Andrew Rae, ARC Medical - Liquid Surgical Anti-Adhesion Therapeutic | LSI Europe '24

Andrew Rae 00:04
Chris, I'm a consultant at ARC Medical. Chris Springate, ARC Chief Executive Officer, is at another meeting. Interestingly enough, based on that last presentation, ARC and Chris in particular had been involved in the development of the tax system with AngioTech Pharmaceuticals, and that was a company that our investment banking syndicate took public many years ago. It became a multi-billion dollar company on NASDAQ in partnership with Boston Scientific. Our value proposition is really threefold, focusing on major markets in the US and Japan, and those markets represent a total addressable market of about $11 billion. The company has recently produced compelling data in a number of compassionate use cases in Canada in the orthopedic space, as well as producing some compelling clinical safety data and preclinical head-to-head data. Finally, the company is quite diligent on the patent front and has seven separate patent families, which extend through 2039 and beyond.

So this surgical adhesion space is quite interesting, as it represents the biggest complication associated with surgery. In the case of orthopedics, these are individuals who develop challenges with respect to range of motion and have difficulty with day-to-day activities like putting on shirts. In the case of gynecological surgeries, such as a myomectomy to remove fibroids, women can develop infertility as a result of this procedure due to their adhesions. In abdominal surgeries, such as colorectal surgeries, we potentially see issues with bowel strangulation, potentially requiring additional surgeries that might be life-threatening in nature.

The application of Joe Code is very simple. In a few seconds, it's 10 mL in a pre-filled syringe. In the orthopedic situation, in the case of abdominal or gynecological surgeries, it's two milliliters per kilogram. This is quickly administered, taking no additional surgical time. It is a liquid that flows like water. It's quite unique as a medical device. It flows through the whole surgical site, providing a temporary barrier post-surgery to prevent these adhesions. This can be applied quite uniquely in terms of laparoscopic indications, notably, but also in open procedures and in arthroscopy.

As mentioned, our go-to markets are in the US and Japan, in particular for orthopedic, gynecological, and abdominal indications. Within five years post-launch, the company would see itself as treating 2 million procedures, representing a market of about $1.8 billion. The company has produced some compelling preclinical data against competitors. We'd be happy to share that with you. That includes film, it includes spray, and one additional liquid medical device showing significant superiority in adhesion prevention.

The markets in the US are of size. ARC's intention is to look at the orthopedic space first, as it is the fastest and cheapest way to get to market, and there are no direct competitors in this space. This is quite unique in the adhesion arena. Indirect competition includes things like physiotherapy to break apart those adhesions post-surgery. As mentioned, we have produced very recently and excitingly some orthopedic data in Canada on a compassionate use basis. These were two individuals with shoulder surgery and two with knee surgery. What we can say is these were individuals who had come back for surgery. Three upon development of their adhesions, the surgeon came in, cut those adhesions, applied 10 mL of Joe Code, and we saw significant and durable response in these individuals, showing a marked improvement in forward flexion and knee flexion, four by four, four for four so far, and we look forward to more subjects moving forward.

We also performed a safety study in Canada, and this was really a volume escalation study showing good safety. We also made sure that there was no device-drug interaction as it pertained to other drugs that were commonly used during these procedures. As mentioned, the company has seven separate patent families. We also have process technology, which involves the ultra-purification and chemical modification of the polysaccharide, which is the key component of this liquid medical device.

So as it pertains to commercialization, we are looking for partners in Japan for gynecological and abdominal that will wholly pay for pivotal clinical studies that are anticipated shortly in the US. We are looking to raise funding to support our orthopedic studies. We are actively conducting out-licensing activities in Japan. We're very close on that front and would expect a partnership by Q1 2025. This would involve our partner paying for full clinical study costs, also paying the company a milestone and royalties on sales. Our studies, as we would launch those pivotal clinical studies, would involve in the abdominal case roughly 150 subjects in Japan. This would be a head-to-head against Seprafilm. Primary endpoints would be the percentage of patients that were adhesion-free. Secondary endpoints would be the non-inferiority versus Seprafilm at the site of administration and superiority in the rest of the abdominal pelvic cavity.

We are also looking at a gynecological study, again a head-to-head study in 40 subjects, and that would also result in us seeing approvals for both gynecological and abdominal uses, both in laparoscopic and open laparotomy procedures. The company has raised $19 million in equity offerings, $18 million in non-dilutive revenue and grants as well, which is very impressive to me as a capital markets person. We are out raising an additional $30 million currently for the orthopedic uses. Those use of proceeds would include the initiation of a pilot study, the completion of a pivotal orthopedic study in the US, and approvals there. That study would be two to 400 patients in size. At 12 weeks, we would be looking at changes in range of motion. Secondary endpoints would be patient-reported outcomes.

Andrew Rae 08:53
Our team has been there and done it before. I mentioned Chris had huge success with the Taxus drug-eluting stent. Historically, Alison Crow has been involved with three prior commercializations of anti-adhesion products. Bob Litchfield, who comes from the university that I attended at Western University in Canada, is the head of the Fowler Kennedy Sports Medicine Clinic in Canada. It is the preeminent clinic of its type in our country. The team is also surrounded by key opinion leaders who have recent, relevant clinical trial experience. These are individuals who assist the company with its clinical trial design, making sure that our studies are both clinically and commercially relevant. There have been many deals struck in this space, in the area of surgical complications, several that are multi-billion in size.

So I would just point to you today a few takeaways. I know there's a lot of data that you're going to be processing today, but we are addressing significant markets in the anti-adhesion space. The company has generated some very recent data in the orthopedic arena on a compassionate use basis. It has very strong intellectual property and process technology. Furthermore, this is a company with operators who have been there and done it before with the development of products like the Taxus stent and other anti-adhesion products.

In the near term, we have a few milestones coming up. The first would be the launch and completion in 12 months of the pilot orthopedic study in Canada. Secondly, would be the completion of the Japanese deal that we feel is very clear and present to us right now by Q1 2025. Finally, the data readouts in Japan for our pivotal clinical studies, both for abdominal and gynecological. So thank you so much for your time today. I look forward to speaking with you. Applause.