By Randall Osborne

With FDA approval of its Apligraf skin-graft product, Organogenesis Inc. earned an $11.5 million payment from collaborator Novartis AG, and expects to launch the treatment for venous leg ulcers early next month.

The funds from Novartis, of Basel, Switzerland, consist of $6 million in equity and $5.5 million in research support, of which $3.75 million in milestones was disclosed in March.

So far, Organogenesis has collected $26.75 million of the potential $40 million in the Apligraf deal with Novartis, which bought exclusive worldwide rights to the product in 1996. Novartis handles product marketing and international registrations.

Apligraf, manufactured by Organogenesis, of Canton, Mass., is a living skin equivalent engineered from the discarded foreskins of human infants, recommended for approval by an FDA panel earlier this year. (See BioWorld Today, Feb. 2, 1998, p. 1.)

Rather than using a scaffold for the cells to grow around, Apligraf is made by culturing the cells in a three-dimensional system that yields the two layers of skin. Venous leg ulcers are chronic wounds, typically near the ankle, caused by poor blood circulation.

In January, an FDA advisory panel recommended approval of a similar product: Dermagraft, a bioengineered skin implant which, like Apligraf, is derived from discarded foreskins.

Developed by Advanced Tissue Sciences Inc., of La Jolla, Calif., Dermagraft is already available in Canada, the U.K., Ireland and Finland for diabetic foot ulcers, which is the indication for which the company seeks approval by the FDA.

Organogenesis has trials under way to expand its product's indication into diabetic foot ulcers as well. This year, a trial in pressure sores is expected to begin. The product also is being tested for burns and surgical indications.

Foot ulcers "would be our second approval, hopefully," said Judi Glova, spokeswoman for Novartis Pharmaceuticals Corp., of Hanover, N.J., an affiliate of Novartis.

"It will probably depend on which trials end first," she added.

Pricing of Apligraf for venous leg ulcers has not yet been established, Glova said.

Organogenesis' stock (AMEX:ORG) closed Tuesday at $25.25, down $3.50. *