ThermoGenesis Sees Explosive Growth Opportunities in Stem Cells

Stem cells can combat a variety of illnesses, from heart disease, to cancer. Mel Engle, CEO of ThermoGenesis [NASDAQ: KOOL] recently discussed with OneMedRadio, the company’s stem cell products and FDA approval that may have groundbreaking implications for the stem cell market.

Specializing in adult stem cells, ThermoGenesis , originally Instakool, provides solutions to wound care and biopreservation needs world wide. Adult cells make up the lion’s share of the stem cell space, mainly because they are easier to come by than embryonic cells, and less expensive to run in clinical trials. They are also derived from mature tissue, like bone marrow or umbilical cord blood, so they avoid the ethical debate that surrounds embryonic stem cells.

Engle notes that China is an explosive market from a cord blood standpoint because if its size in population.  The number of births per year is four times as many as in the United States, and the company had four major accounts currently in place to assist their efforts in China.

Of their multiple devices, the company recently received 510K approval for their bone marrow product, Res Q, used in orthopedic and cardiovascular applications. Engle is hopeful that the company will gain approval for their AXP unit as well, a cord blood device solidifying ThermoGenesis products as first rate technology in the adult stem cell field.

Brett Johnson: Good day. Welcome to OneMedRadio. This is Brett Johnson reporting from New York. Today, we are with Mel Engle, CEO of ThermoGenesis, a California company that services the stem cell and regenerative medicine field. Its symbol is KOOL on the NASDAQ. Thanks for joining us today, Mel.

Mel Engle: Thank you.

BJ: Can you tell us a little bit about the business of ThermoGenesis?

M.E.: Our mission is to design, develop, and commercialize medical products that enable the collection, processing, and cryopreservation of stem cells and other cellular tissues using the practice of regenerative medicine. We’re an enabling technology provider for the automation of stem cell processing, storage, and administration in the lab and at the point of care.

BJ: Stem cells and regenerative medicine business has gotten a lot of attention, how is that affecting your business?

M.E.: Our products are in three major areas within the regenerative medicine sector. First is in cord blood where we actually provide devices and bags and so forth for the collection of cord blood from the placenta of a baby through cord blood processing companies like Cord Blood Registry and New York Blood Center. Secondly, we have medical devices and disposables for the collection of stem cells from bone marrow, and thirdly we have devices that are used to collect platelet-rich plasma from peripheral blood.

BJ: So as you look down the road what are some of the big trends in this general area?

M.E.: We’re seeing an awareness level increasing in trial by innovators to use stem cells more aggressively. First movers are moving now into using the stem cells more and more often and that we see a lot of key opinion leaders talking about the technology and other companies and other customers getting on board with the technology.

BJ: So is part of it because of the new ways to access stem cells that had less ethical concerns such as stem cells from adipose tissue or fat? Is that part of it?

M.E.: We really don’t see any ethical issues in our adult stem cell area. I think that sourcing stem cells from adipose tissue is totally appropriate, it’s done now in an experimental mode. There’s really no major player that’s in the stem cell market. We have a player, Cytori who’s in the adipose tissue market, but it’s not in the stem cell area. But there’s a lot of research going on now for adipose, but we consider that to be totally ethical.

BJ: I see. Right. But I think in the past the embryonic cells was what caused all the uproar.

M.E.: Let me just clarify that there’s two kinds. There’s an embryonic stem cell and an adult stem cell and our company specializes only in the adult side.

BJ: At recent OneMedForum in New York, you talked about some exciting growth opportunities in China and in Asia in general. Can you tell us a little bit about those markets in terms for your business?

M.E.: I think China is an explosive market. It could very well be twice as large as the United States from a cord blood standpoint. The number of births per year is four times as many as they are in the United States. We also believe that all cord blood separations that are being done right now are through manual processes, which are slower and inefficient and with more problems downstream. Our system is fully automated, which reduces processing time and increases the overall efficacy of the procedure. So we see that the market is wide open. We believe that we’ve got a first mover opportunity in China with our distribution partners in place. And that we see that the dynamics there in that market with the population being as high as it is, the birth rate as high as it is, and the one child only rule in China. The Chinese parents are more attuned to saving cord blood than perhaps you’d see in other countries. So we see the opportunity to be very large in China.

