SR Research Report 2015/6/12
3-D Matrix Ltd. (7777)
Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg.
3-D Matrix Ltd. (7777)
2015/6/12
SR Research Report
Contents
Executive summary ... 3
Key financial data ... 4
Recent updates ... 5
Highlights ... 5
Trends and outlook ... 9
Quarterly trends and results ... 9
Full-year (FY04/16) outlook ... 16
Long-term outlook ... 18
Business ... 21
Business description ... 21
Main business segments ... 23
Main development pipeline ... 26
Main business partners ... 38
R&D System ... 39
Group companies ... 42
Business model ... 43
Strengths and weaknesses ... 45
Market and value chain ... 46
Strategy ... 50
Historical financial statements ... 51
Earnings results (for reference purposes)... 51
Income statement ... 53
Balance sheet ... 55
Statement of cash flows ... 58
Other information ... 59
History ... 59
News and topics ... 61
Major shareholders ... 76
Dividends and shareholder benefits ... 76
Top management ... 76
Employees ... 77
Glossary ... 78
3-D Matrix Ltd. (7777)
2015/6/12
SR Research Report
Executive summary
Medical technology company that develops, manufacturers, and markets a
self-assembling peptide technology
3-D Matrix is a medical technology company that develops, manufacturers, and markets a self-assembling peptide technology originally created at the Massachusetts Institute of Technology (MIT).
The key features of the company’s business:
1) MIT holds the underlying patent for the self-assembling peptides that are the basis of the 3DM’s products. The Company has an exclusive global license from MIT for this technology that includes rights of development, manufacture, and marketing of applications that use these self-assembling peptides.
2) Self-assembling peptides have two main advantages over competing medical products currently on the market. Firstly, as they are produced by chemical synthesis, there is no risk of viral or other types of contamination that can occur in goods derived from living organisms. Secondly, they can be mass-produced in a homogenous fashion.
3) These characteristics potentially lend themselves to large-scale use in surgery (as absorbent localized hemostatic agents and mucous membrane protuberance agents) and in the regenerative medicine field (as alveolar bone reconstruction agents).
4) 3DM’s business model attempts to minimize risks particular to medical product start-ups. Specifically, the products it develops are categorized as ‘medical devices’ rather than ‘pharmaceuticals’.
Consequently, the duration from application to approval is shorter and costs are lower compared to drug development. (See the Business section for details.)
Trends and outlook
In FY04/15, 3DM reported operating revenue of JPY100mn (JPY107mn in FY04/14), an operating loss of JPY1.9bn (operating loss of JPY1.5bn in FY04/14), a recurring loss of JPY1.8bn (recurring loss of JPY1.5bn in FY04/14), and a net loss of JPY2.0bn (net loss of JPY1.5bn in FY04/14).
For FY04/16, the company projects operating revenue between JPY783mn~JPY2.9bn (JPY100mn in FY04/15). Other projected ranges are an operating loss of JPY2.0bn to a profit of JPY24mn (operating loss of JPY1.9bn in FY04/15), a recurring loss of JPY2.0bn to profit of JPY16mn (recurring loss of JPY1.8bn in FY04/15), and a net loss of JPY2.0bn to a profit of JPY11mn (net loss of JPY2.0bn in FY04/15). (See Trends and outlook.)
3DM’s medium-term management plan for the period through FY04/18 targets operating revenue of JPY9.9bn, operating profit of JPY3.0bn, recurring profit of JPY3.0bn, and net income of JPY2.3bn.
Strengths and weaknesses
Shared Research believes that the three strengths of 3DM are its promise of the core self-assembling peptide technology, differentiated business model and large potential market. Weaknesses include its commercial success being dependent on outside partners, dependence on third party core patents with relatively short lives, and potential human resources bottlenecks. (See Strengths, weaknesses for details.)
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Key financial data
Income Statement FY04/10 FY04/11 FY04/12 FY04/13 FY04/14 FY04/15 FY04/16
(JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Est.
Operating Revenue 402 158 1,107 32 107 100 783～2,877 YoY - -60.6% 599.5% -97.1% 234.7% -6.9% -Operating Expenses 467 641 753 1,031 1,626 2,003 YoY - 37.2% 17.5% 36.9% 57.6% 23.2% Operating Profit -65 -482 354 -999 -1,518 -1,903 -1,996～24 YoY - - - -OPM - - 32.0% - - - -Recurring Profit -60 -510 310 -978 -1,524 -1,795 -2,004～16 YoY - - - -RPM - - 28.0% - - - -Net Income -61 -534 309 -978 -1,525 -1,995 -2,005～11 YoY - - - -Net Margin - - 27.9% - - -
-Per Share Data (JPY; adjusted for stock splits)
Number of Shares (thousands) 13,568 15,168 18,355 18,936 19,876 21,438
EPS -4.5 -35.2 18.4 -52.6 -77.8 -94.9 -93～0.56
EPS (fully diluted) - - 17.3 - -
-Dividend Per Share - - -
-Book Value Per Share 86.0 75.1 156.3 53.7 146.2 281.8
Balance Sheet (JPYmn)
Cash and Equivalents 544 589 1,758 2,033 2,641 5,137 Total Current Assets 594 666 2,501 2,484 3,593 6,204 Tangible Fixed Assets, net 7 6 88 107 103 94 Other Fixed Assets 19 22 30 47 86 118 Intangible Assets 578 505 437 383 339 393 Total Assets 1,198 1,199 3,055 3,020 4,121 6,809 Accounts Payable 12 16 22 48 92 139 Short-Term Debt - - - -Total Current Liabilities 31 49 112 913 958 409 Long-Term Debt - - - -Total Fixed Liabilities - 0 55 42 29 18 Total Liabilities 31 49 167 955 988 428 Net Assets 1,167 1,150 2,888 2,066 3,133 6,382 Interest-Bearing Debt - - -
-Cash Flow Statement (JPYmn)
Operating Cash Flow -28 -434 -131 -647 -1,680 -1,905
Investment Cash Flow -13 -18 -100 -56 -83 -126
Financing Cash Flow 573 498 1,400 983 2,360 4,511
Financial Ratios
ROA -6.3% -44.6% 14.5% -32.2% -42.7% -36.5%
ROE -6.6% -46.3% 15.4% -39.9% -61.8% -44.0%
Equity Ratio 97.4% 95.0% 93.9% 67.3% 70.5% 90.4%
Source: Company data
3-D Matrix Ltd. (7777)
2015/6/12
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Recent updates
Highlights
On June 12, 2015, 3-D Matrix Ltd. (3DM) announced full-year earnings results for FY04/15 and a medium-term management plan; see the Trends and outlook section for details.
On May 27, 2015, the company announced the establishment of a subsidiary in the Netherlands. In order to expand the medical products business—utilizing self-assembling peptide technology, which is currently under development—in Europe, the company has decided to establish a wholly owned
subsidiary in the Netherlands, mainly as a sales and marketing base. Overview of the new subsidiary
Name: 3-D Matrix EMEA
Business: Medical products business in Europe, such as hemostatic agents Capital: EUR300,000 (planned).
On April 22, 2015, the company announced the approval of a US patent for the use of self-assembling peptide technology in myocardial tissue regeneration.
The US Patent and Trademark Office approved a patent application for the use of self-assembling peptide technology in myocardial tissue regeneration submitted by the company’s US subsidiary.
