Category: News

Rafael Mazuz recently sat down with Morgan Stanley's US Medtech Equity Managing Director, Patrick Wood, at their NYC global HQ to discuss some of the investment mistakes as well as high level trends and dynamics in the advanced wound care sector.

The MedTech Moment: Wound Care Expert Insights

Earlier this week, Diligence Wound Care Global’s Managing Director Rafael Mazuz visited Morgan Stanley’s Global HQ in NYC to spend some time with Morgan Stanley’s Managing Director of US MedTech Equity Research, the incredible Patrick Wood! Here’s a link to the podcast episode we recorded (12 min): The MedTech Moment – Ep. 6: Woundcare Expert Insights On this special episode of The MedTech Moment, Morgan Stanley’s Pat Wood is joined by Rafael Mazuz from Diligence Wound Care Global to talk about common analyst mistakes, trends, and competition in the Wound Care market. Specific and related companies discussed on this episode include: Solventum (formerly 3M Health Care / Acelity / KCI / Systagenix), Smith + Nephew, Coloplast, Convatec, Medline, Mölnlycke Health Care, and more. Are these the types of insights that make you more confident in your wound care business and investment decisions? Contact us to discuss the advanced wound care medtech, biotech, services, and investment opportunities. Most importantly, don’t get hit with bad wound care business decisions!

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Upcoming Wound Care Conferences & Events (UPDATED 28 March 2024)

Upcoming Wound Care and Related Conferences, Meetings, Exhibitions, & Industry Events There used to be a couple of solid online lists of wound care industry events that are no longer maintained. The current ones are either too US focused, ignore ecosystem conferences (ex: home care), and/or include meetings that are not very relevant, or in some cases of questionable reputation and value…so I decided to make my own! If I am attending / faculty / speaking / moderating a session, and have a discount code, I will put it in the Remarks section. Is there a wound care (or adjacent-yet-relevant) industry event that is relevant to our audience and not listed above? Interested in Wound Care Global’s Rafael Mazuz to attend as faculty, moderator, chairperson, pitch competition judge, or another capacity? If so, contact us, providing as much detail as possible.

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Coloplast Acquires Kerecis: Key considerations and implications by Diligence Wound Care Global

Coloplast’s acquisition of Kerecis: Considerations and implications

Coloplast’s announcement is the latest large and significant advanced wound care (AWC) industry deal. As the high level details have already been thoroughly disseminated by press releases and news aggregators, our analysis of the Danish multinational’s acquisition of Kerecis will focus on: What makes this deal noteworthy in the context of the current advanced wound care (AWC) landscape and Coloplast’s positioning, especially in the US AWC market? What are the potential tailwinds and headwinds that Coloplast will encounter as they integrate the Kerecis business org, portfolio, and platform? Why is this deal noteworthy? Aside from its 10-figure price tag and a high multiple on revenues relative to other recent AWC transactions, this deal is also a possible tipping point whereby now roughly half of the top wound care MNCs operating in the US now have biologics / skin substitute / allograft / CTPs (cellular and tissue-based products) to their portfolios. (Side note: There is a recent effort, including a consensus paper published in the Journal of Wound Care [JWC], to begin referring to this segment by the more accurate term, CAMPS [cellular, acellular and matrix-like products]). Does this mean that the rest will follow suit? No–and some have intentionally avoided this segment–for very valid reasons as well. On the other hand, it has become clear to most of the major global wound care brands that to simply innovate around the edges of their core dressings and bandages, if they do not have some other competitive advantage (ex: full service logistics, manufacturing, digital health, remote monitoring, etc.), will eventually render them obsolete. However, beyond these relatively surface-level points, this deal is significant for the following reasons: 1. Only a handful of players have successfully achieved commercial penetration at scale There are around 100 advanced wound care CTPs available in the US, which makes up roughly half of the global AWC market overall, and the overwhelming majority of AWC CTPs. However, relatively few players have managed to successfully take this AWC category from concept to successful commercialization in the years since wound care has been on the map with specialized care settings and reimbursement. Indeed, various platforms based on everything from dehydrated porcine, bovine, ovine, and equine (pig, cattle, sheep, and horse) tissues, to autologous cells, cell culture banks, and human cadaver skin, to various amniotic and placental tissues, to collagen derived from bio-engineered plants, to bioactive glass and other synthetic materials have all been shown to contribute to healing in complex wounds and burns. However, of these ~100 products / platforms, only a handful of companies have achieved significant commercial traction to date (some of these companies have multiple AWC CTP products in their portfolios): Organogenesis Smith+Nephew (portfolios acquired from Healthpoint and Osiris Therapeutics) MiMedx Integra Life Sciences Kerecis A few others could be added, depending on the thresholds considered, such as: Convatec (via its acquisition of Triad Life Sciences in 2022) Medline Life Net Health (acquired the combined Bioventus-Misonix-Sol Systems wound portfolio earlier this year) MTF Biologics PolyNovo So out of ~100 technologies, only about ~5-10 have significant commercial traction. Of these, Kerecis and its fish-derived Omega3 platform has been the fastest growing company in this segment for multiple years. 2. International presence + viability Of the CTP companies mentioned above, most of them have virtually no presence outside of the US (OUS), and/or their OUS focus is on a different part of their business (i.e. not AWC / burn care or CTPs). Again, almost the entirety of wound care CTP usage today is in the US. When you attend US wound care conferences, the CTP companies’ booths are among the largest, busiest, and most elaborate in the exhibition hall (and a large proportion of their booth’s footprint if they have multiple product lines). Yet if you attend the increasing number of international wound care conferences (as we do), most of the same companies listed above are nowhere to be found–or perhaps just a small brochure or poster in the corner. Even large multinationals like Smith+Nephew may have a major presence or sponsorship, but they are unlikely to make their CTPs a major commercial focus, in many cases not even bothering to register the products overseas. I won’t go into details here of the many reasons for this, but suffice it to say that they include: Reimbursement / willingness to pay out of pocket Market and stakeholder awareness: of advanced wound care overall, and specifically of CTP use cases for wounds and burns Regulatory, sourcing, logistical, and cultural challenges, for example: some markets require human tissue products to be sourced from local populations, or to undergo a level of material safety processing/testing (ex: heat) that offsets their clinical effectiveness or proper and timely shipping + storage of such products becomes too complex or costly. Sources of cells / tissues may not meet local cultural or religious guidelines However, Kerecis in recent years has been increasingly present in the global wound care markets. Do they make up the majority of their revenues? Certainly not. However, the platform’s pricing elasticity, regulatory, and sourcing characteristics, combined with increased awareness overall, solve many of these issues. As such, in recent years (even pre-Covid), it was not uncommon to see Kerecis–or one of their third party distributors–with a presence at burn and wound care industry conferences across EMEA, APAC, and LATAM. Kerecis also has some complementary, mostly consumer-focused, wound and skin products (that Coloplast can likely competently commercialize through their channels), as well as a pipeline of more complex surgical reconstruction and repair-focused products based on the Omega3 platform. However, the core of their business at the time of the deal is still their fish-derived lines of wound, surgery, and burn grafts. In short, not only was Kerecis the fastest-growing CTP firm in the US prior to Coloplast’s acquisition, but they also were uniquely able to demonstrate at least some initial traction in less traditional and emerging markets where wound care biologics and CTPs

