Hello, everyone. Thank you all for joining us for the second day of Piper Sandler's annual healthcare conference. I'm Michael Mazzola, one of the associates on our biotech team. It's my pleasure to welcome KALA BIO and their CMO and head of R&D, Kim Brazzell. I'll hand it over to Kim, and he'll tell us more about the company.
Thank you. Thank you, Michael. And I'd like to thank the Piper team for inviting us to provide an update on KALA and remind everybody there may be forward-looking statements in what I have to say. KALA is a leader in the emerging field of mesenchymal stem cell secretomes. We have a focus on rare diseases and ophthalmology and have an ongoing phase IIb/pivotal trial with our lead product, KPI-012, for the treatment of persistent corneal epithelial defects, which is a rare sight-threatening condition with significant unmet need. Our ongoing trial, we are targeting top-line data in Q2 of 2025. And as we'll discuss later, we think this is potentially a billion-dollar opportunity. We've made significant progress in the last couple of years in our development of the secretome program. We filed an IND in November of 2022 and was accepted within the normal 30-day period.
We initiated our phase IIb trial in Q1 of 2023 with a small safety cohort that the FDA asked us to do before going into the efficacy portion of the trial, and then we started the efficacy portion of the trial mid-year of 2023. We've also made significant progress on our CMC and potency assay program and had a very productive meeting with the FDA earlier this year where we gained alignment with the FDA on our program for CMC potency assay program for phase III trials and ultimately for BLA filing. We have a very experienced leadership team that's been together for a number of years, both on the R&D side and the commercial side, experience with rare diseases, and experience with secretomes and cell therapies. We previously developed and gained FDA approval for two ophthalmic products, one for dry eye disease and one for ocular inflammation.
A couple of years ago, we divested those to Alcon to focus on our new focus, which is biologics for rare ophthalmic diseases. As I said, KALA is a leader in mesenchymal stem cell secretomes, which is an emerging field that we think has significant opportunity. By way of background, secretomes are produced by collecting the biomolecules that are secreted by cells into the extracellular space. In our case, we start with human bone marrow-derived mesenchymal stem cells, for which we have a master cell bank. We culture those cells under controlled conditions for sufficient time to let them produce the vast array of biomolecules they normally produce to support the growth and viability of the cells.
We then, again, in a controlled fashion, remove the cells and are left with an aqueous solution containing a variety of the biofactors, which we manufacture into a single topical ocular formulation that's very easy for patients to administer. We think secretomes provide many of the benefits of cell therapy without actually administering the cells, and that helps avoid some of the safety and logistic issues associated with current cell therapy approaches. There's a good deal of literature on the role of mesenchymal stem cells, and, in fact, on ocular tissue, and emerging literature on secretomes that have shown benefit in a variety of different ophthalmology spaces: corneal injury, corneal healing, retinal degeneration, glaucoma, and ocular surface disease. We think that the mesenchymal stem cell secretome platform has applications across a number of rare ocular disease segments.
Our initial clinical trial development program is in a condition called persistent corneal epithelial defects, which we will touch on in a second. We're also looking at other indications such as limbal stem cell deficiency and also have a preclinical program looking at the secretomes, different modifications of the secretome for providing benefit in rare inherited retinal diseases such as retinitis pigmentosa or Stargardt's disease. Our lead program, lead product, KPI-012, again, comes from the human bone marrow-derived mesenchymal stem cell secretome platform. It's composed of biomolecules that are produced by the mesenchymal stem cells that are formulated into a topical ocular non-preserved single-dose unit formulation. This is a simple, convenient approach for patients to treat.
The product contains key classes of biomolecules that are associated with corneal wound healing, such as growth factors, protease inhibitors, matrix proteins, and neurotrophic agents, which we think provide a multifactorial approach to addressing impaired corneal healing, such as that seen in persistent corneal defects and other conditions. We're currently in development, seeking a broad indication for PCED across all etiologies, with the goal of the clinical trial providing complete healing of the lesions. And we'll talk a bit about some of the complications associated with persistent defects. We have an orphan drug and fast-track designation for the product, and that's been helpful as well. So a little bit about persistent corneal epithelial defects. It is defined basically as the name says, but it is a wound or defect on the surface of the eye that has not healed despite conventional therapy. So it's refractory to conventional therapy.