The patent covers both protection and regeneration of cardiac tissue via self-assembled peptide technology. Research has shown that delivering self-assembled peptides to damaged myocardial tissue resulting from conditions including acute myocardial infarction, pericardial disease, congenital heart disease, and congestive heart failure has beneficial effects for cardiac function. According to the company, this patent will protect its rights as it expands the development of regenerative medicine products in the US into the field of myocardial tissue regeneration, including the treatment of heart diseases.
Myocardial tissue has significantly limited reproductive capacity, and the health of tissue that suffers damage from an acute myocardial infarction gradually declines. Regenerative treatments for such necrotic tissue harbor potential, and a significant amount of research is currently devoted to the subject. The self-assembled peptide treatment contained within the patent provides scaffolding to not only protect cardiac tissue, but also aid in regeneration of cells. This is a new approach to treatment for improving cardiac function, and the company anticipates that it will be able to contribute to treating acute myocardial infarctions.
On April 20, 2015, the company announced revisions to full-year earnings forecasts for FY04/15. Forecasts for FY04/15 (previous forecasts in parentheses)
Sales: JPY97mn (JPY51mn) Operating loss: JPY1.9bn (loss of JPY2.0bn) Recurring loss: JPY1.8bn (loss of JPY1.9bn) Net loss: JPY2.0bn (loss of JPY2.1bn). Reasons for the revisions
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material PuraStat® as a medical product in Indonesia. This means the company may market the product
in Indonesia and, as a result, it received a milestone payment of about JPY50mn from its exclusive sales and marketing partner in Indonesia, PT. Teguhsindo Lestaritama. Together with an analysis of the recent sales performance of PuraStat®, this has led 3DM to make an upward revision to its sales forecast
announced on March 13, 2015. The company also made upward revisions to profit forecasts, in view of the above increase in its sales forecast, and lower SG&A expenses.
The company does not expect this to have a material effect on medium-term targets announced on March 13, but it plans to make another announcement including the effect of the above in April 2016 or later. On April 16, 2015, the company announced that it had obtained approval to register locally absorbent hemostatic material PuraStat® as a medical product in Indonesia.
The company’s subsidiary in Singapore, 3-D Matrix Asia Pte. Ltd., and its sales and marketing partner for Indonesia, PT. Teguhsindo Lestaritama (headquartered in Indonesia) received notification from the Ministry of Health on April 16, 2015 that the product has been approved for registration as a medical device.
This application, submitted on July 18, 2014, makes use of the CE marking for PuraStat® obtained on
January 14, 2014. This CE marking can used to apply for regulatory agency approval in the 28 member states of the European Union, in addition to countries in Asia, Oceania, and South America. The product can be commercially marketed once the necessary procedures are complete in each country.
PT. Teguhsindo Lestaritama plans to begin marketing the product in Indonesia in FY04/16. Furthermore, per a partnership agreement with PT. Teguhsindo Lestaritama, 3-D Matrix Asia Pte. Ltd. will receive a milestone payment of approximately JPY50mn, which it will report as sales.
The company is assessing the impact on full-year earnings forecasts for FY04/15, and plans to disclose any relevant information as soon as the assessment is completed.
On April 15, 2015, the company announced the approval of a patent for the use of self-assembling peptide technology in wound healing and skin-tissue regeneration in Europe.
The company has demonstrated that self-assembling peptides, when applied to wounds, can restore the skin to its original condition without leaving a scar. According to the company, this patent will protect the company’s rights as it expands sales of wound-healing agent TDM-511 in Europe.
When treating burns and moderate skin wounds, the limitation of scarring is a challenge. Many types of wound healing agent and treatment methods are being developed to combat the scarring that often occurs after the treatment of deep rounds that reach the dermis. According to 3DM, the use of self-assembling peptides in wound healing and skin-tissue regeneration offers a treatment method that does not leave cosmetic damage.
The company does not expect this patent to have any material impact on earnings forecasts for FY03/15 or later.
On March 13, 2015, the company announced that it decided to withdraw its application for approval of the production and sale of TDM-621, a locally absorbent hemostatic agent, in Japan.
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3DM will conduct another round of clinical trials and file a new application at a later date.
The company filed the application on May 31, 2011 with the Pharmaceuticals and Medical Devices Agency (PMDA) after conducting trials for use in digestive system surgery, cardiovascular surgery, and
gastrointestinal medicine. The PMDA has recently notified 3DM that it must provide stronger evidence for the efficacy of TDM-621.
As of March 2015, 3DM preparing for new clinical trials, which may take place during FY04/16. The company is unable to provide cost estimates for the trials at this time. 3DM will file another application for approval, although the company is not certain when that will happen.
On the same day, the company revised its earnings estimates for FY04/15 and reduced directors’ compensation.
FY04/15 full-year earnings forecasts (previous estimates in parentheses) Operating revenue: JPY51mn (JPY10.4bn)
Operating loss: JPY2.0bn (operating profit of JPY4.5bn) Recurring loss: JPY1.9bn (recurring profit of JPY4.5bn) Net loss: JPY2.1bn (net loss of JPY3.7bn) Reasons for the revisions
TDM-621: 3DM had expected milestone payments and income from product sales associated with TDM-621. However, the company on March 13, 2015 withdrew its request for domestic approval, saying that it will conduct another round of clinical trials and file a new request at a later date. Thus, TDM-621 will not contribute to earnings during this fiscal year.
Delays in overseas sales contracts for TDM-621: 3DM had expected to sign contracts with overseas sales agents for TDM-621 and receive one-time contract payments and earn regular income from product sales. The company was in talks with several sales agents as of March 2015. However, the company may not reach any agreement by the end of this fiscal year.
Costs associated with TDM-621: The cost of sales may increase as a result of the above-mentioned development. 3DM will seek to reduce SG&A expenses.
On the same day, the company revised its medium-term management targets. Earnings targets (JPYmn)
Operating revenue
Operating profit
Recurring profit Net income FY04/16 (previous target) 14,307 6,796 6,779 4,678
FY04/16 (revised target) 3,694 731 714 171
FY04/17 (previous target) 18,473 8,213 8,196 5,450
FY04/17 (revised target) 11,345 4,377 4,361 3,000
Reasons for the revisions
FY04/16: 3DM expected one-time contract payments, milestone payments, and income from product sales associated with TDM-621, as well as payments for other products, both in Japan and abroad (Europe, the Americas, and Asia) during FY04/15. The company now expects to sign contracts for TDM-621 with European sales agents during FY04/16. The company may also sign similar agreements in Asia and Latin America.
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(Europe, the Americas, and Asia) during FY04/15. The company now expects to sign contracts for TDM-621 with US sales agents during FY04/17. The company may also win approval of TDM-621 in Japan and earn milestone payments. At the same time, 3DM may increase product sales in Europe, Asia, and Latin America, and receive milestone payments from mucous membrane protuberance agents.
For corporate releases and developments more than three months old, please refer to the News and topics section.
3-D Matrix Ltd. (7777)
2015/6/12
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Trends and outlook
Quarterly trends and results
FY04/15 results
(FY04/14 figures in parentheses.)
