ITEM 1.
BUSINESS
Since
its inception in 1960, Lescarden has devoted its resources to fund
research and development of proprietary biologic materials with a
focus on wound healing, clinical skin care, osteoarthritis and
cancer applications. In the ensuing years, significant
studies substantiated the ability cartilage powder to function as a
biological response modifier by stimulating the body's immune
system. This response has significant, demonstrated benefits for
chronic wound management, and has been investigated as a potential
treatment for certain types of cancer. Further studies indicated
that Catrix has potent anti-inflammatory properties that could also
be effective against diseases such as arthritis, scleroderma and
psoriasis.
With
a solid clinical platform, the Company in recent years has focused
its strategy toward pursuing marketing and licensing opportunities
for fully developed products that have received patents and are
ready for commercialization.
The
Company's product line is led by Catrix Wound Dressing, a powder
derived from bovine cartilage that has been shown to be effective
in the management of chronic lesions and burns, and especially
helpful when applied to non-healing wounds such as decubitus
ulcers, venous stasis ulcers, and diabetic ulcers. The product has
been approved for sale by the FDA and the Spanish Health Ministry
for distribution throughout the European Union with additional
registration activities proceeding in Asia.
Lescarden
also derives revenue from a line of Catrix-based skin care products
targeting the Plastic Surgery, Dermatology and Medical Spa markets.
Sales of two nutritional supplements, Bio-Cartilage and Poly-NAG, a
patented glucosamine polymer, also contribute to the Company's
overall sales.
Catrix Wound Care
Background
In
the early 1950's, the Company's founders discovered that cartilage
powder significantly hastened the healing of surgical wounds in
animals. Early clinical studies by the Company, supported by
extensive product testing and refinement, led to the creation of a
proprietary process for purifying bovine cartilage to produce a
sterile white powder that could be used to optimize healing. The
resulting product was given the brand name Catrix.
The
Company believes there is persuasive evidence that Catrix functions
in the body as a biological response modifier, regulating the
components of the immune system. Some observed effects of Catrix on
the body include:
●
Acceleration of wound healing;
●
Inhibition of excessive vascularization of certain
tissues;
●
Inhibition of proliferation of malignant
cells;
●
Moderation of excessive collagen synthesis by
fibroblast cells
Chronic Wound Market
It
is estimated that the global market for wound care products is
approximately $10 billion. This is likely to increase due to
several factors:
●
Demographic trends confirm that the world’s
population is living longer, a significant plus factor for the
Company’s Wound Dressing since it is the elderly who are
especially at risk for the various ulcers and non-healing lesions
for which the product provides therapy.
●
There is also a steady worldwide increase in the
incidences of diabetes which affects a wide range of age groups who
are at increase risk of developing non-healing
wounds.
●
There is at present no effective treatment for
non-healing wounds. This represents a growing problem for
hospitals, out- patient centers and long-term care facilities. The
best treatment protocols generally focus on proper wound cleaning
and preparation (removal of dead tissue around the wound) and
maintaining an environment that is conducive to proper
healing.
Human Clinical Trial Conducted With Catrix
Decubitus Ulcers
In 2004 a clinical study was performed in Spain by
the senior nursing professionals associated with the Spanish Ulcer
and Chronic Wound Advisory Panel
.
The purpose of the study was to demonstrate that
Catrix® Wound Dressing could achieve a significant healing
effect on pressure ulcers (bed sores) and other chronic wounds that
had failed to respond after months of standard wound healing
treatment. The 101 lesions included in the study had resisted
healing for an average treatment time of 155 days. 51 of the
lesions were Stage III, or serious, while 32 lesions were deemed to
be Stage IV, very serious (total loss of the skin thickness with
extensive destructions, necrosis of tissue in muscle, bone or
support structure.)
The
conclusions of the study were emphatically positive for
Catrix® Wound Dressing: after 49 days of treatment with the
Dressing, 38.4% of all lesions had healed completely. Another 34.7%
showed significant improvement. Of the 32 most serious Stage IV
lesions, 7 had healed completely, while another 11 had improved to
Stage II condition (partial loss of the skin thickness in the
epidermis, dermis, or both.)