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Bioventus-Misonix M&A: AWC Continues “Bleed” Into Adjacencies

Yesterday (29 Jul 2021), Bioventus and Misonix jointly announced an M&A. This deal is particularly significant in the advanced wound care (AWC) space for three reasons: The combined entity will be a “new” relatively large advanced wound care player (though similar to Misonix pre-deal, not necessarily with AWC as its sole focus). This is also part of a trend whereby companies (including mega-sized ones) have been realizing that to focus on wound healing is not only a huge opportunity, but also a space they may already be playing in without even being fully aware of it. M&A consolidation in the AWC space resumes, after an inorganic growth hibernation period, mostly related to Covid-19 uncertainty. I’ll end this post by highlighting the key questions that I think the combined Bioventus-Misonix entity will need to carefully consider, which will drive their success in AWC (if they choose to make that space a focus for their growth) in the years ahead. The potential creation of a new large AWC player? On yesterday’s joint conference call, Bioventus CEO Ken Reali highlighted the potential for cross-pollination between the customers and care settings of the respective companies. He also cited significant diversity and scale across a range of care settings, geographies, and therapeutic areas…with leading technologies and specialized sales forces, serving a $15B total addressable market across the hospital, ambulatory surgical center, and office care settings.” He also pointed to orthopedics, lower extremity, and neurosurgery as key focus areas that will be served by the combined entity, as well as the ability to service new customers and realize cost synergies. Bioventus’ core solutions and markets are largely focused on orthobiologics, and include HA (hyaluronic acid) for osteoarthrtitis, ultrasound bone growth / fracture treatment and rehab, non-pharmaceutical nerve pain relief, and others. Misonix has regenerative medicine cellular and tissue product (CTP) solutions for wound and related indications, with the traditional core of its portfolio being its neXus ultrasonic platform. neXus (the instrument attachments are BoneScalpel, SonicOne and SonaStar) is used across multiple surgical and wound indications–mostly cutting / removing bone, tumor, nonviable soft tissue, and other ortho-plastics needs. More recently, they also added Sequel for external fixation. On the joint call, Misonix CEO Stavros Vizirgianakis noted, “We believe we can enable new proprietary procedural solutions with the Bioventus portfolio,” and also spoke to the ability of Bioventus to accelerate Misonix’s international growth. Integra Lifesciences, Organogenesis, Smith & Nephew, and Wright Medical (acquired by Stryker in late 2020) are illustrative examples of firms who have in recent years begun to increasingly blur the lines between advanced wound care / tissue regeneration and orthobiologics / orthopaedic hardware / sports medicine. On this point, it is important to note: There exist differences in approach depending on whether the “core” of the company is embedded in AWC / tissue regeneration, branching out to the ortho / sports med world, as opposed to the other way around. Typically, such companies still maintain separate commercial teams–in many cases all the way up to the senior management level, highlighting how tricky it can be to leverage wound care and ortho-plastics / foot and ankle call point synergies without neglecting the vast number of other specialties and decision makers involved in wound healing. These include: internal medicine, endocrinology, vascular, and nursing–as well as the often neglected yet critical administrative / managerial decision makers that are responsible for everything from clinical outcomes management, to clinical-operational flow, to reimbursement, to staffing / competencies, and in many cases full P&L responsibility of the program. The most successful companies who leverage AWC / tissue regeneration competencies to drive ortho-plastics / ortho-biologics results (and vice versa) have developed competencies and allocated resources to address all of the above. “The ‘New’ Bioventus” as presented on yesterday’s call is below: While Misonix had been organized by surgical (~54% of revenue) and wound (~46% of revenue) divisions, the combined entity will be structured as follows: Pain Treatments: Comprised of Bioventus and Bioness (acquired in Mar 2021) existing product lines Restorative Therapies: Biovenuts and Bioness bone rehab, together with Misonix soft tissue debridement and CTP portfolio; This is where wound care will sit as well. Surgical Solutions: Bioventus bone grafting products, together with Misonix’s bone cutting solutions, as well as the the Misonix neXus console / control unit itself. Broadly speaking, the proposed new structure makes sense. Indeed, Bioventus’ primary objective is and should be to maximize their stakeholder value and results overall–not necessarily to become a top global wound care player. Yet with their expected $170M 2021 revenue within the combined Restorative Therapies business unit, that is a non-trivial part of the AWC market–even if they expect it to make up just 34% of their total 2021 revenue. Should AWC become a priority, it may benefit from additional refocus and structuring, together with any future inorganic growth ambitions. But for an initial post-deal structure, it indeed strikes a reasonable balance between wound care and the more traditional segments. Trend: Medtech firms “bleeding” into wound care, whether intentionally or unintentionally We need to appreciate that most companies miscalculate–or perhaps it’s more fair to use the term “oversimplify” the AWC medtech market. Depending on the source, you may see the TAM (total addressable market) for AWC listed in the $2 to $50B range. Generally speaking, I think $5 to 15B is about right, but this really depends on the specific context and analysis being considered. But to be clear: Any company involved in the creation, resection, repair, implant, infection management, perfusion, protection, stimulation, closure, and/or support of most tissue types, is to some extent involved in the business of wound healing. Whether resecting a tumor, performing reconstructive surgery, postpartum care, or placing a stoma, orthopaedic fixator, or vascular access port, when clinicians and medtech solutions “touch” (physically or figuratively) one or more of the phases of healing, they are intentionally or unintentionally involved int he advanced wound care space. If you’re looking to further deepen your understanding of this point, It’s covered in