Operating revenue: JPY100mn (JPY107mn)
Operating loss: JPY1.9bn (operating loss of JPY1.5bn) Recurring loss: JPY1.8bn (recurring loss of JPY1.5bn) Net loss: JPY2.0bn (net loss of JPY1.5bn)
R&D expenses were JPY816mn (+36.3% YoY). Excluding R&D, SG&A expenses increased to JPY1.2bn (+15.8% YoY) as the company ramped up overseas expansion.
The company posted JPY141mn in non-operating income (JPY3.5mn for Q1, JPY54.8mn for Q2, JPY72.7mn for Q3, JPY10.0mn for Q4) because of an increase in the value of assets held in foreign currencies at subsidiaries.
Hemostatic agent (TDM-621)
3-D Matrix had applied to Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) for approval to manufacture and sell this pipeline product in the domestic market. However, since the precise validation of the efficacy of the hemostat was deemed necessary to obtain approval, the company decided to withdraw the application in March 2015, conduct a subsequent clinical trial, and then reapply for approval. The company plans to start these clinical trials in 1H FY04/16 while continuing to consult with PMDA. In January 2014, this hemostatic agent was certified as meeting the European CE marking requirements. As such, the company can now apply for product registration in countries that adopt the CE marking system without conducting clinical studies. With this approval, the company started clinical use in
Quarterly Performance (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % of FY FY Est. Operating Revenue 48 1 7 51 0 0 0 100 102.9% 97 YoY - - - 58.4% - - - 96.8% -R&D Expenses 146 136 145 171 141 281 181 214 YoY 59.7% 50.0% 61.6% 39.1% -3.7% 106.1% 24.7% 24.8% SG&A Expenses 222 221 232 349 297 286 328 274 YoY 65.9% 62.6% 40.7% 73.2% 33.6% 29.3% 41.7% -21.5% Operating Profit -321 -356 -372 -470 -438 -567 -509 -389 - -1,918 YoY - - - -OPM - - - -Recurring Profit -341 -361 -357 -466 -471 -514 -438 -372 - -1,814 YoY - - - -RPM - - - -Net Income -341 -361 -357 -467 -635 -514 -439 -407 - -2,009 YoY - - - -NPM - - -
-Source: Company data
Figures may differ from company materials due to differences in rounding methods. Forecasts based on most recently released figures.
FY04/15
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Germany in August 2014. As part of pre-marketing activities, the company is compiling a track record of clinical use by well-known doctors and prominent medical institutions in major European countries such as Germany, France, and the UK. Sales of the product through sales agents began in Q4 FY04/15 and operating revenue was booked. The company negotiated sales agreements with multiple potential sales partners in Europe, but agreements were not concluded during FY04/15.
Among Asian countries that adopt the CE marking system (Singapore, Indonesia, South Korea), the company has applied for product registration as a medical device and has begun preparing for product sales. It applied for medical device product registration in Singapore in June 2014, which was approved in September of that year. It likewise applied for product registration in Indonesia in July 2014, which was granted in April 2015. An application was submitted in South Korea in January 2015. This application was still under review as of June 2015. In Indonesia, a milestone payment was received from the sales partner on product registration approval, and product sales were started in Hong Kong where such approval is not required, both of which were booked as operating revenue.
As South American countries (Brazil, Columbia, Mexico) adopt the CE marking system, the company applied for product registration in Columbia in March 2015. The review of this application is currently ongoing. Preparations are being made for similar application filings in Brazil and Mexico.
In the US, the company has been consulting with the Food and Drug Administration (FDA) regarding protocols in order to start clinical trials in the US. Plans are to start these trials in FY04/16.
Mucous membrane protuberance material
The company started a clinical study in December 2014, but decided to voluntarily and temporarily discontinue the study in February 2015, in order to explore test methods for more evident efficacy and for product development. The company aims to restart the study by end-Q3 FY04/16 and as of June 2015 there were no changes to its development plan up to placing the product on the market. It aims to quickly restart the study while maintaining product advantages.
Alveolar bone regenerator
In clinical trials in the US, the company completed treatment and observations of 15 patients, collecting good results and data in terms of bone formation. It plans to move onto the next clinical trial phase in 1H FY04/16.
Wound-healing agent
In October 2014, 3-D Matrix submitted a 510(k) premarket notification to the US Food and Drug Administration (FDA), which was approved in February 2015, allowing for the start of sales. The company expects increased therapeutic effects in combination with other pharmaceuticals (antibiotics, anticancer drugs, hyaluronic acid) and as of June 2015 it was working on commercialization with higher added value for the fields of skin burn treatments, skin cancer treatments, and cosmetic surgery.
In other areas, the company is collaborating with the National Cancer Center on treatment for “triple negative” breast cancer with nucleic acid medicine that targets the RPN2 gene. It was awarded research grants from the government, which were booked as operating revenue. The National Cancer Center has started physician-led clinical trials with the company providing siRNA nucleic acid medicine that uses the self-assembling peptide A6K as a drug-delivery system (DDS).
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In 2010, 3-D Matrix began collaborative research with the New Energy and Industrial Technology Development Organization (NEDO), an incorporated administrative agency. The title of the research is “Research and Development of Next-Generation Alternative Vital-Function Technologies / Research and Development of Next-Generation Regenerative Medicine Technologies / Development of Autonomous Regeneration Device for Regenerating Tissue in Vivo with a Small Number of Cells.” The company has received subsidies for the relevant research, which it booked as subsidy income. The company is also providing its self-assembling peptide as scaffolds for cartilage regeneration.
Q3 FY04/15 results (out March 13, 2015; see table above)
(Q3 FY04/14 figures in parentheses.)Operating revenue: JPY0 (JPY56mn)
Operating loss: JPY1.5bn (operating loss of JPY1.0bn) Recurring loss: JPY1.4bn (recurring loss of JPY1.1bn) Net loss: JPY1.6bn (net loss of JPY1.1bn)
R&D expenses were JPY603mn (+40.9% YoY). Excluding R&D, SG&A expenses increased to JPY911mn (+35.0% YoY) as the company ramped up overseas expansion.
The company posted JPY131mn (JPY3.5mn for Q1, JPY54.8mn for Q2, and JPY72.7mn for Q3) in non-operating income during cumulative Q3 because of an increase in the value of assets held in foreign currencies.
Hemostatic agent (TDM-621)
In January 2014, 3-D Matrix obtained the CE mark for this product, meaning the company can sell or apply to register it without clinical trials in certain countries. As a result, the company launched clinical use of the product in leading facilities in Europe. According to 3DM, key opinion leaders (KOLs) began clinical use of TDM-621 in Europe in the second half of 2014. As of March 2015, the company says it has received feedback on 60 cases, with positive evaluations for TDM-621’s hemostatic properties, visibility and safety. The company continued to focus on uptake at leading facilities, thus expanding clinical use of PuraStat®.
The company is also negotiating sales agreements with a sales partner in Europe.
The company also aims to grow sales of PuraStat® using the CE mark in countries outside Europe.
Subsidiary 3-D Matrix Asia Pte. Ltd. (Singapore) obtained approval to register TDM-621 as a medical product in Singapore in September 2014 after applying in June of that year. The company also applied to register TDM-621 as a medical product in Indonesia in July 2014, and use in clinical trials began in Hong Kong in September 2014. The company plans to continue growing sales in Asia and Oceania.
