PERTH, Australia – After its initial public offering on the Australian Securities Exchange, soft tissue regeneration company Aroa Biosurgery Ltd. has received new clearances in the U.S. and Europe and is focusing on building up its commercial and manufacturing capacity.
What sets Auckland, New Zealand-based Aroa apart from other regenerative tissue companies is the rate of tissue regeneration with Aroa’s scaffold and its affordability, Aroa Founder and CEO Brian Ward told BioWorld.
“Typically, biologics have been limited, largely because they’re expensive, so in a way, surgeons ration them to an extent. We’re able to make these products more affordable, so we’re able to change that performance paradigm.”
Aroa’s products are developed from its Endoform technology platform, an extracellular matrix biomaterial derived from the forestomach of sheep and are used to improve healing in complex wounds and soft tissue reconstruction. They are typically 20% to 60% less expensive than competing biological products, he said.
The technology combines “advanced regenerative performance with scalable and efficient manufacturing to target significant addressable markets with a substantial competitive advantage.”
The name “Aroa” is Maori for “understanding,” and “we as a company value the understanding of the human biology and what we think is a world-leading capability in that area,” he said.
The platform includes a basement membrane layer and supportive connective tissue that acts as a scaffold to grow new tissue that is lost or damaged through disease or injury, allowing the patient’s own cells to grow into the matrix to build new tissue and re-establish blood supply. As the patient continues to heal, the scaffold is replaced by the patient’s own tissue.
The scaffold is developed by isolating a specific layer of tissue from the forestomach of sheep that forms the extracellular matrix.
“What you end up with is a very porous matrix that has more than 150 molecules that adhere to the framework, all known to be important signals in soft tissue and wound healing, and the cells move into the material and start to lay down new tissue,” Ward said.
Aroa Biosurgery was founded in 2008, based on the regenerative properties of ruminant forestomach extracellular matrix technology initially developed by Ward.
“We started with a relatively simple product, and as the company developed, we advanced more complex products,” he said.
The Endoform dermal template was the first product for chronic non-healing wounds and was launched in the U.S. by Hollister in 2013. Several months ago, Hollister exited that part of the business, and Aroa reacquired global rights to the product again.
A more complex product was then developed that combined the biologic product with a synthetic polymer, and the hybrid device for abdominal wall construction was launched in the U.S. in 2018.
Aroa has five existing commercial products approved for sale in the U.S. based on the Endoform technology, which has been used in more than four million procedures targeting chronic wounds, hernia and soft tissue reconstruction. The company has regulatory clearance in more than 37 countries and a deep patent portfolio.
Aroa began trading on the ASX in July 2020 following its IPO that raised AU$45 million (US$33.1 million). The offer was comprised of AU$30 million through the issue of 40 million new shares priced at AU75 cents per share, with the remaining AU$15 million forming part of a limited sell down by early investors in the company. The IPO valued Aroa at AU$225 million. Bell Potter Securities and Wilsons were joint lead managers.
Funds raised will be used to build out the commercial organization, investing in a U.S. sales force and building up manufacturing capacity, Ward said. Currently Aroa can produce $30 million worth of product sales, and it plans to build that up to supply $400 million worth of product sales.
In fiscal year 2020, which ended on March 31, the company achieved revenue of NZ$22 million (US$14.8 million) and NZ$18.7 million in gross profit.
The pipeline is focused on a $2.5 billion market opportunity in the U.S., which is Aroa’s primary market. It is also growing its presence in Canada, Europe and select Asian countries where it has made early inroads.
Aroa employs 140 people across its headquarters in Auckland, its U.S. operations in San Diego and its U.S.-based sales office.
Another key distribution channel for Aroa is via its Nasdaq-listed partner Tela Bio Inc., which sells and distributes Aroa products across 200 U.S. hospitals. Tela expects to expand to 60 employees this year to cover the top 500 hospitals for soft tissue reconstruction in the U.S.
Symphony to be launched next year
Following the IPO, Aroa gained two more approvals: Symphony in the U.S. and Myriad in the EU.
Approved by the U.S. FDA on July 30, Symphony is designed to reduce the time to wound closure, particularly where patients have severely impaired healing or are compromised by other diseases. It is applied as a graft and is surgically fixed at the margins.
Symphony combines Endoform and hyaluronic acid and is engineered into a perforated, multilayered device with a high volume and surface area. It takes advantage of Endoform’s scaffold, secondary molecules and vascular channels to support new tissue formation.
The hyaluronic acid in Symphony gels after rehydration and helps maintain a moist healing environment. Hyaluronic acid is also known to improve blood vessel formation, cell migration, collagen production, and reduce scarring.
“We expect Symphony to be particularly helpful in diabetic foot ulcers and venous leg ulcers, which can be very difficult to heal. These are conditions where there is a dysfunctional extracellular matrix, reduced cell proliferation and patients may have poor blood flow, immunity and sensation,” Ward said.
“The approval of Symphony represents a major expansion in our product portfolio. This is the next key step in our strategy to unlock regenerative healing for more patients. Symphony will give clinicians a new option to treat some of their most hard-to-heal patients, in what we estimate is a U.S. market size of $1.15 billion for the product,” he said.
The company plans a commercial launch in the U.S. for 2021.
On the same day as the U.S. approval, Aroa received the European CE mark for its Myriad product, which supports rapid tissue growth for dermal tissue reconstruction of complex wounds, tissue resections and injuries from trauma.
Myriad is a perforated, thick, multilayered Endoform graft that is engineered to have a high volume and surface area with interstitial spaces that are easily accessible to cells.
Aroa anticipates European market launch in 2021. Aroa received FDA 510(k) clearance for Myriad in June 2017, which led to first sales in early 2020 with a total estimated market size for the product globally of $350 million.
“As Myriad was only launched in the U.S. in early 2020, there is still significant potential for uptake of the product,” said Ward.
Aroa’s products are also approved in New Zealand, but it’s a tiny market of 75 million people.
“New Zealand has been a great springboard for us, but from day one, we operated like a U.S. company. All of our commercial activity is there,” the CEO said.