It causes significant symptomatology to the patients, a good deal of pain, photophobia, and if it's in the center of the cornea or in the visual axis, it can cause significant visual impairment. Utmost importance, if these lesions are not healed quickly, then the risk of infection is high, which can lead to corneal ulcers and loss of the eye, as well as you can get further worsening of the defect, which can cause thinning, scarring of the stroma, and extreme cases can cause corneal perforation and vision loss. Now, PCEDs, which is what we call them, are known to be caused by a number of underlying etiologies, including trauma, which is a common cause, neurotrophic keratitis, diabetic keratopathy, severe ocular surface disease, such as Stevens-Johnson syndrome, infectious keratitis, particularly herpes keratitis, and ocular surgery, as well as a number of others.
These patients often have more than one etiology. That's why we think that a multifactorial approach to treating this condition would be very beneficial across all the etiologies because clinicians often aren't able to pinpoint the exact etiology of the condition. So we think it's beneficial to have a broad mechanism of action. The estimated incidence of PCED in the U.S. is about 100,000 patients. If you add Europe and Japan, that gets up to about 240,000. We're currently, as I said, in a phase Ib pivotal clinical trial, I mean, at phase IIb clinical trial. We have already completed a phase Ib trial in PCED patients and showed complete healing of the lesion in six of eight patients. We think PCED persistent defects is an underserved market. There's only one product approved in the space.
There are currently no approved prescription products with a broad PCED indication. There is one product, Oxervate, that is marketed by a small company in Italy. It's recombinant human nerve growth factor, and it has an indication for the treatment of neurotrophic keratitis, which we believe is responsible for about a third of all the persistent corneal defects, so we feel that, first of all, there are a lot of unmet needs in this space. As I said, the currently approved product only addresses about a third of the etiology, so a single product that can address multiple etiologies would provide significant benefit for the treatment of this condition. The current product, Oxervate, has done very well in the last few years. The sales in 2023 were estimated to be about $700 million, and our understanding is that they will approach $1 billion this year in that space.
So we think that KPI-012 could be the first approved product with a broad indication and a differentiated product profile that would be able to treat neurotrophic keratitis, those one-third of patients, plus the other two-thirds of patients for which there are no approved therapies. Why do we think we can address the variety of different underlying etiologies? It's because the composition of our product, of the secretome, represents a multifactorial mechanism of action. We know a lot about corneal wound healing. There's been a lot in the literature over the last few years. And we know that their impaired healing, which is responsible for PCED and a lot of other indications, can be driven by disruption of one or more of these pathways.
For example, impaired epithelial cell proliferation and migration, one of the first steps in healing of wounds, is production of epithelial cells that migrate to cover the wound and achieve healing. In a number of these conditions, you get significant inflammation, which leads to an upregulation of proteases, which work to disrupt the basement membrane. So even if you have sufficient epithelial cells, they don't have a matrix to stick to. So they can go to the wound bed, but they don't adhere and slough off. We also know that the impaired basement membrane matrix impacts the attachment of epithelial cells to the wound basement membrane, and we also know that impaired corneal innervation has a significant effect on corneal healing. From an evolutionary perspective, there's a close relationship from the innervation of the cornea and wound healing.
So if you've ever scratched your eye, you know you have a significant amount of pain. That stimulates the healing process. And when that innervation is disrupted, then you lose the ability to heal. So our product contains multiple factors that can address each of these impaired pathways. We have growth factors such as hepatocyte growth factor, pigment epithelium-derived factors that promote epithelial differentiation, migration. We have protease inhibitors such as TIMP-1 and serpins, which inhibit proteases that degrade the basement membrane. We provide matrix proteins such as fibronectin and collagen that provide the scaffold to repair the matrix, and that promotes the adherence of the epithelial cells to the basement membrane. And we have neurotrophic agents such as PEDF, GDNF, BDNF that support innervation of the cornea.
We think that the key biomolecules that are present in KPI-012 can address many of the biologic pathways associated with impaired healing and with PCED. As I mentioned, we have completed a phase Ib clinical trial in a patient with persistent epithelial defects. It was an initial safety cohort of three patients without corneal disease that were dosed for a week. We saw no tolerability or safety issues, then we moved to eight patients that had persistent epithelial defects. They were dosed anywhere from one to eight weeks and followed up to 19 weeks with the key efficacy endpoint of the healing of PCED based on corneal fluorescein staining photographs. That's important because that is the endpoint that FDA has indicated they want to see for demonstration of efficacy in registrational studies.
