By Matthew Willett
Less than a month after Advanced Tissue Sciences Inc. filed for premarket approval for Dermagraft, its dermal fibroblast wound treatment for foot ulcers, the company has funded the product's commercialization through a private stock transaction worth $20 million.
The equity investment by the La Jolla, Calif., company's majority shareholder, the State of Wisconsin Investment Board, totals more than 3.49 million shares, raising the board's stake in the company to just under 19 percent.
ATS' stock (NASDAQ:ATIS) gained 3 cents Wednesday to close at $7.97.
ATS based the pricing on a 15 percent discount to a 30-day average closing price. Company CEO and Chairman Arthur Benvenuto told BioWorld Today the Wisconsin Board is one of the company's most valued investors.
"They're our largest shareholder and very involved in the biotech industry," he said. "They're valued investors and have been with us a long time. This financing speaks for itself in terms of their commitment to the technology and our prospects."
The board began investing in 1995 in ATS, which was founded in 1986. This round of unregistered common stock selling puts the company on solid footing, Benvenuto said.
"At the end of the second quarter we reported $23 million in cash and cash equivalents, and this, taken with current and anticipated financial resources, we believe will provide sufficient capital to fund operations through 2002," Benvenuto said.
Proceeds from the financing will aid the company in development and commercialization of at least two products: the recently submitted Dermagraft and a collagen product. Dermagraft is currently undergoing testing for indications beyond diabetic foot ulcers, company co-founder, technology innovator, president and chief operating officer Gail Naughton said.
"We hope to launch [Dermagraft] early next year, and we're also in clinical trials for other indications, venous ulcers, pressure ulcers and periodontal disease disorders, and we're moving forward to evaluate Dermagraft for treatment of ischemic heart disease," Naughton said. (See BioWorld Today, Aug. 28, 2000, p. 1.)
Dermagraft has shown promise in cardiovascular indications, she said, since it has demonstrated the ability to grow new blood vessels in damaged heart muscles. She added that the 59-million-patient cardiovascular market is an appealing one to ATS.
Dermagraft is currently undergoing large animal testing in a final pig study for that indication.
Naughton added that ATS sees potential for its collagen replacement technology in several fields, including orthopedics, dental reconstruction and facial reconstructive surgery.
"We hope to also have the collagen product on the market in the second half of next year as well," she said. "We're manufacturing Dermagraft and going through the validation stage, so we should have it on the market in the second half of next year."
Beyond that, Naughton said, the company also intends to find a market for an outgrowth of the Dermagraft program, a bioreactor system that simulates in vitro conditions, in addition to partnering out technology for additional revenue.
"On a go-forward basis, we're looking at broadening our alliance base," Benvenuto said. "We've seen those [alliances] as not only a source of additional funds, but as an opportunity to take a technological leadership position, especially in the cardiovascular area. Expect us to move forward on that front and future bolster our cash resources."