Welcome everyone to our press meeting. I'm here today with Håkan Johansson, our CFO. We've announced this meeting to give a short presentation on the situation and the message that we have received from FDA late Friday night. I think this will take about 10-15 minutes, and then we'll open up for questions. When Håkan and I prepared this meeting, we had a totally different agenda, and we had a totally different presentation to make. We thought rather we would be speaking about CERAMENT G being the first ever approved bone graft substitute. Fate wanted differently, and we have received instead a message where there is further data required. Operator, if you help me to go to the first slide of the presentation with the headline FDA Request for Additional Data and Clarifications.
The challenge was known already from the very beginning that the U.S. market does not have an industry standard nor a treatment standard for addressing bone infections. It was always known to us that we will need to develop controls so that once a potential approval has been given, there is a patient group towards which the results of CERAMENT G could be tracked. You always have to have, let's say, an anchor point or an origo or whatever you want to call it. Now, the products that apply for De Novo and the products that become a Breakthrough Device, they do it by the very definition that there is no predicate device, meaning there is no device that you specifically can compare yourself with, which is a standard. A Breakthrough Device, of course, is the same. It means that there are no existing alternatives.
I would say any pioneer, any device that is doing the pioneer work will actually have this challenge. I think that's also maybe why if you look at the last two years, about 50% of the De Novo applications get approval on the first attempt, and 50% are sent back on some kind of completing data or additional data or clarification. Now we are in the second, where we have to not complement data on CERAMENT, but on the control. If we look at the very strong data, the clinical studies that are done in Europe, they have been made, for example, the Oxford data within one clinic that have had very clear and rigid treatment guidelines.
Oxford, Nuffield Orthopaedic Centre in Oxford, 20 years ago, they treated their patients with PMMA beads, and they had an infection recurrence rate of 15%. I'd just like to mention that this center is probably one of the most sophisticated in all of Europe in terms of treating bone infections. Usually they accomplish very much better results than, I would say, the clinic possibly at a regional hospital. As they then progressed, they went from PMMA beads to starting to treat their patients with autograft to heal the bone injury and calcium sulfate mixed with antibiotic to deal with the infection. At that time, they had a recurrence rate of 10%. Eventually, when CERAMENT was introduced, they switched to CERAMENT G and V and adopted a one-stage procedure, and the infection recurrence rate was down to 4%.
The data that we have submitted to FDA, we have shared this with the market, has been based on the Oxford data, where the study has been going on in two phases. We have submitted 100 and 163 patients. The controls that we have submitted has also been taken from Oxford's historical records. We felt that this was the best way to do it so that we had the maximum ability of comparability. If we look at some other studies that have been very strong in Europe, like Djahangiri. That is a study where they treat patients with CERAMENT and compare to what has been done in other studies. It's a literature comparison. This is very strong clinically, but it doesn't meet the demands of FDA. They need more data than such. As you know, Djahangiri is on trauma patients.
I also have a comparison. The CERTiFy study. A CERTiFy study is a true randomized clinical trial. Here you have specified controls. Such a study would be, of course, also not a problem, but this is not on infected patients. This is with BVF, that data could not be used either. If we go to the next slide, please. We talk a little bit about the U.S. market dynamics. The data you see here is from our newly concluded BONESUPPORT commissioned market research. We did quite an extensive market research to better understand the market dynamics, since there are no standards on this market. It showed that of the bone infections that clinicians are confronted with, 38% are treated with PMMA beads. This is the same method that was used in Oxford about 20 years ago. This is off-label. This is not endorsed by FDA.
The beads are created in the clinic in an open environment where antibiotics is mixed into the cement and transformed into small pellets and connected to a string, which is then lowered into the wound and later on has to be removed. There are many strong clinical studies showing infection recurrence rate of between 13%-36%. Basically confirming the Oxford data. Other treatment methods include only intravenous antibiotics, meaning no local treatment at all. This is usually made for patients with very mild infections or if the status of the patient is so bad that an amputation is anyhow very near to come. Then there are all kinds of other treatment options. I think at the bottom of the page you will see that in 22% of the cases there are various different mixings of antibiotics with all kinds of different local agents, possibly even CERAMENT.
All this is off-label. We know with off-label that it's very difficult also to guarantee the results because you could have different concentration at different times and the elution of antibiotic is very random. Go to the next slide, please. Was this a surprise to us of the control data? No, it was absolutely not a surprise. We knew already going into the De Novo process that we would have to create controls and we had good dialogue with FDA during the process. We spent a large amount of 2020 to bring controls from the Oxford data that we felt would be normative and representative as a comparator to CERAMENT. Now, let me emphasize that this is not done to validate the efficacy of CERAMENT. I think that is quite undisputable.