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Henry Schein and Prism Medical Products Logos after Henry Schein's announcement of a majority stake M&A in Prism (6 Jan 2021)

Henry Schein Acquires Majority Stake in Prism Medical Products

Today (6 Jan 2021), Henry Schein, a top global medical, dental, and veterinary solutions provider / distributor with a global presence, announced its acquisition of a majority ownership position in Prism Medical Products, one of the top US DME (durable medical equipment) providers focused on shipping products to the home. Recent forays into this space by Organogenesis and other product-service hybrid moves, as well as expansion and increased activity from some major SNF wound care supply-services firms, make this one of the more dynamic (though less publicly discussed) growth areas in the AWC (advanced wound care) commercial ecosystem. With a nearly $10B market cap (at the time of this writing), Henry Schein is right up there with Cardinal Health, McKesson, Medline, Owens & Minor, etc. in terms of its distribution scale and presence, albeit focused on private medical, dental, and veterinary care customers in private practice as opposed to hospital, SNF, and other care settings. Traditionally, Henry Schein often focused on more generic / commodity medical products (often tending to be more specialized across dental). However, post deal, the company will now have a hand in a lot more distribution of wound, ostomy, and related specialty product lines. Following this deal, now virtually all of the major medical product distributors have a home healthcare DME presence: Cardinal – acquired AssuraMed (the parent company of Edgepark Medical Supplies) for $2.07B in 2013 McKesson – acquired Sterling Medical in 2006, with other relevant acquisitions (such as home infusion, etc.) in subsequent years Medline – acquired medical billing firm PFS in 2017 to bolster their existing DME business Owens & Minor – acquired Byram Health Care for $380M in 2017 Henry Schein – has now entered the space with this Prism deal For those less familiar with the intricacies of the wound care / DME space, Prism and firms like it typically act as a third party biller, submitting bills and supporting documentation directly to payers, while facilitating fulfillment of orders for wound care, ostomy, incontinence, breast pump, and other supplies. Most of the top global AWC and related (medical compression, etc.) brands are distributed by Prism Medical Products and similar firms, including 3M-KCI, ConvaTec, Coloplast, Medline, Smith & Nephew, and many more. There are also commercial incentives to build out and commercialize private label AWC brands within the DME space, with several firms doing so successfully. Although is not typically encountered in hospital-based settings (even outpatient ones), they are a massive force in freestanding private clinic settings, where a material proportion of advanced / chronic wounds are treated in the US and overseas. Not to mention…Guess which wound clinic type was the fastest growing in 2019-2020, and into 2021 and beyond?… We’d love to hear your take on this important wound care corporate M&A development. Or maybe you’re interested in discussing how product-service strategies can help you differentiate in this crowded space, and learn the best practices (and most dangerous mistakes to avoid). Contact us to discuss your unique wound care business situation. Most importantly, don’t get hit with bad wound care business decisions.

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Net Health Acquires Tissue Analytics

Today (14 May 2020), Net Health, a leading specialty health software firm with particularly successful market penetration in US wound clinics, announced the acquisition of Tissue Analytics. The entire TA team will remain and join the Net Health organization. This development is significant to the advanced wound care and adjacent industries for many reasons. By integrating the TA platform and team, Net Health will now have (among others): The ability to follow patients across all care settings: From the hospital, to home, and everywhere in between (including even DME [durable medical equipment], which it has already integrated for many manufacturers and distributors). Best-in-class EMR integration competencies. Strong data and predictive analytics capabilities (TA Cofounder and CTO Josh Budman will assume a leadership role which includes predictive analytics). Powerful clinical trials capabilities, which can now leverage vast amounts data from a massive number of outpatient wound care clinics and other care settings, combined with rich product, procedure, and outcomes data. Partnerships across top industry players, which Net Health and Tissue Analytics had independently developed, will now benefit from economies of scale (technical, analytical, and commercial alike). Tissue Analytics was backed by a broad range of institutional and strategic investors, including Dreamit Ventures, digiTx Partners, Chinese conglomerate Tencent, Mölnlycke Health Care, Intermountain Healthcare, and Penn Medicine. Net Health is a portfolio company of The Carlyle Group, Level Equity, and Silversmith Capital Partners. Lastly, it was a great honor to serve on the Tissue Analytics board of directors for the past two years. I look forward to continuing to collaborate with the combined Net Health and Tissue Analytics organization in other ways, as they continue to drive innovation in the wound care and specialty health IT space.