In June 2014, the company established a subsidiary in Brazil, in order to develop sales of PuraStat® in
South America. Its use in clinical trials began in Chile in October 2014. The company is also preparing to register the product in South America, and is looking for a potential sales partner.
In Japan, 3DM on May 31, 2011 filed an application with the Pharmaceuticals and Medical Devices Agency (PMDA) for approval of the production and sale of TDM-621. However, 3DM withdrew this request on March 13, 2015 following the agency’s decision that the company needs stronger evidence for the efficacy of TDM-621. The company will conduct another round of clinical trials and submit a new request at a later
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date. 3DM said it was preparing for trials as of March 2015 and that it would start the trials during FY04/16.
In the US, the company is negotiating with the Food and Drug Administration (FDA) concerning the launch of clinical trials. The company is also preparing to begin clinical trials in China.
Alveolar bone regenerator (development code: TDM-711)
The company is in talks with the FDA concerning the expansion of clinical trials in the US. Mucous membrane protuberance material (development code: TDM-641)
3DM began clinical trials in December 2014. However, the company decided to halt the trials because the tests failed to provide strong enough evidence for the efficacy of the agent. The company will seek to come up with a better method of testing.
Wound-healing agent (TDM-511)
The company in October 2014 filed a 510(k) application with the FDA, and obtained approval in February 2015.
1H FY04/15 results (out December 11, 2014)
Operating revenue: JPY0 (JPY49mn in 1H FY04/14)Operating loss: JPY1.0bn (operating loss of JPY676mn in 1H FY04/14) Recurring loss: JPY984mn (recurring loss of JPY701mn in 1H FY04/14) Net loss: JPY1.1bn (net loss of JPY701mn in 1H FY04/14)
R&D expenses were JPY422mn (+49.2% YoY). Excluding R&D, SG&A expenses increased to JPY583mn (+31.5% YoY) as the company ramped up overseas expansion.
The company recorded JPY58mn (JPY4mn during Q1; JPY55mn during Q2) of non-operating profit during 1H FY04/15 due to changes in exchange rates for assets denominated in foreign currencies that are held by a subsidiary.
Hemostatic agent (TDM-621)
In January 2014, 3-D Matrix obtained the CE mark for this product, meaning the company can sell or apply to register it without clinical trials in certain countries. As a result, the company launched clinical use of the product in leading facilities in Europe. According to the company, the product has won acclaim from doctors in Europe for its hemostatic properties and its transparency and high visibility. The company continued to focus on uptake at leading facilities, thus expanding clinical use of PuraStat®. The company
is also negotiating sales agreements with multiple sales partners in Europe. The company is considering various types of sales agreements, including an exclusive sales agreement with a major corporation, agreements with various distributors for different types of therapy, and direct sales through a wholesaler.
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The company also aims to grow sales of PuraStat® using the CE mark in countries outside Europe.
Subsidiary 3-D Matrix Asia Pte. Ltd. (Singapore) obtained approval to register TDM-621 as a medical product in Singapore in September 2014 after applying in June of that year. The company also applied to register TDM-621 as a medical product in Indonesia in July 2014, and use in clinical trials began in Hong Kong in September 2014. The company plans to continue growing sales in Asia and Oceania.
In June 2014, the company established a subsidiary in Brazil, in order to develop sales of PuraStat® in
South America. Its use in clinical trials began in Chile in October 2014. The company is also preparing to register the product in South America, and is looking for a potential sales partner.
In Japan, the company is applying to the Pharmaceuticals and Medical Devices Agency (PMDA) for approval to manufacture and sell TDM-621. In the US, the company is negotiating with the Food and Drug Administration (FDA) concerning the launch of clinical trials. The company is also preparing to begin clinical trials in China.
Alveolar bone regenerator (development code: TDM-711)
The company is in talks with the FDA concerning the expansion of clinical trials in the US. Mucous membrane protuberance material (development code: TDM-641)
In September 2014, the company submitted a notification of its plans for clinical trials to the PDMA. The “30 day investigation” was completed in October, an investigation carried out by the PDMA to prevent any adverse public health effects. As a result, the company is working with health facilities to prepare for clinical trials to begin.
Wound-healing agent (TDM-511)
Preclinical trials are underway in the US, and the company is preparing to file a 510(k) application with the FDA.
Q1 FY04/15 results (out September 12, 2014)
Operating revenue: JPY0 (JPY48mn in Q1 FY04/14)Operating loss: JPY438mn (operating loss of JPY321mn in Q1 FY04/14) Recurring loss: JPY471mn (recurring loss of JPY341mn in Q1 FY04/14) Net loss: JPY635mn (net loss of JPY341mn in Q1 FY04/14).
R&D expenses were on par with Q1 FY04/14. However, the company plans to spend more on R&D over the course of the full-year owing to clinical trials of locally absorbent hemostatic agent TDM-621 in the US and Europe. Other SG&A expenses increased as the company stepped up its expansion overseas. Hemostatic agent (TDM-621)
In January 2014, 3-D Matrix obtained the CE mark for this product, meaning the company can sell or apply to register it without clinical trials in certain countries. As a result, the company launched clinical use
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of the product in leading facilities in France, Austria, and Germany. The company continued to focus on uptake at leading facilities, thus expanding its clinical use. The company is also negotiating sales agreements with sales partners in Europe.
The company also aims to grow sales of TDM-621 using the CE mark in countries outside Europe. Subsidiary 3-D Matrix Asia Pte. Ltd. (Singapore) obtained approval to register TDM-621 as a medical product in Singapore on September 3, 2014, after applying in June of that year. At the time of writing, the company is negotiating with partners about sales agreements in the region. The company also applied to register TDM-621 as a medical product in Indonesia in July 2014. The company plans to continue growing sales in Asia and Oceania.
In June 2014, the company established a subsidiary in Brazil, in order to develop sales of TDM-621 in South America. At the time of writing, the company is preparing to register the product in South America, and looking for a potential sales partner.
In Japan, the company is applying to the Pharmaceuticals and Medical Devices Agency (PMDA) for approval to manufacture and sell TDM-621. In the US, the company is negotiating with the Food and Drug Administration (FDA) concerning the launch of clinical trials. The company is also preparing to begin clinical trials in China.
Alveolar bone regenerator (development code: TDM-711)
The company is in talks with the FDA concerning the expansion of clinical trials in the US. Mucous membrane protuberance material (development code: TDM-641)
In September 2014, the company submitted a notification of its plans for clinical trials to the PDMA. The company plans to begin clinical trials between Q2 and Q3 FY03/15.
Wound-healing agent (TDM-511)
Preclinical trials are underway in the US, and the company is preparing to file a 510(k) application with the FDA.
Lawsuit settlement
OncoTherapy Science, Inc. brought a lawsuit against the company for failing to pay compensation. On August 8, 2014, following negotiations in court, the company agreed to pay a fee of JPY160mn to settle the case under the view that settlement of the issue would absolve the company of future obligations. The company booked the settlement fee as an extraordinary loss this quarter (Q1 FY04/15).
Shareholders’ equity
The company offered new shares overseas, with July 9, 2014 as the payment deadline. As a result, issued capital and reserves increased by JPY2.5bn each in Q1.
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For details on previous annual results, please refer to the Historical financial statements section.