In
their Summary, the administrators of the Study stated:
“…treatment with Catrix is effective in the treatment
of pressure ulcers that did not heal after the application of one
of several standard treatments…”
“…these results prove that the treatment with Catrix
significantly reduces the treatment length, and therefore leads to
a reduction in the sanitary cost in this kind of
patient.”
“…it is difficult to state the reasons why Catrix was
so effective in this study. Although this study does not compare
Catrix with other scarring products, we must take into account that
all the included pressure ulcers were previously treated with other
products, vastly used and considered necessary for the treatment of
pressure ulcers at the centres where the patients came from. The
cures with these other products were proven to be inefficient, and
sometimes to even cause wound deterioration. In all the cases, the
only change from the previous treatment was the application of
Catrix. We can therefore conclude that the obtained results were
due to Catrix.”
In
comparing the estimated cost of treating the wounds that healed,
including the nursing time and materials, the investigators
determined that Catrix® reduced the average cost by
40%.
Nine
additional studies have been undertaken in Italy, Germany, Spain,
Hungary and Poland to further establish the credibility of Catrix
to heal chronic ulcerations.
Radiation Dermatitis
In
May 2004 a study was undertaken to compare the efficacy of
Catrix with that of hydrocolloid dressings, the standard therapy
used on cancer patients treated with radiation therapy. Skin
injuries caused by repeated exposure to radiation are a frequent
side effect in oncology treatments. If wounds persist they not only
bring discomfort and risk of infection to the patient, but can even
force suspension of the radiation treatments.
Results
of the study demonstrated that Catrix is more effective than
hydrocolloid dressings in the treatment of wounds caused by
radiodermatitis (average healing time with Catrix: 4.9 days, vs. an
average of 9.0 days with hydrocolloid dressings). Both the nursing
staff and patient groups gave Catrix a higher evaluation in the
study.
Diabetic and Venous Ulcers
This
observational study, was published in November 2004, examined
the effectiveness and safety of Catrix in the treatment of diabetic
and venous ulcers compared to standard treatments. 54.8% of the
wounds healed in the 20 week timeframe with the average healing
time being 9.3 weeks. The conclusion was that Catrix was well
tolerated and effective in treating these types of lower extremity
wounds.
Burns
In February 2007 a pilot study was presented
in Korea demonstrating the benefits of utilizing Catrix Wound
Dressing with pediatric patients suffering from
2
nd
and 3
rd
degree burns. The purpose was to
evaluate whether Catrix could provide caregivers with a viable
alternative to skin grafting, the standard treatment for these
severe burns.
The
results will be published soon. They indicate that Catrix Wound
Dressing can indeed provide a healing option comparable to graft
surgery without the complications and expense associated with
grafting. This approach will receive further study, but it appears
to offer a new, non-invasive method for treating severe burns that
is safer and more cost-effective.
Many
plastic surgeons that provide primary care for burn patients are
already familiar with the Catrix skin care line, which they utilize
to aid in healing cosmetic surgical procedures. Since these
surgeons are already part of Lescarden’s customer base, they
would appear to be excellent prospects to purchase the Catrix Wound
Dressing to treat burn patients. Lescarden intends to capitalize on
this opportunity.
Catrix Skin Care
Catrix
powder is formulated into a line of skin care products designed to
meet the needs of plastic surgeons, cosmetic dermatologists and
their patients. The demonstrated ability of Catrix to expedite
healing, reduce inflammation and enhance patient comfort following
aesthetic procedures fills a unique niche in the rapidly growing
market for cosmetic and anti-aging procedures.
These
Catrix-based products are especially valued for their ability to
provide anti-inflammatory benefits without the use of steroids
which can adversely affect the skin when used for extended periods
of time. According to The American Society of Aesthetic Plastic
Surgery the market for cosmetic procedures in the US totaled
$12.4 billion in 2005.
In
April 2002, Lescarden announced that another study, published
in The Journal of The American Academy of Dermatologic Surgery, had
concluded that Lescarden’s Catrix 10 Ointment facilitates
faster healing than conventional treatments following cosmetic
surgery procedures. The study was conducted by a team headed by
Maritza Perez, M.D., director of cosmetic dermatology as St.