In these eight patients, all eight showed improvement in the persistent defect or healing, partial healing. Six of eight had complete healing of the defect as measured by lack of corneal fluorescein staining. Four of these patients healed within a week, one in two weeks, and the other at four weeks. They all remained healed through the end of follow-up. As I said, the product was well tolerated and no significant safety issues observed. This shows the data from the eight patients. As you see in the second column, there was a variety of different etiologies. There was a variety of different durations of the lesion and size of the lesions across the eight patients. As you see, four of the eight healed within a week, one at two weeks, and one at four weeks. We had two patients that didn't heal.
One of them, neither of these patients would have been entered into our current clinical trial because of other issues that they had. And the one patient at the bottom had almost three years of a defect. So the six of eight completely healed matches well with the efficacy that Oxervate showed in the neurotrophic keratitis trial. In their U.S. trial, they showed 67% healing on drug, 17% healing in the vehicle group. We also saw significant pain relief. A lot of these patients come in with significant pain because they have an area of denuded cornea. And the cornea is the most highly innervated organ in the body. So when you don't have that epithelial layer, the nerves tend to get agitated. And eight of those had significant pain upon entry into the study.
Within three weeks, that pain had gone to zero in those patients that were treated. We think that's important for the symptoms, but also is a good surrogate for healing because we believe that once you heal the cornea, once the epithelium is intact, then the pain tends to go away. As I mentioned earlier, we've been making good progress. We had a pre-IND meeting with FDA in 2020. They indicated that if we conducted trials and with enrollment of the wide variety, basically all comers of etiologies for the persistent epithelial defect, then they would be open to a broad PCED claim rather than just as Oxervate has for one of the etiologies. They also provided guidance on the CMC, on the clinical trial design, and on endpoints. As I said, we filed the IND in December 2022.
We initiated a small safety cohort that was requested by the agency primarily because our phase Ib trial was at a one-unit dose, and our current trial is at a one- and three-unit dose, and despite having two large toxicology studies with no findings, they asked for a small cohort of patients. We completed that successfully and started the efficacy portion of the trial mid-year of 2023. We also expect that for additional indications at the front of the eye, we can use the same formulation and hopefully the same dose so we can leverage our current CMC program and IND to support additional indications. The FDA indicated that if this trial were positive, they would want to see one additional trial to support BLA submission, so a little bit about the design of the trial.
Again, there was an initial two-patient safety cohort where we saw no tolerability or safety issue. We then moved into the efficacy portion of the trial, which is a 90-patient, multifactorial, multi-center randomized trial, eight weeks treatment plus two weeks of follow-up, and then a six-month safety follow-up. And the primary endpoint is proportion of patients that are staining free or that have complete healing at week eight and continue at week ten. And that endpoint is based on corneal fluorescein staining photographs that are taken by the investigator and then are read by Central Reading Center. And again, we target top-line data in Q2 of 2025. So we're very pleased with the progress we've made to date and look forward to updating everyone in the near future. Thank you.
Hi, my name is Samantha, and I'm an associate here on Piper Sandler's MedTech research team.
Up next, we have Ron Nixon from Sanara to give you an overview. Thank you.
And is there a clicker? Thank you. Thank you.
Good morning, everyone. I'm Ron Nixon, CEO of Sanara MedTech. And for those of you that don't know Sanara MedTech, on the first slide here, we put some detailed information up. And the slide is on the website today so that you'll be able to go pull it up if you don't already have it. That gives you a little bit of the brief information about Sanara that might be of help to you.
So what I want to do is start with kind of the history of Sanara and how we got to where we are today. And so starting back in 2018, we identified an interesting product called CellerateRX that was inside of a little microcap company.
We saw that it was gaining significant traction at a small level, but as a pretty rapid traction in the surgical space, predominantly in ortho and spine. This company had started to build that, but they were about to lose the license for that product because the time had expired on it, and this guy wasn't going to be patient with them. My firm, The Catalyst Group, actually went in and acquired that technology to complement something that we were building for the surgical market as well, which is an antimicrobial that's one of our platform products that we've now introduced in 2023. In 2019, to roll forward, we took it over. We changed the name to Sanara MedTech. We put $10 million of capital in, eight from us and two from existing shareholders that were in the former predecessor company.