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Full-year (FY04/16) outlook
For FY04/16, the company projects operating revenue between JPY783mn~JPY2.9bn (JPY100mn in FY04/15). Other projected ranges are an operating loss of JPY2.0bn to a profit of JPY24mn (operating loss of JPY1.9bn in FY04/15), a recurring loss of JPY2.0bn to profit of JPY16mn (recurring loss of JPY1.8bn in FY04/15), and a net loss of JPY2.0bn to a profit of JPY11mn (net loss of JPY2.0bn in FY04/15).
Pipeline assumptions
In FY04/16, 3-D Matrix will continue development in the surgery and regenerative medicine fields utilizing its self-assembling peptide technologies with the aim of quickly realizing operating revenue through product sales.
In Japan the company is consulting with PMDA regarding clinical trial protocols with the aim of restarting clinical trials for its absorbable local hemostat. It will conduct clinical trials in 1H FY04/16 and aims to resubmit its application in 2H FY04/16.
In Europe, the company is ready to start product sales through wholesalers / sales agents (specialized sales approaches for each country) targeting prominent medical institutions in Germany, France, and the UK with the aim of generating operating revenue. The plan is to launch sales targeting the entire EU by end-Q3 FY04/16 using sales partners (candidates) that have sales channels and promotion functions covering the entire region.
In the US the company is now in the protocol preparation stage and plans to launch clinical trials in FY04/16. In Asia and South America, there are also plans to launch product sales in Southeast Asian countries such as Indonesia, and South American countries such as Columbia, and Chile.
As for other products in its development pipeline, clinical trials for the alveolar bone regenerator are ongoing in the US. Clinical trials for its mucous membrane protuberance material were suspended, but the company aims to restart these trials by end-Q3 FY04/16, while maintaining product advantages. As for the joint project with the National Cancer Center, the center has started physician-led clinical trials, promoting development in the drug-delivery system (DDS) field.
FY04/16 Company Forecasts
(JPYmn) 1H Act. 2H Act. FY Act. FY Est.
Operating Revenue - 100 100 783～2,877
CoGS - - 2
CoGS / Operating Revenue - - 1.5%
R&D Expenses 422 394 816 SG&A Expenses 583 602 1,185 Operating Profit -1,005 -898 -1,903 -1,996～24 YoY - - - -OPM - - - -Recurring Profit -985 -811 -1,795 -2,004～16 YoY - - - -RPM - - - -Net Income -1,148 -846 -1,995 -2,005～11 YoY - - -
-Source: Company data
Figures may differ from company materials due to differences in rounding methods.
FY04/16 FY04/15
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Projections for absorbable local hemostat
In preparing its earnings forecasts the company assumes operating revenue of JPY582mn~JPY675mn from product sales of absorbable local hemostats and JPY176mn~JPY2.2bn from upfront payments and milestone payments involving these products.
The company plans to sell absorbable local hemostat products in those regions that adopt the CE marking system in Europe, Asia, and South America. In Europe the main sales targets will be prominent medical facilities in Germany, France, and the UK. In Asia the main sales targets will be Southeast Asian countries like Indonesia and Malaysia, while the main targets in South America will be Columbia and Chile. 3-D Matrix expects a significant year-on-year increase in product sales. Its anticipated product sales of JPY582mn~JPY675mn breaks down as roughly JPY266mn sales in Asia/South America and around JPY316mn~JPY409mn in Europe. The main factors are sales through dealers in Europe, sales agents, and sales partners.
In Europe, the company is working out sales forecasts calculated based on marketing forecasts (market scale / forecasts) obtained by the company through meetings with wholesalers and sales agents in Germany and the UK. For Asia and South America, the company is setting sales forecasts calculated based on marketing forecasts derived from (1) rough estimates for order volumes based on agreements with partners in Indonesia and (2) market scales / forecasts for countries in Southeast Asia and South America (Malaysia, etc.).
3-D Matrix books upfront payments on its absorbable local hemostats associated with sales partnerships involving partner candidates in Europe (negotiating). The company considered multiple methods for making this calculation including comparisons with cases involving other companies and comparisons with its past results. Total upfront payments were estimated based on past results in Japan and Asia, while taking into consideration market scales, product values, and assumed shares / risks in the target regions.
The company is currently negotiating sales agreements with the aim of selling absorbable local hemostat in Europe. Contracts were not completed during FY04/15. After the company proposed conditions following candidate partner due diligence, there were items that required time to complete and a candidate partner’s group was reorganized and business divisions were also reorganized. However, the company narrowed its list to three candidates and plans to conclude contracts by end-Q3 FY04/16 along with compiling product evaluations and moving forward with negotiations.
The upper range of the company’s operating revenue forecasts for FY04/16 is JPY2.9bn. Upfront payments from sales partnerships with candidate sales partners in Europe and product sales from such partnerships are projected at JPY2.1bn. As such, working to reach the upper end of this target is a main condition for the conclusion of such agreements.
Expense forecast
R&D expense is the total for projects in each development pipeline. This mainly consists of clinical trial expense for absorbable local hemostat (Japan / US), CE marking registration expense (each country worldwide), and clinical trial expense for alveolar bone regenerator (US) and mucous membrane protuberance material (Japan). SG&A expenses were estimated based on future business plans and by taking into account past amounts.
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Long-term outlook
Medium-term management plan
According to the company’s medium-term management plan, it plans to expand its operations via upfront payments, milestone payments, and product sales from locally absorbent hemostatic material TDM-621 and other pipeline products both in Japan and overseas.
FY04/17 (target) assumptions
The company made estimates based on sales and upfront payments mainly for its absorbable local hemostat as well as upfront payments for other products in its pipeline. Expectations are that its absorbable local hemostats will be sold in Japan, in addition to those regions that adopt the CE marking system, specifically Europe, Asia, and South America. In Europe these sales are expected to target prominent medical institutions in Germany, France, and the UK, as well as customers in each EU country. Sales in Asia will mainly target Indonesia, Malaysia, and South Korea, while those in South America will target Columbia, Chile, Brazil, and Mexico.
Product sales are estimated at JPY4.0bn, with Europe expected to account for roughly 55% of this amount. The company makes sales projections and order estimates based on the estimates for the previous year and certain assumptions for (1) sales in Europe through wholesalers/sales agents, (2) sales through sales partners, (3) CE marking registration for products in South Korea, (4) CE marking
registration for products in Brazil and Mexico, and (5) approval for manufacturing / marketing in Japan.
Medium-Term Plan FY04/15 FY04/16 FY04/17 FY04/18
(JPYmn) Act. Est. Target Target
Operating Revenue 100 783～2,877 8,233 9,851 R&D Expenses 816 1,024 1,544 1,643 SG&A Expenses 1,185 - - -Operating Profit -1,903 -1,996～24 2,180 3,010 Recurring Profit -1,795 -2,004～16 2,180 3,010 Net Profit -1,995 -2,005～11 2,064 2,337
Source: Company data
Figures may differ from company materials due to differences in rounding methods.
Revenues by Segment FY04/15 FY04/16 FY04/17 FY04/18
(JPYmn) Act. Est. Target Target
Locally Absorbent Hemostatic Material 54 758～2,850 7,473 9,091
Product Sales 3 582～675 3,976 9,090
Upfront, Milestone Payments 51 176～2,175 3,497 1
Others 45 25 758 758
Product Sales 0 7 7 7
Upfront, Milestone Payments 45 18 751 751
Source: Company data
Figures may differ from company materials due to differences in rounding methods.