Lukes-Roosevelt Hospital Center in New York.
The
Perez study focused on patients who, after completing laser
resurfacing treatments on their faces, were randomly assigned to
receive Catrix 10 Ointment on one side of their faces and a widely
utilized over-the-counter ointment on the other side for eight
consecutive days. At the completion of the test period researchers
evaluated their data and were able to confirm that facial areas
treated with Catrix 10 Ointment healed much faster.
“Since
the Catrix 10 Ointment facilitates quicker healing, in theory
patients treated with it were at less risk for the complications
that open wounds imply,” said Dr. Perez. “Although the
mechanism by which bovine cartilage accelerates wound healing is
not completely understood, we think it may enhance and accelerate
the skin’s own healing process.”
The
Company has also developed a 5% Catrix Rejuvenation Cream and a 5%
Catrix Lip Balm. The Cream is intended for daily use as a
rejuvenating moisturizer while it is also effective in relieving
symptoms associated with psoriasis, dermatitis and other skin
anomalies. Domestically, sales of these products have occurred
principally through dispensing physicians, skin care professionals,
independent representatives, specialty retailers and via the
internet.
Poly-NAG
Derived
from specially processed crustacean shells, Poly-NAG is a polymeric
form of glucosamine (Poly-N-Acetyl-D-Glucosamine) that is marketed
by Lescarden in the anti-arthritic market as a treatment for
osteoarthritis. The product has demonstrable advantages over the
numerous products that compete in the glucosamine marketplace
because it remains active in the body longer than competitive
products.
In
clinical trials at the University of North Texas Health Science
Center, orally administered Poly-NAG was shown to be absorbed by
the body and metabolized into glucosamine, which was measurably
present in subjects’ blood serum. In addition, the tests
confirmed that serum levels of glucosamine remained higher for a
longer time in subjects receiving Poly-NAG, compared to subjects
receiving plain NAG. Based on these results, the Company was
awarded a US Patent for Poly-NAG in September, 2000. A European
patent was awarded in April, 2005.
Lescarden
recently engaged in two clinical studies of Poly-NAG’s effect
in animals. The purpose was to better define the marketability of
Poly-NAG for veterinary applications, a market where North American
sales of anti-arthritic remedies are over $400 million
annually. The results of these laboratory animal studies were
similar to those of the human tests, confirming that Poly
NAG’s activity in the organism lasts longer than the effects
with standard glucosamine. This important point of differentiation
should provide a meaningful market advantage when Poly-NAG is
introduced into the veterinary marketplace.
Distribution
Europe
The
Company is continuing its presence in the European market and
promoting the value of the Wound Dressing as a valuable healing
asset in the treatment of burns and chronic wounds through a
licensing agreement with Smith & Nephew signed in June 2009.
The arrangement with Smith & Nephew has increased sales of
Catrix wound dressing in Spain.
Korea
In
December 2004, Lescarden entered into a 10 year exclusive license
agreement with Daewoong Pharmaceuticals, headquartered in Seoul,
South Korea. Daewoong is the largest producer and marketer of
over-the counter and ethical pharmaceutical products in Korea, with
annual sales over $400 million. Already established in the diabetic
foot ulcer segment of the market, Daewoong is expanding its product
line to cover all aspects of wound treatment. The Company is
working with Daewoong to secure approval from the Korean FDA to
distribute Catrix pursuant to the terms of the agreement. Subject
to such approval, designation of Catrix as a class IV medical
device from the KFDA would yield higher levels of reimbursement but
it is unclear if and when such designation will be
achieved.
Government Regulation
Since
the 1996 FDA approval of the Company's 510(k) application for the
use of Catrix in the management of a variety of skin ulcerations,
wounds and burns, the Company has focused on the development of a
distribution network for its family of proprietary, market-ready
products. This strategy envisions a network of licensing and
distribution agreements in addition to Lescarden's own direct
marketing efforts. The plan includes a complete marketing program
for Catrix powder, as well as for Catrix Skin Care Products, which
are being offered to cosmetic dermatologists, plastic surgeons and
skin care specialists. Looking to the future, the Company believes
that the observed effects of Catrix (including acceleration of
wound healing, tumor inhibition and reduction, inhibition of
excessive vascularization and modulation of immune system
functions) coupled with an absence of toxicity, present additional
promising avenues of investigation.
