Israeli company CartiHeal has announced success in a clinical trial of its treatment for knee cartilage damaged either by injury or by arthritis. The company reported that its cartilage substitute product was more successful than the currently used treatments. The trial involved 251 patients, and was conducted over two years.
Among the investors in CartiHeal are Elron Electronic Industries Ltd. (TASE: ELRN), with a holding of 27%, Accelmed, headed by Dr. Uri Geiger, venture capital firms aMoon, Peregrine Ventures, Johnson & Johnson Innovation, and Access Medical. The company's technology originated at Ben Gurion University of the Negev, which also holds shares in the company through its technology transfer arm. The company was founded in the Incentive technology incubator, owned by Peregrine Ventures.
Another investor in CartiHeal is US company Bioventus, which invested $15 million at a pre-money valuation of $180 million in 2020. The investment agreement includes an option to buy the company for $360-500 million . If CartiHeal receives marketing approval form the US Food and Drug Administration (FDA), it can choose to oblige Bioventus to exercise the option.
CartiHeal has received a Breakthrough Therapy Approval from the FDA , which allows a shortening of the clinical trials process for products that meet a need not met by products currently available on the market. Thanks to this status, the company believes that it will be able to register the product for sale after the current trial. It intends to apply for approval by the end of this year. It should be mentioned that the FDA is currently being slow to approve new products because of the workload arising from the Covid-19 pandemic, and the difficulty in visiting production lines for inspection. It could therefore be that it will take CartiHeal a year or more to obtain approval.
In the event that Bioventus exercises its acquisition option, Elron will receive up to $129 million, depending on milestone provisions.
The patients in the clinical trial of CartiHeal's Agili-C implant were tested for the outcome of treatment in five categories: Pain, Other Symptoms, Quality of Life, Activities of Daily Living, and Sports. The difference in scores required to demonstrate that CartiHeal's product was superior, statistically and medically, to the standard currently available treatments was preset, and CartiHeal surpassed the required result. In addition, 77.8% of those treated with CartiHeal's product felt an improvement in their condition, versus 33.6% of those who received conventional treatment.
CartiHeal chief medical officer Dr. Ken Zaslav, a past president of the International Cartilage Repair Society, said, "The idea of the study design was to treat patients that we, as orthopedic surgeons, see on a daily basis in our clinics and operating rooms. This is the first multinational, randomized and controlled study which enrolled subjects with such a wide range of indications."
"Study results, which demonstrate the superiority of the Agili-C implant over the current surgical standard of care, offers an important potential benefit, as reflected in our Breakthrough Designation by the FDA, for patients who lack other sufficient treatment options", said Nir Altschuler, CartiHeal’s founder and CEO.
In the event of its options being exercised, Elron expects to receive up to $126-129 million including $90-92 million at the sale and $36-37 million in subsequent payments. Accelmed, which holds a 15% stake, expects returns of seven times its $10 million investment.
Published by Globes, Israel business news - en.globes.co.il - on August 4, 2021
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