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CURATIVE TECHS' GROWTH FACTOR WOUND HEALING TREATMENT CENTERS

Executive Summary

CURATIVE TECHS' GROWTH FACTOR WOUND HEALING TREATMENT CENTERS affiliated with acute care hospitals will number 35 by the end of 1991, Curative Technologies (CTI) said in a preliminary prospectus for an initial public offering. CTI currently manages 24 "Wound Care Centers" (WCCs) at U.S. hospitals. The centers provide patients with chronic non-healing wounds access to the firm's initial product, Procuren, "a naturally occurring complex mixture of growth factors that promotes the growth of skin, soft tissue and blood vessels," the prospectus states. Eleven new centers are scheduled to open this year, for a total of 35 in 16 states. Procuren ("autologous Platelet Derived Wound Healing Formula") has been used to treat over 5,300 patients at the CTI-operated centers to date. The product, introduced in 1988, "has generally been successful in promoting the healing of wounds which previously had not healed," the company said. CTI estimates that 3 mil. people in the U.S., many of them diabetics, suffer from chronic non-healing wounds. The WCCs produce a 60-80 day supply of Procuren from seven ounces of the patient's blood, to which thrombin is added, thereby releasing growth factors. The topical solution is applied daily for two to three months. CTI charges around $ 50 per daily dose, or $ 4,000 to $ 5,000 for the full course of treatment. Procuren and WCC-related revenues totaled $ 10.2 mil. in 1990. CTI believes Procuren is not subject to FDA approval because it is produced at the WCCs and not shipped across state lines. However, the firm is seeking agency approval for Phase III studies of a second product, homologous PDWHF, which will be centrally produced from pooled human blood platelets. Because Procuren has not been approved by FDA, the Health Care Financing Administration is deciding whether it is an experimental drug not covered by Medicare, CTI noted in the prospectus. Procuren also may be excluded from Medicare reimbursement because it is self-administrable. CTI met with HCFA in May to provide support for Medicare reimbursement; approximately 50% of Procuren sales are to Medicare patients, the firm said. A CTI-conducted cost efficiency study comparing the outpatient WCC approach to conventional wound healing treatment for diabetic ulcers showed a 25% reduction in the average total charge. In addition, the WCC/Procuren method reduced the incidence and length of hospitalization and the number of amputations, CTI said. Phase II trials for the second product from the seven-year-old firm, homologous PDWHF, demonstrated statistically significant improvement with the growth factor treatment compared to placebo in a double-blind, four-center trial involving 78 wounds in diabetic patients. Phase III studies will include over 200 diabetic patients at up to 10 clinical sites. A similar study has been initiated in Germany and will be expanded this year. CTI signed an agreement in November with the New York Blood Center to be the exclusive supplier of homologous PDWHF in the U.S. Additional potential applications for PDWHF include scar revision and the treatment of severe burns and skin grafts; CTI is now conducting clinical trials for those indications. The firm is also looking at the use of PDWHF to accelerate the healing of surgical incisions and to promote hair growth. CTI, in a June 3 prospectus, is proposing an initial offering of 3 mil. shares of common stock to the public and up to 187,500 shares of common "upon the conversion of certain loans." At an estimated per share price of $ 7 to $ 9, CTI would expect to net approximately $ 21 mil., of which $ 11 mil. would fund ongoing R&D for PDWHF in chronic wounds and burns and $ 5 mil. would go to working capital. Smith Barney and Vector Securities International are underwriters for the offering. CTI was founded in 1984 as CuraTech by University of Minnesota researcher David Knighton and is headquartered in East Setauket, N.Y. CTI had 143 full-time employees as of March 31, with 24 in R&D. CTI Chairman, President and CEO Russell Whitman joined the firm in January 1987 after 16 years with Pfizer, where he specialized in the medical device and hospital products areas. Senior VP and Wound Care Center Division President Gerardo Canet joined CTI in April 1989 after 10 years at the home health care services firm Kimberley Quality Care. CTI's Senior VP-R&D Ronald Duff was formerly with Damon Biotech. CTI's board includes former Upjohn President and Chief Operating Officer Lawrence Hoff.
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