Regeneration Technology Powers Up R&D
BY ROBIN R. YOUNG CFA, MARCH 22, 2004
After two disappointing quarters, Regeneration Technology's (NASDAQ NM:RTIX) message at AAOS was that the distribution system had to change in order to become more effective and that the company's new product pipeline had to grow. Roger Rose, RTI's VP of distribution, marketing and donor services, outlined a plan to build an independent distribution capability in those product categories not currently covered by agreements with Sofamor Danek, CR Bard or Exactech. He also emphasized the complementary goal to build and improve the effectiveness of existing distribution arrangement customers, like Medtronic/Sofamor Danek.
Randall Mills Ph.D., RTI's Vice President of Business Development, delivered the R&D story. It was impressive. To begin with, RTI announced a 100% increase in R&D spending for 2004, an increase in R&D headcount from 17 to 30 and, finally, a doubling of PhDs on staff. RTI aspires to lead in the field of biologics. Therefore, by definition, Dr. Mills said RTI must develop and deliver to the market biologic materials that must:
- Be unambiguously safe
- Restore the body's natural function
- Leave no trace once healing has occurred
- Heal fast
- Be less invasive
- Allow the physician to intervene in the disease process earlier
Specifically, RTI is developing products capable of challenging Autograft in terms of speed of healing. Dr. Mills described the prospect of developing a cocktail of growth factors derived from a wider variety of tissues than bone. By creating the optimal combination of naturally occurring growth factors from donated tissues, Dr. Mills said, RTI will be in a position to challenge autograft's efficacy. RTI is developing the ability to create Bioactive Matrices that can be 'mineralized' and formed under pressure into common implant shapes. To illustrate the point, RTI pressure-formed a prosthetic hip stem from allograft bone. They also are creating a Wound Healing bioactive matrix, a kind of super charged Regranex and tackling cartilage growth. All these products would qualify under the current FDA guidelines for homologous use. We were very impressed. For Roger Rose's efforts, a strong pipeline will make his existing partners more effective distributors. Rose's challenge will be to build a distribution base that can 'sell' biologics/regenerative technologies. Generically speaking, too many sales people are intimidated by the science of tissues, cells, signaling factors etc. and can't talk a surgeon through the very different healing process that these technologies deliver.
For the cause of biologics in orthopedics, Dr. Mill is clearly swinging for the fences. If this industry is ever to achieve its potential, the players have to start, we think, acting like R&D leaders and, to continue the baseball analogy, stop thinking singles and doubles.