Once a product in De Novo gets approval, you need to have a normative group to compare with because FDA would like to track over time, safety and efficacy. If this doesn't come out favorable, they can also pull a product, of course, off the market. Those are the rules for De Novo. The data that we prepared was then submitted and what has happened in the notification that we got from FDA is they said, we need more data than this. We submitted 163 patients treated with CERAMENT and about 65 patients in the control group, and we need now to increase that latter number to meet the requirements. What could happen if we cannot find this data? We have to go to different clinics now and extract this data.
We have a list of a few bullet points of topics that have to be responded to FDA. I think they've been very helpful and very clear on what it is and the major point here is on the control data. There are some minor points as well on labeling and packaging and stuff like that, but those are in a different dimension. If we are unable to extract and get the data required for this approval to take place, then the product, CERAMENT G for bone infections, will not be moved from Class III to Class II. It means that it will stay in Class III, which is the PMA category. Just for everyone's information, by default, all products with these kind of implantables and biological products are in Class III, the PMA.
A De Novo application means that you bring it down from the high evidence level of PMA down to Class 2. If the data attempt would fail, it goes back to that category. The FORTIFY study that has been running since 2017 is a very good example of the data quality and data level which is required for a PMA approval. Final question on that slide or final topic. Could we not then just do a clinical trial and get it over with?
If there would be any kind of standard in the market, this might be straightforward, but since it isn't. If we would do a clinical trial, we would have to ask bone infection unit that have a high frequency of patients, such as Oxford, to treat some patients with CERAMENT G and some patients with PMMA beads, which most likely Oxford would completely refuse, as they have done that 20 years ago and seen that they have a recurrence rate which is more than three times higher, and also leads to higher amputation rate. It would be unethical actually to do that. Given that there is no standard, of course, there are centers around the world that still are treating with PMMA beads or other methodologies.
We see rather that we will contact and work with partner centers that have historical data in this respect and categorize and select patients that are representative so that we can build the controls. A clinical study on this specific matter is not in our plan. We do not plan to start a clinical study to satisfy this need. We believe there's enough data in the existing domain among clinicians and faculty. Next slide, please. I mentioned already that we will now engage in data mining. Why does that take a couple of months? Why do we think that October is when we will have this ready? I think if we wouldn't have the pandemic, it would go a little bit faster.
Experience and history shown us last year that interacting with the university hospital clinics that are in possession of this data and have tracked and followed patients long-term, it's not trivial when society is in lockdown and the healthcare system is under such tremendous pressure. We believe that it's going to be a little bit more tedious than it would've been without a pandemic. I also want everyone to understand that it's not just finding patients that have been treated for bone infections. You have to cross-link it, so let's say to get comparable data on age, weight, comorbidities, health condition, size of the injury, location of the injury, so that you get at least data which has a bit of comparability to the data for the CERAMENT patients that we have submitted, the 163 patients.
Given also that different doctors treat different ways, we have to find those doctors that have a similar surgical technique and extract those patients. I have been asked already over the week, what is the chance of success? Well, when it comes to the superiority of CERAMENT G, we don't see that there's any doubt on this. We are absolutely confident. I cannot give a guidance on probability that how fast and to what success rate we will find this data, and then the interpretation of FDA. What I can guarantee is that we have a very strong ambition. We are very determined, and we will work very closely with FDA to make sure that what they want is what we will deliver. Finally, does it change our financial position?
Obviously, I was hoping that we would launch CERAMENT G in the U.S. in April of this year. That's not going to happen. It's probably now going to be beginning of next year instead, this doesn't change our financial status. It does a bit of dent in the sales short-term, it changes nothing really in our long-term prospect, it change nothing also in our strong financial status that we have. Go to the final slide number six of my presentation. We have now updated our timeline, we look at the upper part of the slide. There's no changes to the lower part of the slide. What you can see here is that the submission of the additional data is slotted for October this year, with a potential approval in quarter one 2022.
About 12 months delay versus what we originally had anticipated and hoped for. That concludes my presentation, and if we now open up for questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad now. Our first question comes from the line of Rickard Anderkrans from ABG. Please go ahead.
Good morning, Emil, Håkan. Thank you for taking my questions. I'll keep it rather brief here. Given the uncertainties of the FDA recognizing the validity of your special controls provided, do you see any risks for the control arm, which is standard of care in the ongoing FORTIFY study being recognized as a valid control by the FDA?
Thank you, Rickard. I think that's a very good question, actually. The answer is no, I don't see that risk. I explain why, because the FORTIFY study was designed in very close collaboration with FDA, and it was changed many times to satisfy their needs. There's always a risk when you do a clinical study, especially on trauma, but the size of the study, 200 patients, should theoretically guarantee that statistical significance is accomplished. Of course, as I said, there's always a risk, but all the prerequisites are there for giving the validation required.