Others includes alveolar bone regenerator, mucous membrane protuberance material, and the vascular embolization agent. The wound-healing agent is not included in targets.
The company's earnings forecasts for FY04/16 include a lower and an upper limit, in view of the possibility that one-time payments and product sales may be delayed until FY04/17 depending on progress and negotiations with sales partners of the locally absorbent hemostatic material in Europe.
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3-D Matrix expects to win approval for manufacturing / marketing in Japan in 2H FY04/17. There are plans to restart clinical studies taking into account consultations with PMDA, with the studies conducted by multiple institutions and CRO. Moreover, the clinical studies and reviews should only take two-thirds the time required for the previous (canceled) study as the previous study did not uncover any adverse events or other problems.
As for upfront payments on absorbable local hemostat agreements, the company estimates upfront payments from sales partner candidates in the US (negotiations ongoing) and milestone payments tied to approval for domestic manufacturing / marketing. Of the estimated JPY3.5bn in upfront payments for relevant hemostat products, roughly 70% is from sales partners in the US and about 30% is from milestone payments in Asia and those tied to approval for domestic manufacturing / marketing. The projected JPY751mn in upfront payments for other products in its pipeline are mainly milestone payments for alveolar bone regenerators and mucous membrane protuberance material.
FY04/18 (target) assumptions
The company estimated sales, mainly for its absorbable local hemostats, and upfront payments for other products in its pipeline. Expectations are that its absorbable local hemostats will be sold in those regions that adopt the CE marking system, specifically Europe, Asia (including Oceania), South America, Japan, and the US. In Europe, these sales are expected to target prominent medical institutions in Germany, France, and the UK, as well as customers in each EU country. Sales in Asia will mainly target Indonesia, Malaysia, South Korea, and Australia, while those in South America will target Columbia, Chile, Brazil, and Mexico.
Product sales estimates are based on estimated values up through the previous year, as well as sales forecasts and order estimates that assume expanded sales in Europe, Asia, and Japan. These estimates also assume the start of new product sales in the US from FY04/18.
The projected JPY751mn in upfront payments for other products in its pipeline are mainly milestone payments for alveolar bone regenerators and mucous membrane protuberance material. As such, progress for its development plans / negotiations is a precondition for reaching this projection. Development targets for main pipeline products
Absorbent topical hemostatic agent (TDM-621)
Europe: The company received the CE Mark on January 14, 2014 and began sales from April 2015. The US: The company expects to start clinical trials in FY04/16.
Japan: In March 2015, new clinical trials were decided. However, the company changed its plans and will later resubmit its application for approval.
Asia: Medical device registration approved in Singapore in September 2014 and in Indonesia in April 2015. An application was submitted in South Korea in January 2015. This application was still under review as of June 2015.
South America: Submitted an application for medical device registration in Columbia in March 2015. This application is currently under review. The company plans to submit the same applications in Brazil and Mexico in FY04/16.
Mucous membrane protuberance agent (TDM-641)
Japan: Clinical trials began in December 2014. However, in March 2015 the company decided to temporarily halt the trials because the tests failed to provide the strong evidence for the efficacy of the
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agent that had been expected from previous trials. The company will seek to come up with a better method of testing.
Vascular embolization agent (TDM-631)
Japan: Aiming for pre-clinical trials in FY04/16, clinical trials in FY04/17, and approval for manufacturing / marketing and a market launch in FY04/18.
Alveolar bone reconstruction agent (TDM-711)
The US: clinical trials began in February 2012. The goal is to receive approval for manufacturing and marketing, attain national health insurance coverage, and launch the product in FY04/18.
Wound-healing agent (TDM-511)
United States and Europe: In October 2014, the company submitted a 510(k) premarket notification to the Food and Drug Administration (FDA) with a view to sell the product as a medical device, and received approval in February 2015.
Note: In the US, premarket notification submissions for medical devices that are substantially equivalent to existing devices in safety and effectiveness can be filed without clinical trials. This submission process is known as 510(k).
3-D Matrix Ltd. (7777)
2015/6/12
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Business
Business description
3DM is a medical technology company that develops, manufacturers, and markets a self-assembling peptide technology originally created at the Massachusetts Institute of Technology (MIT).
The key features of the company’s business are:
MIT holds the underlying patent for the self-assembling peptides that are the basis of the 3DM’s products. The Company has an exclusive global license from MIT for this technology that includes rights of development, manufacture, and marketing of applications that use these self-assembling peptides.
Self-assembling peptides have two main advantages over the medical products currently on the market they are intended to compete with. Firstly, as they are produced by chemical synthesis, there is no risk of viral or other types of contamination that can occur in goods derived from living organisms. Secondly, they can be mass-produced in a homogenous fashion.
These characteristics lend themselves to potentially large-scale use in surgery (such as absorbent localized hemostatic agents and mucous membrane protuberance agents) and in the regenerative medicine field (as alveolar bone reconstruction agents).
3DM’s business model attempts to minimize risks specific to medical product start-ups. Specifically, the products it is developing are categorized as ‘medical devices’ rather than ‘pharmaceuticals’.
Consequently, the duration from application to approval is shorter and costs are lower compared to drug development.
Self-Assembling Peptide Technology
The human body is made up of proteins, the smallest unit of which is amino acids. Peptides are molecules composed of a number of connected amino acids. Invented by Dr. Shuguang Zhang at MIT in 1992, self-assembling peptides are composed of a (16 base) RADA sequence that is made up of three types of amino acids; Arginine (R), Alanine (A), and Aspartic acid (D).
The peptides are suspended in an acidic solution, when this solution comes into contact with a neutral pH environment, for example blood or a salt solution, the peptide molecules ‘self-assemble’ to create a gel formed of nanofibers. Once the self-assembling peptides become gelatinous, they will not revert to a liquid state even if they returned to an acidic solution. Moreover, ADME tests run on the self-assembling peptides have confirmed they do not accumulate in any particular organ, but instead degrade into protease and are excreted from the body after approximately 30 days.
The gel that is formed is an environment similar to that for cells cultured in vivo and has a network structure similar to that of an extracellular matrix, such as collagen. The company is exploiting these characteristics to create applications in a variety of fields, including surgery, regenerative medicine, and drug delivery systems (DDS).
While MIT holds the patents, 3DM has an exclusive agreement with MIT for the basic patents for the self-assembling peptide technology: PuraMatrix™ is its first-generation product that uses these self-assembling peptides.
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PuraMatrix™
Source: Company data
Self-assembling peptides are non-biological molecules produced by chemical synthesis and have the following characteristics:
Safety: as self-assembling peptides are produced via chemical synthesis there is no risk of viral infection (as can occur in biologically-derived molecules) or contamination from foreign elements. Homogeneity: mass production with practically identical levels of quality is possible.
Ease of use: as a gel created from a solution, they are transparent and easy to handle.
Development potential: application potential across a wide range of fields and in development as medical devices.
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Main business segments
The company reports only one business segment, Medical Products. However, this can be further broken down into the Medical Products Development and Research Reagent Sales sub-segments.
