SastoMed GmbH. Mölnlycke is of course known in the industry as a top global wound care (also wound prevention and surgical) product brand, particularly in Europe and the United States. SastoMed, a much smaller German firm, was a subsidiary of SanderStrothmann GmbH, a company which assesses, formulates, and produces cosmetic, skin, and medical products for hundreds of well-known global brands. SastoMed has developed and commercialized two wound care products at the heart of this acquisition: Granulox, a hemoglobin spray that delivers oxygen from the surrounding air into to the wound bed via facilitated diffusion (see this article for a video + discussion). Granudacyn, a hypochlorous wound irrigation solution for cleaning, moistening, and rinsing of acute, chronic, and contaminated wounds, and 1st and 2nd degree burns.   Why is it important? There have been multiple wound care M&A and JV deals in recent history, including: Integra’s acquisition of Derma Sciences Acelity’s acquisition of Crawford Healthcare The formation of Appulse as a JV by the principals of Hollister’s divested key wound care products (Hydrofera Blue and Endoform) …and several others (with more expected!) Yet despite the volume of wound care activity, this deal is unique and significant for a variety of reasons: Innovation Significance Both Granulox and Granudacyn are innovative products beyond what we normally see in the industry. Let’s briefly recap why: Granulox There exist dozens of negative pressure wound therapy (NPWT) devices, over 80 allografts, and hundreds of dressings and pressure offloading solutions. Clearly, not all wound care products in each category have the same levels of efficacy, quality, and cost-effectiveness, yet as a whole, these categories are clearly becoming increasingly saturated and sensitive to reimbursement and other economic factors. But what about solutions for delivering oxygen to hypoxic wounds (most chronic wounds are hypoxic)? Historically, the only options for these patients have been: Vascular procedures (bypass surgery, stents, etc.): These overcome blood vessel blockages and are important procedures not going away anytime soon. Indeed, the other options listed below are not substitutes for improving the underlying circulation addressed by vascular procedures. However, such procedures and are both invasive and expensive, so not every patient is a good candidate. Revascularization benefits also apply primarily to the large blood vessels, often having less impact on microvasculature, which is a key challenge for many types of chronic wounds (such as diabetic ulcers and pressure ulcers). Systemic medications (blood thinners, diuretics, etc.): These are and will continue to have important roles in cardio-vascular management (circulation, edema management, etc.), and they aim to help balance  negative impacts of certain co-morbidities. Still, many chronic wounds will require additional oxygen to optimize healing–especially at the wound surface and surrounding microvasculature. Hyperbaric oxygen therapy (HBOT): Thousands of patients receive and benefit from this treatment daily (the vast majority are in the US). However, it requires proper functioning of the patient’s blood vessels in order to be effective (and to be approved for reimbursement in the US), and there is a steep drop-off in perfusion between treatments. The high cost, long treatment time (~2-3 hours per day for ~20-60 days), contraindications, low availability (outside of the US), limited indication coverage, and recently heightened regulatory scrutiny and cost pressures mean that while HBOT is and will continue to be an important wound care tool, it is not enough to meet the large and growing need for wound oxygenation solutions. Topical oxygen devices (besides Granulox): The growth of this category in recent years underscores both the increasing awareness and need for tools to combat wound bed hypoxia. On the other hand, the existing alternatives have the following limitations: Difficulty overcoming the exudate (moisture) barrier: A thin layer of just 0.1mm of moisture, such as is found on most wounds and between the cells, blocks 99% of oxygen diffusion from the air to enter the wound bed (hemoglobin molecules such as in Granulox can break that barrier, which is why the mechanism of action is referred to as “facilitated diffusion [of oxygen]”). Incompatibility with many other treatments: Application of most topical oxygen products limits clinicians’ choices for which dressings can go on top (often, the dressing is part of the delivery mechanism). Granulox can be used together with most standard and advanced wound care products. Granulox is the only hemoglobin-derived oxygen transfer product for wound care. But most importantly, Granulox complements all of the above treatment options. So it does not disrupt clinical practice, but rather is a readily available adjunct treatment to initiate oxygen delivery which overcomes many of the hurdles making wound oxygenation such a challenge. The ~100% reduction in slough buildup and ~50% reduction in pain for Granulox patients across all wound types are two more underserved clinical needs (in addition to the increased oxygenation / 50% faster healing) that make this a very innovative development. Granudacyn Natural and pH balanced: Hypochlorous Acid (HOCl) is produced by the human body as part of the immune system, and innocuously breaks down into water and a salt. As such, Granudacyn can be used inside body cavities and will not impact cellular tissue products (CTPs), which makes it complementary to Mölnlycke’s surgical business in addition to wound care. The importance of balanced pH in wound healing is also well documented. Excellent stability: Many otherwise high potential wound cleansers suffer from a relatively short shelf life. Granudacyn can be stored for a minimum of 18 months, which is plenty for any typical wound care setting. Strategic Significance Prior to this acquisition, the focus of Mölnlycke’s wound care business had primarily been on prevention (offloading, reduction of wound/periwound trauma and irritation) and passive healing (moisture balance, infection management, etc.). Granudacyn of course strengthens their wound management (and surgical) portfolio(s), but with Granulox, it can be said that Mölnlycke has now established a significant position in the field of active healing. Stated differently: Pre-acquisition Mölnlycke had products to optimize the wound bed and surrounding area via the body’s own healing process. Post-acquisition Mölnlycke can now offer its customers active acceleration of tissue regeneration,