The
production and marketing of the Company's products and its research
and development activities are subject to comprehensive regulation
by various federal, state and local authorities in the United
States and governmental authorities of other countries in which we
conduct business. Among others, the FDA, HPB (Health Canada) and
the SHM (Spanish Ministry of Health) exercise regulatory authority
over the development, testing, formulation, manufacture, labeling,
storage, record keeping, quality control, advertising and promotion
of the Company's products.
A
new drug or device may not be marketed in the United States until
it has satisfied rigorous testing procedures established and
approved by the FDA. The drug may then be marketed only for the
specific indications, uses, formulation, dosage, forms, and
strengths approved by the FDA. Similar requirements are imposed by
foreign regulators upon the marketing of a new drug in their
respective countries.
All
of the Company's contract manufacturing facilities are subject to
periodic inspections by the FDA and comparable agencies from other
countries. If violations of applicable regulations are discovered
during these inspections, the Company may be restrained from
continued marketing of the manufactured products. Such facilities
are also subject to regulation regarding, among other things,
occupational safety, laboratory practices, the use and handling of
radio-isotopes and hazardous chemicals, prevention of illness and
injury, environmental protection and hazardous substance
control.
The
Company also is subject to foreign regulatory authorities with
respect to clinical trials and pharmaceutical sales. Whether or not
FDA approval has been obtained, approval of a product by the
comparable regulatory authorities of foreign countries must be
obtained prior to commencement of marketing of the product in those
countries. The approval process varies from country to country and
the time required may be longer or shorter than that required for
FDA approval.
Raw Materials and Manufacturing
Catrix
is manufactured for the Company by contract manufacturers. These
manufacturers must be FDA-approved pharmaceutical manufacturing
facilities. Likewise, foreign government agencies, in countries
where marketing approval is sought, must also approve all such
manufacturers. The Company's food supplement cartilage material,
BIO-CARTILAGE, and its Poly-NAG are manufactured in the United
States and Iceland. An additional manufacturer is being developed
in the Western Pacific Area.
Catrix
is
prepared from animal cartilage tissue. The most accessible and
easily processed source is bovine tracheas collected from normal
healthy beef cattle subsequent to slaughter. Tracheas are cleaned,
flash frozen and delivered to qualified pharmaceutical
manufacturing facilities. The cattle from which the tracheas are
harvested are certified free of BSE (Bovine Spongiform
Encephalitis) and the only cattle herds used as source material are
located in New Zealand.
All Catrix and production procedures have been
submitted in extensive detail to the FDA, the HPB in Canada, and
the Spanish Health Ministry in Spain, and accepted as part of the
review of the Company's official submissions with respect to
studying Catrix in patients.
Intellectual Property
The
Company was granted and owns, by assignment, several United States
patents. There are similar patents or pending patents in various
foreign countries. We also rely on trade secrets, know-how and
continuing technological innovation to maintain our competitive
position. We use other methods to protect our proprietary rights,
including confidentiality agreements and proprietary information
agreements with vendors, employees, consultants and others that may
have access to proprietary information.
Competition
Competition
in the wound healing and clinical skin care markets is based
primarily on: product performance, including efficacy, safety, ease
of use and adaptability to various modes of administration; patient
compliance; price; acceptance by physicians; marketing; and
distribution. The availability of patent protection and the ability
to obtain government approval for testing, manufacturing and
marketing are also critical factors. See "Business-Government
Regulation."
A
key factor to our success will be our ability to expand our
distribution network and production capabilities while we continue
to enhance our existing products and technologies. Where possible,
we intend to pursue patent and trademark protection for our
products and processes we design and develop.
Human Resources
At
August 29, 2016, the Company had one full time employee. Outside
consultants are hired to coordinate the financial reporting,
regulatory, production operations, quality control and customer
service functions.