We ended up changing out certain people in the management team and really focused on how we can go build surgical business. In 2020, we uplisted to Nasdaq with the name Sanara, and we started creating a strong board of directors that you'll see more about here in a few moments. Then from 2021, we did a capital raise of $32 million from Cantor Fitzgerald, and that was to really take us from our 56% ownership down with a dilutive event. We didn't take any capital out. We raised that capital for us to go execute our strategy, but we also know that people typically don't like a privately held public company. And that's what in effect was at 56% ownership. We're down to 41% ownership today in the business, but not selling any stock. Our company has never sold any stock.
It is strictly from the stock that's been issued to others for our strategy on expanding the business. So in 2021, after raising that capital, we also bought Rochal Industries, which was the research and development company that was owned by our company, rolled it in mostly for stock and with milestones so that it would be very accretive to the company and run in parallel with what our other investors wanted to see, which is now we've got a captive R&D company inside of Sanara. We also picked up a couple of products from Cook Biotech to expand within the surgical arena that you'll hear about more as well. We bought another biologics company that gave us a foothold over in the Florida market for us to continue to expand and add more ancillary products into the marketplace.
And we entered into a joint venture with a company called InfuSystem for several things that we were doing in the post-acute market that we'll talk about as well. In 2023, we introduced our BIASURGE product for the surgery. It's an antimicrobial that will kill bacteria like MRSA, VRE, all the bad actors. And it's the first leave-in wash for a surgical location. And we have high expectations for that product. We added a few more products like ALLOCYTE and some others that were still ancillary. But our two platforms today are Cellerate and BIASURGE, and I'll call the other ones really more ancillary products because both of those other products that are platforms have significant growth opportunities as we go forward. In 2024, we licensed some collagen peptides from Tufts, which is what our core product Cellerate is. And by doing so, we picked up 18 proprietary collagen peptides.
And as we've announced before, we're focused on increasing our IP around our core product Cellerate. We have a lot of IP already around our BIASURGE product, and we want to continue to advance and develop products for other specialties and their needs, even though Cellerate is being used in many of the other specialties. Maybe have a directed product offering for other specialties like vascular or plastics or some of the other ones that are high users of the product today in general surgery as well. So I mentioned earlier about building out the board of directors. As you can see, we've got a heavy weight towards technical people on here. I'm an engineer by background and have been focused on technological businesses my entire career. And Bea Salamone is the one that actually owned Rochal with her husband.
And so she's on our board after we bought that business, and she's in the National Academy of Engineering. You got Sarah Ortwein, who is the highest-ranking female at Exxon. Before she retired, she was the first major division president and to be female. And she's also very technical. She ran R&D for them for a while besides just the operating companies. Got Eric Tanzberger, who's great for our audit committee. He was in a high-performing expanding business through acquisition, which is in the death care business named Service Corporation. They happened to be the original backer for me back when I started my business. And then Bob DeSutter from Piper Sandler joined our board. He's obviously focused on med tech and really understands it. Have a Stryker guy and Eric Major, and then Keith Myers, who was the founder of LHC.
We were the capital behind LHC when it was $10 million in revenues. We ultimately sold it to United when we were doing $3.5 billion in revenues. We'd gone from six locations to 1,000 locations, 100 employees to 29,000 employees. Then we sold it to them for them to be able to use in their efforts of doing more care at home at a higher acuity level. Recently, we announced that we are breaking out our segments. One is for the post-acute, or we call it non-acute, which is our Tissue Health Plus strategy. The others are surgical business. Right now, I'm going to focus a little on the surgical business, but as you can see, pardon me, this has been the growth rate since 2019.
You can see we've had a decent year as we have continued to expand this business in surgery. You'll see more information about how we've penetrated that market and how effective we've been at penetrating that market as well. What are some of those accomplishments? You can see that our products are approved to be sold in over 4,000 hospitals. Our original target was 6,000 hospitals. We got a lot of room to run because as you see on the second bullet point, we're in greater than 1,200 hospitals today in 34 states. Our revenue on a trailing 12 months is $78 million, and that's a 25% year-over-year growth with our core products that we have today. Our key differentiators in how we've driven this business is by building a really strong sales team that have.