Medical products development
In this sub-segment, the company develops medical devices and treatments for use in the fields of surgery, regenerative medicine, and DDS (drug delivery systems) based on its self-assembling peptide technology.
The main development pipeline consists of:
Surgical field: absorbent localized hemostatic agents, mucous membrane protuberance agents, and vascular embolization agents
Regenerative medicine field: alveolar bone reconstruction agents
3DM’s strategy has been to develop these applications in-house as medical devices and then to obtain manufacturing and marketing approvals for them. Its sales strategy involves signing exclusive sales agreements with distributors domestically and overseas.
In the field of regenerative medicine, 3DM has been conducting research into bone reconstruction (outside of the alveolar bone space), cartilage and tendon regeneration, treatments for skin wounds, and cardiac muscle regeneration; and looking to commercialize this research.
As for the DDS space, 3DM has been working to launch products that combine self-assembling peptides with a variety of pharmaceuticals, with the peptides functioning as a carrier for the pharmaceutical agent. While it is also likely that self-assembling peptides themselves can be developed to function as
pharmaceutical agents, independently developing this would be time consuming for the company. Instead it intends to license the technology out to third parties for this purpose and generate licensing revenue from doing so.
The company is also using joint research and MTA agreements with universities and other research facilities to acquire new self-assembling peptides application technologies.
Medical device development process
The medical products that 3DM is focused on are categorized as ‘medical devices.’
The process for developing a new medical device or a pharmaceutical product follows the same sequence of basic research, preclinical trials, clinical trials, and an application for a manufacturing and marketing approval. However, with pharmaceuticals the clinical-trial stage requires a number of phases and generally speaking, involves a large number of patients. As a result, the pharmaceutical development process tends to be long.
More specifically, for pharmaceutical development the clinical trials have three phases; in Phase I and II, researchers test the drug/treatment on a small group of healthy people to evaluate its safety and effectiveness, while in Phase III they administer it to a large group of patients who suffer from the disease or condition that it is intended to treat to confirm its safety and effectiveness.
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On the other hand, medical devices require a comparatively short development process of just one clinical trial phase. The R&D process for medical devices can be summarized as follows:
Medical Device R&D Process
Source: Company data
Basic research: the company searches for potential medical device applications for its technologies and optimizes product specifications.
Preclinical trials: animal tests conducted to see if the product meets safety and efficacy standards.
Clinical trials: human trials on sufferers conducted to see if the product meets safety and efficacy standards.
Application for a manufacturing and marketing approval: an application is submitted to the relevant regulatory body in each country, such as the Ministry of Health, Labour and Welfare’s Pharmaceuticals and Medical Devices Agency (PMDA) and the Food and Drug Administration (FDA) in the US.
Manufacturing and marketing approval: the relevant regulatory body issues an approval to the company.
Inclusion in HIP/National Health Insurance schemes: in order to be covered by Japan’s national health insurance scheme (HIP) or the relevant health insurance in other countries the product’s reimbursement price needs to be calculated by the authorities. In Japan, the reimbursement value will set and the product included in HIP about two to three months after the manufacturing and marketing approval is approved.
Market launch: the product is manufactured and goes to market. 3DM’s main development pipeline consists of:
Absorbent localized hemostatic agent (development code: TDM-621) Alveolar bone reconstruction agent (development code: TDM-711) Mucous membrane protuberance agent (development code: TDM-641) Vascular embolization agent (development code: TDM-631)
Wound-healing agent (development code: TDM-511)
All of these are based on the same sequence of self-assembling peptides (RADA 16) as absorbent localized hemostatic agent TDM-621. Clinical trials in humans are already underway for TDM-621 and no adverse effects were detected among the 97 patients in the trial, as of June 2013. Given this, the key point for the other products appears to be not their safety but rather their efficacy. According to the company, as long as efficacy is confirmed in clinical trials, the regulatory approval appears likely.
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Medical reagent sales
3DM sells self-assembling peptides product, PuraMatrix™, through its partner Corning Incorporated as a research reagent to universities and other research facilities around the world. PuraMatrix™ is used in various medical applied studies and types of therapy.
3DM is marketing the product as a research reagent in the hope that the researchers using PuraMatrix™ will develop new commercially viable applications.
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Main development pipeline
Development pipeline progress (locally absorbent hemostatic materialTDM-621)
Source: Company data
Development pipeline progress (others)
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As of March 2015, 3DM’s main pipeline products are an absorbent localized hemostatic agent, a mucous membrane protuberance agent, an alveolar bone reconstruction agent, a wound-healing agent, and a vascular embolization agent.
Absorbent localized hemostatic agent (development code: TDM-621)
3DM is developing the absorbent localized hemostatic agent TDM-621 based on its RADA16self-assembling peptide technology. TDM-621 can be applied with a syringe to comparatively narrow openings where bleeding may occur during surgery and can also be used in conjunction with an endoscope.
TDM-621 becomes pH-neutral when it comes into contact with bodily fluids, such as blood. The peptides then self-assemble into nanofibers and become gelatinous. The gel perfectly coats the surface of the contact area, forming a coating that physically seals the surface film and peripheral blood vessels. In aortal blood vessels, it produces blood coagulation and hemostasis.
Overview of Hemostasis
Source: Company data
No risk of infection with TDM-621; advantageous in different types of surgery Existing hemostatic agents are categorized as liquid types (fibrin glue) or sheet/powder types (fibrin and collagen). Fibrin glue involves creating a paste out of blood-derivative fibrinogen. There are question marks over the safety of the products currently in use as the use of blood preparation products carries the risk of infecting a patient with the hepatitis C virus. Clearly, accidental hepatitis C infections of patients have the potential to morph into a major public healthcare issue.
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Source: Company data
TDM-621 has a number of advantages over existing hemostatic agents. First, there is no risk of infection. The majority of hemostatic agents currently in use are synthesized from human or animal blood, such as from fibrinogens, while the raw material for collagen is produced from the skin of animals. As these products are derived from living organisms, they carry the risk of viral infection. In contrast, TDM-621 is chemically synthesized from amino acids and so carries no risk of viral infection or contamination from unknown elements.
The medical use of biologically derived products is subject to strict controls:
Informed consent. Patients (or their families) must receive an appropriate explanation about their use and risks
Records of production and use must be kept
Reports must be created verifying absence of infectious diseases in the products
As TDM-621 is chemically synthesized product, there is no infection risk. Apart from obvious healthcare and legal benefits, this could also reduce administrative burden. In cases when biologically derived hemostatic agents are used, patients (or their representatives) must sign off a consent form before the start of the surgery. When TDM-621 is used, no consent is required. Infections transmitted during medical procedures have emerged as a serious public health issue in the recent years and there is substantial latent demand for new medical agents that can eliminate the risk of infection, reduce surgery time and alleviate the burden on patients.
From a surgeon’s perspective, TDM-621 also has a number of appealing features. A transparent liquid, it becomes pH-neutral gel only after coming into contact with bodily fluids such as blood. Therefore, it does not obscure a surgeon’s view and can be easily applied via a catheter or into a narrow tissue entrance. In contrast, standard hemostatic agents are cloudy liquids and can obscure a surgeon’s view of a damaged area, especially when operating remotely with a camera. Finally, unlike surgical glue, TDM-621 does not self-solidify, so it can be applied via a catheter.