Great. Can you talk a bit about the data collection here? How large will the data collection be in terms of number of patients and centers, and is the registered data you gather up to your discretion, what you include and such, or has it been really strict protocol by the FDA in terms of the size and type of data you're going to collect?
There's more dialogue needed here to narrow this gap. We felt that the data we had submitted would be sufficient. It comes down to be able to arrive at statistical significance. It showed that FDA was a bit more narrow in their definition in terms of which control patients to include. They were a bit more narrow in terms of the size of the injury, the age group, and so on, and how long the patient had an infection. I guess we have to calibrate on their criteria. Then go out and find enough patients to reach the significance. Of course, if you cut out outliers in a population, you reduce the number of patients that goes into the analysis. Then eventually you could have problems with guaranteeing the statistical validity.
Sure. Was there any focus on the fact that the majority of patients at least appear to be non-U.S. patients?
That did not seem to have any concerns.
Great. Just a final two here. Could a small-scale animal model be at play here? Animal study.
No. The animal study will answer questions such as how does tissue react in different circumstances? The question here relates to patient controls, and I will answer a little bit longer here, Rickard, because if there would be any doubt on the efficacy of CERAMENT, then of course animal studies could come in play, but that's not the point. The point has been given on patient controls, which more relates to the post-market surveillance and to have an anchor point for continuous monitoring.
Right. Sure. The final one, do you see any increased cost from this in a meaningful way, and do you see any slowdown of your other R&D and pipeline projects due to this?
Well, we're fortunate to work with very good consultants, so we have the ability to scale up efforts without harming other projects. It will drive some cost. This will not be a material cost, but the answer is yes. You can also look at last year's cost. The trending from last year is pretty wise to continue. If we would have received an approval on Friday, there are costs that would have fallen off our P&L going forward, but now those costs rather continues, and that is the cost for consultants to work with FDA.
Sure. Thanks a lot. Thanks again for taking my questions.
Thank you, Rickard.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. We have one more question from the line of Kristoffer Lilleberg from Carnegie. Please go ahead.
Yeah. Thank you, and good morning. Two questions. First, don't you think there's a risk here that FDA will want to wait for the FORTIFY data that should now be available around at the same time as you will submit the new data?
Thank you, Kristoffer. Good morning also to you. I think that's also a very good question, and also with a bit of pragmatic nature. FDA is under pressure of course, also due to the pandemic, and there could always be the risk that they would want to wait for the FORTIFY data, and they would have then most likely a very good set of controls. I don't dare to speculate how they're thinking about this. It just happens to coincide time-wise that we are likely to have the FORTIFY data about the same time as we believe we would have dug out the information.
How we move forward there, maybe some parts of the material will even be combined just to strengthen further because, yes, one is on trauma and one is on bone infection, but there is also a lot of similarities here in terms of mechanism of action and so on. Both of the products are CERAMENT G. If anything, I believe that having the FORTIFY data possibly could even strengthen our case further.
You don't see a risk related to that given the high thresholds to reach significance in that trial?
You mean in FORTIFY?
In FORTIFY, yeah.
Sorry. Well, I think the study has been designed with all the prerequisites of eliminating risk. I think we know from history that trauma studies have, by default, a higher risk than other studies. At least from our side in designing this study together with FDA, we have done everything we can to eliminate risk or to reduce risk, but risk can never be fully eliminated. The conclusions from the discussion now with FDA on De Novo doesn't give me any merits to challenge the existing setup of FORTIFY.
Okay. Thank you. It's interesting to hear, you said that Oxford would have liked to do a comparative trial, and I totally understand that, but at the same time, you also commented that 40% of patients are still treated with beads. I guess it should be possible to find centers somewhere to do such a trial if needed. Don't you believe?
Yes. If we would go down that route, then we would have to steer our attention towards the U.S. market, of course. The PMMA beads in the leading centers of Europe are a declining treatment method, which is close to disappearing. In the U.S., as we saw, still 38% of the patients receive such a treatment. Yes, there's definitely patients to be found.
Okay, great. Thank you.
As there are no further questions, I'll hand it back to the speakers.
Well, thank you everyone for joining us this morning. Ultimately, we would have hoped to have a different message to you, but we are nevertheless grateful that we have a good dialogue with FDA. We conclude that about 50% of the applications on De Novo are sent back for different kinds of additional data or supplementary data. We are now going to work closely with FDA to make sure that we can deliver the quality and the quantity on the controls that they need for us to take this product to market. With that, I remain and say thank you, everyone