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A visualization of the reduction in weekly wound care clinic patient volumes in early 2020 vs. 2019

COVID-19: Preliminary Operational and Commercial Wound Care Insights

Advanced wound care’s position in the evolving COVID-19 landscape Global economies have been slammed by COVID-19 in the first part of the year. Some biomed sectors, such as PPE, respiratory, and telemed solutions, have seen unprecedented demand for increased production/availability and new innovation alike. On the other hand, orthopedics, plastics, and other service lines with a traditionally large mix of elective consultations and procedures, have absolutely been hit hard. Generally speaking, healthcare systems have taken a hit as they shift clinical resources from their most lucrative revenue drivers to critical care preparedness and treatment. However, when it comes to the supply and demand interplay of COVID-19 on the advanced wound care industry, the results are more nebulous. Even across geographies, the question of whether wound care is an “essential” service line is currently being interpreted differently, depending on who you ask. For example, in several countries across Europe, most wound care clinics are closed. In the US, most wound care clinics remain open–though a significant number are operating on a part time (ex: Tuesdays and Thursdays only, or only half-day hours). Of those operating on a full-time schedule, many are seeing significant patient volume reductions compared to the same period in 2019. From both operational and commercial perspectives, the implications are significant. Forward-thinking executives and investors need to understand and actively plan for the possible scenarios and consequences of their actions (or lack thereof). The operational data, on-the-ground insights, and their implications [T]he keenest wound care executives and investors use real world data not just for making claims about physical products (though that is important, too). By combining data analytics with on-the-ground insights to stress test operational and commercial hypotheses, firms can stay one step ahead of the news cycle. The result is the ability to out-plan, out-invest, and out-compete in the wound care arena, and to be prepared for the possible consequences of their moves. Anecdotally, year-over-year (YOY) volume reductions range from 10% to 40% or more. The figure below shows data, collected and analyzed by Tissue Analytics from across several US clinics that use its wound care measurement and assessment software. It shows a very clear YOY reduction in weekly patient visits of around 5% in early March 2020, steadily growing to 25% as of 17 April 2020 (the most recent data published as of this writing): According to Tobe Madu, the Tissue Analytics data scientist who conducted the analysis, “For this analysis we looked at outpatient clinics since these are the facilities most likely affected by the COVID-19 lockdown mandates. Only clinics that were fully integrated with Tissue Analytics as of the first week of 2019 were considered. The data points presented in weekly intervals corrects for daily fluctuations and reveals a clear decreasing trend for patient visits.” Of critical importance is also the notion of whether the reductions in patient encounters are among existing patients who may be told by their providers to come at less frequent intervals (ex: fortnightly instead of weekly), or perhaps the patients themselves decide to skip appointments, ostensibly due to COVID-19 fears. Likewise, relaxed US telemed reimbursement and restrictions allow for easier remote monitoring and consultations even as clinic-based visits dip. In such cases, we might expect to see a short-term stabilization once a new comfort level in terms of visit frequency vs. COVID-19 risk is met. Clinically, wounds may heal more slowly (lower frequency of debridement, fewer advanced product applications, less utilization of HBOT, etc.), but would supposedly still allow for effective patient triage in most cases. Alternatively, are patient volume reductions driven by a reduction in new wound care patient admissions to the clinic? In other words, are patients in treatment during the early months of of 2020 continuing to come as normal until healed (around ~8 to 15 weeks on average, depending on the case mix and clinical outcomes of the particular facility), yet new wound patients are hesitant to schedule their first appointment? If this is the case–which my gut told me is more likely–then we might expect a continued patient volume free-fall, combined with a major risk of tragic clinical outcomes (including amputation, sepsis, and death) from delayed treatment in the coming weeks and months. Many of these patients will eventually burden emergency rooms, inpatient acute care units, and SNFs, who will inevitably treat the fevers, weakness, elevated white blood cell counts, and other presentations as COVID-19 until test results and a full clinical assessment confirm that the patients’ neglected wounds are the more likely root cause of the symptoms. I asked Tobe from Tissue Analytics about my hypothesis: That patients already receiving treatment pre-pandemic may be likely to continue, but that new patients with wounds may not be scheduling new admissions. If so, then the drop in patient visit volume would be likely to continue beyond the current 25%. Tobe was able to work his data analytics magic to dig into this, too: Tobe further articulated what the above data visualizations tell us: “When we compare the pre-lockdown (wks. 3-11) and post-lockdown (wks. 12-16) period, new patients account for 15% of the decline in average outpatient clinic visits per week. Last year, for the same time period, new patients represented a mere 3% of the increase in total patient visits. The decline in new patient visits appears to be a legitimate concern moving forward even though new patients only represent ~10% of the patient population.” Of course, a larger facility sample size and a few more weeks of data would be beneficial. Likewise, Tissue Analytics’ outpatient customer base may skew towards larger, IT-resourced health systems. Having said that, the data pattern suggests one of two possibilities, either: We may not yet have seen a bottom for outpatient wound center visit volumes. Wound care center operations are fueled by new patient admissions. If new patients are not being admitted to post-acute settings (a good amount are likely ending up in acute settings), then we might expect an ~8-15 week lag for the most severe

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Perspectives on Smith & Nephew’s Announced Acquisition of Osiris Therapeutics Today