3DM notes that TDM-621 induces hemostasis in, and perfectly seals surface membranes and peripheral blood vessels, meaning it can induce a greater hemostatic effect than existing products (which induce hemostasis by bonding the tissue or covering it with an adhesive agent.
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Image of DM-621
Source: Company data
TDM-621 is dispensed as a prefilled syringe product adding to ease of use. Any residual left in the body breaks down into amino acids and is naturally excreted over the course of several days.
To eliminate the risk of administering potentially dangerous dosages, 3DM has introduced a number of measures to prevent accidental dangerous use. For instance, TDM-621 is prefilled in a syringe with a non-standard tip that prevents attaching needles and limits the amount of substance to recommended levels (see image above).
TDM-621 Features
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TDM-621 R&D Status Japan:
3DM launched clinical trials in January 2010 for TDM-621 in order to apply for a Japanese manufacturing and marketing approval. 97 clinical trial patients were chosen who exhibited the following symptoms: Exudative (oozing) hemorrhaging from wounds in coronary artery bypass surgery and artificial
vascular replacement surgery
Exudative hemorrhaging from the wound surface in hepatic resection surgery
Exudative hemorrhaging from the mucosal resection part or submucosal layer during upper
gastrointestinal tract endoscopic mucosal resection surgery, and endoscopic submucosal dissection. Clinical trials were completed in April 2011.
TDM-621’s hemostatic efficacy has been generally confirmed in clinical trials and tests five to seven days after surgery did not detect any problems. The product also received high praise by the doctors
conducting the Japanese clinical trials. Based off the clinical-trial results, the company submitted a manufacturing and marketing approval application in May 2011 to the PMDA for TDM-621.
However, the PMDA has notified 3DM that it must provide stronger evidence for the efficacy of TDM-621, with more precise evidence on its hemostatic effects. In March 2015, the company withdrew its
application for domestic manufacturing and marketing approval and has decided to restart clinical trials in Japan and reapply for approval. The company plans to commence clinical trials in April 2016.
Asia (ex. Japan):
Plans were also afoot to commercialize and market TDM-621 in Asia, excluding Japan. On September 17, 2011, 3DM concluded a partnership agreement with Daewoong Pharmaceutical Co. of South Korea and a licensing agreement with Excelsior Medical Co. of Taiwan. In addition to South Korea and Taiwan, the company is also seeking to expand sales in Southeast Asia. The company’s Singapore subsidiary, 3-D Matrix Asia Pte. Ltd., has an exclusive sales agreement with PT. Teguhsindo Lestaritama. Under the agreement, the Indonesian company is responsible for selling the Japanese partner’s products in Indonesia. The company submitted an application for CE marking in Indonesia in July 2014 and South Korea in January 2015, taking advantage of the fact that the CE marking can be used to obtain marketing approval without clinical trials.
In Singapore, the company obtained approval to register PuraStat® as a medical product in September
2014, after submitting an application in July of that year. The company is also preparing to conduct a clinical trial in China with a view to launching the product during FY04/17.
United States
In the United States, the company submitted an investigational device exemption application to the FDA, with an eye to starting clinical trials in FY04/16. The company aims to apply for and obtain manufacturing and marketing approval, as well as conduct a product launch, in FY04/17.
Europe
In Europe, 3DM’s French subsidiary obtained a CE Mark in January 2014 (CE Marks are required certification for selling medical devices in the EU and denote EU safety standards have been met). According to the company, the acquisition of the CE Mark will enable 3DM to sell the product in 28 EU member states, Hong Kong, Malaysia, Singapore, New Zealand, and Chile. With the CE Mark, the company will also be able to obtain approvals without clinical trials in such nations and regions as Australia, South Korea, Indonesia, Brazil, Thailand, Vietnam, the Philippines, and South America.
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TDM-621 sales agreements
In May 2011, 3DM concluded an exclusive sales agreement for absorbent localized hemostatic agent TDM-621 in Japan with Fuso Pharmaceutical Industries Ltd. (TSE1: 4538). The company has already received an upfront payment and a milestone payment (triggered by the confirmation of the regulatory approval application). It will receive a further undisclosed milestone payment upon receiving the manufacturing and marketing approval for TDM-621. Furthermore, Fuso Pharmaceutical is obliged to purchase a minimum volume of TDM-621 from 3DM for approximately 10 years. Fuso Pharmaceutical was chosen as a partner as it recognized the value and potential of the product from an early stage. As previously mentioned, 3DM has also concluded agreements with Daewoong Pharmaceutical of South Korea, Excelsior Medical of Taiwan, and PT. Teguhsindo Lestaritama of Indonesia. Daewoong
Pharmaceutical is one of South Korea’s leading pharmaceutical companies, and Excelsior Medical one of Taiwan’s top medical devices manufacturers.
Regarding sales partners in the US and Europe, as of March 2015, the company is negotiating with several candidates, and plans to conclude an agreement within FY04/16. The company is considering various types of sales agreements, including an exclusive sales agreement with a major corporation, agreements with various distributors for different types of therapy, and direct sales through a wholesaler.
Price, market size
According to the company, the global hemostat market is worth about USD3.0bn. About half of this market comprises regions where sales are possible with the CE marking, or approval may be granted without clinical trials with the CE marking.
Assuming the same pricing as for existing hemostatic products, Shared Research anticipates a sales price of around JPY14,000/cc. However, when considering the competitive advantages of TDM-621, it is conceivable that a premium could be charged.
Global hemostat market
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Mucous membrane protuberance agent (development code: TDM-641)
R&D for 3DM’s self-assembling peptide based agent that is injected into the mucous membrane during endoscopic procedures to form a protuberance on the tumor site is ongoing. TDM-641 is intended for use in endoscopic surgery for stomach cancer, endoscopic mucosal resection (EMR) surgery and endoscopic submucosal dissection (ESD) surgery for esophageal cancer.The company is developing TDM-641 as an agent to be injected into the submucosal layer in endoscopic procedures and causes the affected area to protrude. Based on the product’s feature–namely, of forming a pH neutral gel on coming into contact with a liquid, such as blood–it has been confirmed in animal experiments that not only can TDM-641 produced the protuberance, but that it also possesses a secondary hemostatic effect. Naturally, saline and sodium hyaluronate do not provide this hemostatic effect and it is hoped that TDM-641 will reduce the difficulty of these operations.
Overview of the mucous membrane protuberance method
Source: Company data
TDM-641 R&D Status
Both mucous membrane protuberance agent TDM-641 and absorbent localized hemostatic agent TDM-621 use the same RADA 16 self-assembling peptides as their raw material, although the
concentration of the peptides varies for the two. Consequently, safety data obtained in clinical trials for TDM-621 can also be used for TDM-641. In September 2014, the company submitted a notification of plans for clinical trials of TDM-641 as an agent to be injected into the submucosal layer in endoscopic procedures to the Pharmaceuticals and Medical Devices Agency (PMDA). In December 2014, the company launched trials of the product, in order to evaluate and verify its safety and efficacy as a submucosal injection material for endoscopy, for EMRs (endoscopic mucosal resections) and ESDs (endoscopic submucosal dissections). The company planned to enroll 260 patients in these trials.
However, in March 2015 the company decided to temporarily halt the trials because the tests failed to provide sufficient proof of the efficacy anticipated from previous clinical trials. The company will seek to