What happened? Smith & Nephew (NYSE: SNN) will be acquiring Osiris Therapeutics (NASDAQ: OSIR) for $660M. The investment, announced today, potentially repositions Smith & Nephew within the CTP (cellular and tissue-based products) space. If the deal goes through, it will be Smith & Nephew’s most significant M&A deal within that space since the acquisition of Healthpoint (Santyl, Regranex, and Oasis were the key products) for $782M in 2012. Speaking of Santyl, Israel-based MediWound–a firm that is also developing topical debridement products to compete with Santyl–has also announced news today: CEO Gal Cohen will be stepping down, after 12 years with the company. He will be replaced by CFO and COO Sharon Malka. Many are watching closely as MediWound–and some other players/products in the space–prepare to launch products which would compete with Santyl. Santyl has largely been considered a cash cow in the wound care space. But back to the Osiris M&A news: The CTP (also casually referred to as “graft” or “skin substitute”) space has been growing very fast over the past decade, virtually entirely driven in the US. The emergence of different technologies to extend the shelf life of such products has simplified logistics during this period as well. One of the major breakthroughs has been Osiris’ own development and implementation of Prestige Lyotechnology to keep living cells viable without the need (and cost/logistical hurdles) involved with cryo-preservation. What are some of the underappreciated points to consider? Most of the focus about the M&A announcement has been on: Existing sales/sales growth Strong R&D Clinical trial assets and know-how Potential synergies with S&N’s other divisions The above points are fair game and relevant for sure. Especially for non-wound care/regenerative experts, they look great on a whiteboard or slide deck. But digging a bit deeper, we can take a slightly more nuanced look at the potential pros and cons for S&N: Underappreciated points encouraging the acquisition For the types of products they focus on, the Osiris sales and marketing apparatus is among the best in the wound care and regenerative medicine industry. The ability to drive case-based (as opposed to tender-based) sales in both the surgical/acute and post-acute settings with complex, high-margin products, is not one to take for granted in this sector. With the proper integration, structuring, and execution, sales executives with those specialties could in theory accelerate sales of other advanced S&N products, including single-use NPWT (PICO) and some of the former Healthpoint portfolio as well. Much of S&N’s PICO commercial team in recent years has been made up of former Healthpoint executives. Side anecdote: perhaps the best wound care sales representative that called on me when I directed US-based wound care centers was a Healthpoint rep who joined Smith & Nephew as part of the 2012 acquisition. He stayed with Smith & Nephew for some time, and grew his territory’s business significantly. He eventually left S&N due to a perceived lack of advancement opportunities in line with his performance. S&N had among the most full-service and diverse advanced wound care portfolios pre-acquisition. Even compared to some of the other “Top 6” wound care companies, they have been able to offer deeper discounts in exchange for higher utilization of their portfolio. In some cases, they have offered orthopedic and wound care products together “at risk,” guaranteeing replacement products for surgeries at no charge, should the wound fail to heal. In the mid to long term, today’s acquisition may be used to further strengthen that offering. Despite being a multi-billion dollar segment and one of the fastest growing in healthcare, there are not many firms with significant revenues and commercial footprint, yet who are small enough for a major player to acquire. In other words, there are several large, and many, many small players, but not many mid-sized ones to feed an acquisition. Often, the ones who might be otherwise attractive targets find themselves caught up in legal, regulatory, reputational, or other crises. At the time of this announcement, Osiris does not seem to have any such issues. Underappreciated points challenging the acquisition As mentioned above, the Osiris commercialization team has an excellent reputation in the industry. S&N sees the Osiris workforce, of about 360 people, as relatively easy to integrate. Again, this may be a case of everything lining up nicely on the presentation and spreadsheet, but it could be more difficult in practice. Over the past couple of years, Smith & Nephew has lost many of their most talented executives, who often cite a slow-moving, bureaucratic, and risk-averse corporate culture as the reasoning. This corporate culture many not mesh well with the drive that is ingrained in so many Osiris account executives and managers. On the other hand, Smith & Nephew has gone through a senior leadership change in recent months as well. If the acquisition goes through as announced, it will be interesting to see how many of the top-performing Osiris sales and marketing executives are still around in the next few years. Perhaps the biggest unknown in the wound care regenerative medicine space is the issue of reimbursement. Recently, there have been some small but potentially foretelling reimbursement developments pertaining to CTPs in the US. Government and payer policy can be extremely tricky to predict, but this is a segment which is heavily influenced by it. Companies like Osiris Therapeutics, Organogenesis Inc. (NASDAQ: ORGO), Integra LifeSciences (NASDAQ: IART), and Acelity [update: 3M (NYSE: MMM) announced it would acquire Acelity less than two months after news of this S&N-Osiris acquisition broke] have historically led the sector with investment in R&D and post-market surveillance trials. However, regulators and payers alike are increasingly asking the question, “Is it enough?” Among industry, this is a tough one: On the one hand, most wound care patients have so many comorbidities that traditional pre and post-market clinical trials in this space are designed such that they exclude vast amounts of patients because traditional investigators otherwise do not know how to control for those variables. The result is that the enrolled patients–both in

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Diligence Wound Care Global Managing Director Rafael Mazuz Joins Tissue Analytics Board as Independent Director

We’re thrilled to share this important announcement (read the official press release here). But even before getting into the details of the features and capabilities of the Tissue Analytics (TA) platform, it’s important to convey why we decided to stake our reputation on this particular innovative skin and wound care company in the digital health space. After all, we serve top wound care brands, from dressings and compression therapy, to negative pressure wound therapy (NPWT), to cellular and tissue products (CTPs), to pharmaceuticals, and everything in between. We work diligently to raise the bar for every client, for every product and service, across every market. Then why, when it comes to the mobile assessment, integration, and analytics segment, have we aligned with a specific firm? Because we see firsthand what they have delivered for our clients. Over the course of several years, we have had a chance to evaluate most of the solutions in this space, visited and worked with hundreds of facilities and clinicians, and advised scores of leading and rising product firms. This allowed us to see the platforms–and the teams behind them–operating in the real world of wound care business. Some companies had great teams but were clueless about market needs or security requirements to protect sensitive health data. Other solutions were overly cumbersome and expensive. Some simply lacked the honesty and integrity standards that are critical to our institutional investor, MNC / SME / startup, and trusted healthcare services partners and their brands. In contrast, Tissue Analytics is well-liked and has consistently delivered for wound care stakeholders, including real-world use cases such as: Objective, accurate, fast, and cost-effective multi-site clinical trials (obeservational + interventional; pre + post-market) resulting in faster and cheaper go-to-market execution Marketing strategy execution and long term brand value for a major global distributor launching new products across multiple markets simultaneously Turnkey full integrations across major EMRs (almost unheard of in the healthcare industry), resulting in faster deployments and fewer IT (expensive!) resources Exponential ROI from reduced operational, regulatory, and compliance expenses and penalties Connecting data from digital and smart diagnostics (perfusion, temperature, pressure, moisture, infection, etc.) seamlessly with EMRs, care navigators, and clinicians Empowerment of field-based, non-wound-certified clinicians via virtual wound care services (telemedicine) 3D rendering of wound depth and surface models without the need for external hardware attachments Best-in-class analytics capabilities, which opens up machine learning (ML), artificial intelligence (AI), risk sharing, and many other “holy grails” of wound care (and healthcare overall) As our clients increasingly dealt with forces and developments such as: Expiration of IP and (perceived) commoditization / lack of differentiation across multiple product categories High costs and enrollment periods for even small (<100 patient) trials at a small number of sites Difficulty for less-established players to penetrate the market Increased influence by healthcare systems, MCOs, and wound care management firms over purchasing and treatment decisions Reimbursement pressures and documentation scrutiny (in the US) Lack of options for treatment and usage data insights from across the continuum of care …we simultaneously observed and interacted with the TA team as a result of our normal business activities. It became clear that in the midst of such a turbulent era in the industry, TA is a hi-tech engine to help deliver the captain, crew, and passengers to their destination faster and more efficiently. It’s also the best solution to connect all of the new digital-enabled and smart devices, diagnostics, telemed services, and other emerging wound care innovations (and the data points they generate) with the providers and other stakeholders. Without a seamless conduit for that information, those solutions will struggle with real world adoption. TA is the front-runner to be that conduit. In the coming weeks and months, many more industry collaborations will be announced. They involve some of the most cutting edge companies in this space partnering with Tissue Analytics on impressive, next-generation initiatives that are raising the bar for the development and delivery of advanced wound and skin care. Many of the innovations in development and launching are great ones to integrate with the TA platform, too–removing obstacles to adoption of such solutions. In fact, multiple companies we work with are already eyeing TA as the cornerstone of their new product commercialization plans. Rest assured that regardless of whether wound care stakeholders leverage Tissue Analytics, another digital solution, or shy away from this dimension of the industry completely, Diligence Wound Care Global will remain a radar and GPS to guide them safely and with confidence. Update: As of April 2020, Tissue Analytics, Inc. has been acquired by Net Health, Inc. Become a keener wound care executive. Are you a health care, services, and/or medtech executive involved in skin and wound care? Do you have strategic, operational, R&D, or marketing goals that might be executed in a more successful, cost effective, and agile manner by leveraging new digital health platforms such as Tissue Analytics? Get in touch to discuss your unique wound care business challenge and whether Tissue Analytics might be part of the solution.

Diligence Wound Care Global Managing Director Rafael Mazuz Joins Tissue Analytics Board as Independent Director Read Post »

What We’ve Been up to in 2018 Q3 – Q4 and What It Means for the Global Wound Care Business Outlook

What We’ve Been up to in 2018 Q3 – Q4 and What It Means for the Global Wound Care Business Outlook A tour around the wound care world The past few months of 2018 have been quite packed and exciting for us at Diligence Wound Care Global. We wanted to share some of what we’ve been doing and learning during Q3 and so far in Q4 this year (while keeping in mind that most details of our business activities are highly confidential). Most importantly, we’ll highlight relevant insights along the way which will help empower you to be confident in your wound care business decisions. Kicking it off with education, networking, investment, and innovation in the US… Following an educational yet fun conference during The American Podiatric Medical Association (APMA)‘s national meeting in Washington, DC, we were tapped for multiple wound care due diligence cycles throughout the mid and late summer. In between, we found time to contribute to the September edition of Today’s Wound Clinic. We also conducted strategic advisory sessions with a relatively new client in the Midwestern US to assess and consult on their commercial strategy and next moves. With the availability of so many different wound care products for treating etiologies and symptoms, a new-to-wound-care, Asian client who once attended a conference with me joked, “It’s like a night market! So many options!” He may have been new to wound care, but his assessment was spot on. Even for experienced wound care clinicians, the options can seem overwhelming. But with the right strategy, positioning, and execution, it’s possible for a strong product to rise above all the noise. Taking that approach, we’re excited to be working with this new American innovation to get it in the hands of as many clinicians–and in the wounds of as many patients–who might benefit from it. …to Europe for a new perspective on an old problem… When we conduct portfolio assessments, advisory sessions, and workshops for our corporate strategy and business development clients, we stress that the focus should be on solving stakeholders’ clinical, operational, and financial needs, as opposed to purely filling gaps based on traditional product categories. It was with this principle in mind that we traveled to Europe to meet with a very early stage startup client in the university incubator/fellowship environment. One of the things that is most exciting about the need their new solution is addressing is that it helps to solve one of the areas of wound care delivery that has not received much attention or innovation for many years. As we work with them to hone in their development and commercialization life cycles around the true market needs, we can tell that by the time it’s ready for launch, it will be very much on point. We’re looking forward to sharing more details in the coming months. …then Eastward to Asia… Those who know and follow Diligence Wound Care Global’s work are aware that aside from North America and Europe, we are heavily involved in the evolution of wound care across Asia Pacific, with engagements throughout the region at any given time. Q3 (and Q4) this year was (and will be) no different: Internal and external stakeholder competency development We began this leg of the trip by supporting a well-respected, MNC industry client in building and developing their wound care competencies across multiple markets. This included the creation of best-in-class training assets, face-to-face facilitation of “zero to hero” wound care ecosystem training, and interactive role playing and similar exercises. We delivered this for both the sales and marketing teams (field and corporate), as well as the key support roles involved with each market such as medical affairs, training, and regional leadership. Yet our planning and groundwork activities do not end there. At the same time as we’re delivering value for internal stakeholders, this particular client has the foresight to also drive value for its external stakeholders. In other words, beyond simply selling the “features and benefits” of its products (which are great ones), our role is to support our client in “raising the bar” on wound care services management and delivery throughout the region. Important everywhere, but especially in this part of the world, the goal of creating long-term relationships and partnerships has been at the core of their success. To further that goal, we met with C-Suite executives, physicians/surgeons, and nursing staff in every market we visited. The internal stakeholders we trained each morning and afternoon duly benefited from joining for the external stakeholder meetings in the evenings–via both a deeper appreciation of their customers’ ecosystem and pain points, as well as the stronger rapport that goes along with that. Although unrelated to the above engagement, this vision of furthering the clinical-operational-financial delivery of wound care was also articulated to us during a recent meeting with the CEO of a leading global product firm. In fact, from where we sit, most of the top-performing wound care executives are viewing the future of the industry through this trend (though the road maps they are each developing are unique). These and other concepts for wound care global success will be presented and discussed in greater detail during our session at SAWC Fall 2018 (see below for details and a registration discount code). “Raising the bar” for wound care delivery One particular activity during this recent trip was especially memorable and instructive: Participating as faculty for The Philippine Orthopedic Wound Care and Diabetic Limb Society, which is the newest of 12 sub-specialty groups under The Philippine Orthopaedic Association (other sub-groups include sports medicine, spine, trauma, hand, shoulder, and pediatric ortho). What I experienced there left me with a sense of optimism about the future of wound care in this part of the world: From the effectively delivered presentations from interdisciplinary perspectives, to the motivation of attendees to setup their own wound care centers, the prospects are indeed bright. …and full circle back to the United States (around the globe). By mid-September, some crucial M&A scouting, exciting

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Urgo’s M&A of SteadMed: Here’s What You Need to Know

There has just been another significant wound care acquisition. French MNC Urgo Medical just announced the M&A of Texas-based SteadMed Medical. The resulting entity will be known as Urgo Medical North America. If you’re an advanced wound care stakeholder inside North America, you may be wondering, “Who is Urgo Medical?” If you’re an advanced wound care stakeholder outside North America, you may be wondering, “Who is SteadMed?” Most importantly, the executives and investors reading this are likely wondering, “How will this affect the market?” Who is URGO Medical? Attend almost any major wound care or surgical conference in EMEA, APAC, and even LATAM in recent years, and you’re likely to have seen an Urgo booth side-by-side with other major international players such as Mölnylcke, Convatec, Smith & Nephew, 3M, Acelity, Coloplast, Medline, Integra LifeSciences, BSN Medical (Essity), HARTMANN, L&R, and B. Braun (and depending on the market, larger booths than the others). Likewise, Urgo products can frequently be found in healthcare facilities and pharmacies across those markets: Many–perhaps most–wound care companies have their own “algorithms” or slogans (the difference between the two is often blurred) which typically map out to corresponding products in their portfolio. Urgo is no different, with their, “Prepare–>Clean–>Accelerate–>Close” marketing, correlated to product packaging: Specifically, Urgo manufactures and distributes about 40 advanced wound dressings, prevention, compression, and related products across most of the major categories, including: UrgoClean and UrgoClean Ag UrgoStart UrgoTul UrgoCell UrgoK2 (compression) TRIACT technology (had been licensed by Hollister and used in the Restore brand) Multiple other tapes, films, gels, etc. Notably, Urgo is not currently involved in the “active healing” segment: As of this writing, they have no NPWT, allografts, oxygen enhancers, etc. Whether they introduce one or more active healing “anchor products” into their portfolio remains to be seen. In Europe particularly, they are considered one of the market share leaders across certain care sites (France, where they are headquartered, being one of the larger European wound care markets). Who is SteadMed Medical? SteadMed is a Texas-based wound and skin care product distributor who has over the years become a major player in the US, with operations in Canada and Mexico as well. As they have over 40 employees and a presence in virtually all major US regions, in addition to their activities in Canada and Mexico, we at Diligence Wound Care Global have sometimes referred to them as “the most significant North American distributor who is not also a principal” (in other words, they license products developed and/or produced by other companies for sale within a specific geography). SteadMed has historically not attempted to develop a full-line of advanced wound products (foams, alginates, collagens, allografts/xenografts, etc.), instead focusing on certain niche products. They especially established themselves with Drawtex (hydroconductive dressings), and a few years ago launched Vashe (hypochlorous acid cleanser and wipes), which they quickly grew to the overwhelmingly top US cleanser by market share–across a diverse range of clinical care sites. For several years, they distributed XPansion, a single-use split thickness skin grafting kit, which they recently relinquished to the Maryland-based acellular matrix producer, ACell. And just this summer, they announced that they are taking over distribution of Hollister’s Restore and TRIACT lines since the announced wound care divestment. The impact of the Urgo acquisition on distribution of Restore and TRIACT is to be seen, as there is significant overlap between those brands. Following are the brands distributed by SteadMed pre-acquisition: Drawtex hydroconductive dressings Vashe hypochlorous acid cleanser and wipes Resta moisturizer and antimicrobial moisturizer TRIACT and Restore (some of which were actually tech licensed from URGO) XPansion autografting kit distribution passed on to ACell earlier this year Clearly, there is some overlap between some of the the Urgo and SteadMed / Restore product lines. However, this is a bit misleading, since Restore TRIACT products were actually leveraging an Urgo technology. So in essence, the Restore brand’s transition to SteadMed was more of a stepping stone than anything else. Urgo products will need to move through the FDA approval process, inventory must make its way into the supply chain, and the sales and marketing teams will need to understand the new products and how they fit in with the existing ones, too. This will all need to be sorted out for the rest of 2018 and into 2019. As a result, the portfolio is likely to be fluid during the integration period, with changes to be expected. SteadMed Founder, President, & CEO Michael Steadman will continue to lead the firm, and its main office will remain in the Dallas-Forth Worth, Texas area. Why is this significant? Although Urgo is a major global wound care player, they were clearly latecomers to the largest market in the world, The United States. US wound care sales channels can be especially difficult to navigate, and customer intimacy has traditionally been a key success factor for firms in this space. Beyond the unique sales and marketing considerations, the healthcare payment and reimbursement systems in the US are complex and evolving. Finally, the regulatory landscape can be challenging, though for Urgo’s current portfolio this should not present much of a challenge (though it may be for future products in their R&D and M&A pipelines). For Urgo, the acquisition of SteadMed allows them to play “catch-up” in the US. They’re gaining access to a relatively sizable and competent sales force with existing relationships and channels spanning advanced wound centers, physician offices, the operating room, inpatient wards, home healthcare, and skilled nursing facilities. On the one hand, breaking into new accounts with primary and secondary wound dressings is difficult. On the other hand, adding them to the “bag” of existing sales teams (and their existing relationships) can exponentially decrease cost of sales and boost sales force effectiveness and ROI. Recently, there have been trends of renegotiation and consolidation of contracts as well as increased movement towards alliances and consortia, which we have analyzed as well. Most importantly, just like with Integra’s acquisition of DermaSciences, this news means the landscape has gotten all the more

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Were You Caught off Guard by the Healogics iSupply Announcement This Week?

What happened? The latest wound care development is the new Healogics iSupply program, announced this week. Highlights of the initiative include: Special pricing on many/most categories of wound care and related regenerative medicine products. Leverage of outcomes and utilization management data. Quarterly product/supply reporting initiatives. Potential for future evolution based on the Healogics database and economies of scale. Participating brands (not all products from each brand were included): Integra LifeSciences (NASDAQ:IART, up about 5% as of 48 hours since the announcement), BSN Medical, Solsys Medical (TheraSkin), Hydrofera, and a new advanced dressing private label line launched as part of the initiative: Healogics by DermaRite. Three types of wound care executives This development caught many in the industry off guard. This is unfortunate, as deepening collaboration with product firms has been openly discussed by Healogics leadership for quite some time now. In fact, it was shared as a corporate strategic initiative for 2018. We have always encouraged product firms to keep a finger on the pulse of wound care management and services trends, not to simply look to what other product firms are doing. The good news is that for many of our scenario planning and business war gaming strategy clients, the ability to participate in the Healogics iSupply selection process–or choose not to–was a conscious one. Executives reading the iSupply press release this week can be grouped into three categories: Wound Care Product Executive Type 1: Prepared and Active Participants Those participating went in with confidence about the unique needs of wound care management firms and their healthcare facility partners, more effectively conveying their portfolio’s proposition. Wound Care Product Executive Type 2: Confident Decliners On the other hand, strategy, sales, and marketing executives who decided to not participate (or to only explore at the early stages before pulling back), did so with confidence that the costs–both direct and indirect–of such a partnership perhaps would not have best served their stakeholders. Such clients then were able to develop and stress test plans and contingencies from product pipeline, to international expansion, to sales call points, to digital health strategies and of course partnerships with other wound care services providers that they believed would be the best focus for their firms. Most importantly, both of the above groups who adequately planned and prepared for the iSupply reality are not losing any sleep over the announcement–they either navigated the process and joined the initiative, or moved on with confidence and a clear path forward. Wound Care Product Executive Type 3: Caught off Guard and Scrambling Unfortunately, there exists a third group: Executives who neither anticipated nor prepared for the iSupply scenario. This includes those who did not consider the option of a Healogics-branded private label competitor emerging from the process (which is precisely what happened). Such individuals do indeed have cause for concern of how to answer the inevitable grilling that will come from senior leadership and the board of directors (if not already). At least one major US wound care firm has already laid off a significant chunk of its strategy and marketing managers. More casualties may be on the horizon… The stakes were high and on the table… About ten months ago, as the new Healogics CEO stepped into the role, I published an article entitled, What the Recent Healogics Developments Can Teach Us About the Future of Wound Care. After briefly summarizing the history of Healogics and US wound care overall, I posed a series of questions–from the hypothetical perspective of their management team–including (quoted from the original article): What value can we [Healogics] extract from our wound outcomes data, and to what extent might we share / sell that to others (product firms, payers, regulators, hospitals, SNFs)? To what extent should we be open to partnering with product firms (the product firms are extremely open to that idea), and if so, should that be an R&D/clinical outcomes partnership, a monetization one (they currently monetize just one product: HBOT), or another model? Should we focus on other management firms…product companies, payers, other specialty service companies…mHealth/telemedicine firms, wound care provider firms, or other partners and structures? Would our interests be better served by proactively renegotiating our contracts…or do we focus on driving operational and other efficiencies to better compete within the existing model? Can and should we provide more product selection and formulary streamlining advisory to our hospital partners to potentially offset the expense incurred by us managing their wound center (and if so, should we contract with specific product companies, or keep such an initiative to within the hospital’s decision making system)? Both before–and especially after–the article was published, there was tremendous interest from several well-known wound care product companies about the merits and drawbacks of participation in specialized group purchasing organization (GPO)s, clinical data/outcomes registries, and how to maneuver the changing wound care landscape to capitalize on opportunities, without placing too many chips on a single bet. The above questions I floated nearly one year ago are as relevant as ever. They are indeed playing out, not only this week with the Healogics iSupply brand, but throughout the advanced wound care space. As wound care business models evolve, the dynamics will cascade to other companies and alliances. Be confident in your wound care business decisions Were you or your colleagues caught off guard from the announcement, or did you have the proper plans and contingencies in place to capitalize on it (regardless of whether you were part of the partnership)? Are you… …a product executive tasked with exploring collaboration with services or other product firms? …a services firm interested in providing a product or technology suite to your stakeholders? …an investor trying to sort this all out? Don’t get burned by your next wound care business decision. Tell us your unique wound care business or investment situation. We’ll give you confidence in your path forward.

Were You Caught off Guard by the Healogics iSupply Announcement This Week? Read Post »