BJ: How will you go about that? You indicated that you actually have a partner over there and will it be a joint venture? How will you actually approach that market?

M.E.: We have four major accounts in place right now. We’re awaiting final approval from the SFDA to be able to sell our AXP system in China. We anticipate receiving that approval in the next three or four months. Fenwal is our major distributor there that looks after our product line. They have the rights to China, to Japan, and other countries in that area and India. We have other customers that are utilizing the technology.  Beike Biotechnology is one of them. So we have people who have been experimenting with the product, doing some research, getting ready for the product launch. Some key leaders have been using the product successfully so we believe that there’s a lot of interest from a trial standpoint.

BJ: Can you tell us a little bit about the product and the technology and in simple terms how your device works?

M.E.: Well there are multiple devices. The cord blood unit, we call the AXP, which this is a centrifuge. Basically, a small centrifuge the size of a football that actually spins blood from the placenta and separates stem cells from the buffy coat into a small collection bag that is then processed and stored in a cryopreservation unit called the BioArchive in liquid nitrogen in 196-negative Celsius container that allows the stem cells to be stored safely and then retrieved if they’re needed for therapeutic uses later on.

The second product is a bone marrow product called Res-Q. This is a small point of care device that is used to — it can be used for spinal fusion, it can be used in cardiovascular applications, it can be used in smaller applications where the patient is on the table and their blood can be spun and the stem cells can be reinjected back into the body.

We also use that, the Res-Q technology. We just recently received a 510k approval for Res-Q to be used with platelet-rich plasma usage and we see that application in orthopedic applications as well as downstream in cardiovascular applications.

BJ: So the 510k approval you just recently received, will that be then a product coming on to the market at some point here in the coming months?

M.E.: I’d say that we’re in a situation where we have the product on the market shortly.  It’s just a matter of having it tried by physicians once now that approval is there. We have several ongoing studies that have been done by BioParadox and also with Dr. Allan Mishra and they are the major influencers with this technology. And we believe that the PRP unit is going to be enormously successful. We have high hopes for it, but we just received the approval about two months ago.

BJ: Terrific. Can you tell us a little bit about how you got involved in the company and a little bit of the company’s history?

M.E.: The company was founded in 1986 located in Rancho Cordova. The original company’s name was Instakool. It was a refrigeration company that actually had devices that cooled white wine bottles if you remember way back when, when you would just instantaneously get, you know, a cold wine. It then morphed into a refrigeration company that refrigerated blood products and eventually moved to its current type of focus based upon stem cells.

My background is 16 years as a CEO of multiple companies in both a device and drugs. I’ve worked with big companies and small companies alike with populations of 20 employees up to a thousand employees. And I think that’s what the company was looking for was somebody with a broad experience base that could help turn the company around from where it was back prior to 2009 when I joined the company.

BJ: How has the experience been so far and so what do you see as the big challenges coming down the road?

M.E.: Well, the first thing that we did was to make sure that the product quality was at the highest level. The company had a couple of product recalls back in 2008, which needed to be resolved and our quality is now — we’ve actually tracked it to be 85% better than it has been in prior years. So we consider our quality to be state of the art. The technology that we have, the AXP and the MXP and the Res-Q are at the top of the game. So we believe that we’ve got first rate technology.

The next thing we needed to do was to make sure we had the right management team in place and there were some changes that were made there. I believe that the company is stronger than ever. We’re poised for the challenges ahead. We believe that we’re in the right market at the right time and that we’ve got an excellent product line and people base to make these things happen.

BJ: Any comment on the milestones coming down the road?

M.E.: If you take a look at the Chinese approval, that’s a major milestone for us. We see that happening in the next little while, for the next couple of months to get SFDA approval for our AXP unit. We believe that we have some market changes that are going on in the United States, which we’re seeing a rebound from the soft economy that we’ve had. We anticipate that our business will be bouncing back in the United States, we’re very hopeful about that. We believe that the introduction of the PRP system using the Res-Q unit will be endorsed by physicians and practitioners that are using the product.

Our strategy is to grow the core business through pursuit of new geographic markets and market adjacencies such as new autologous indications and allogenic applications. Second is to turbo charge our core business growth through aggressive business development targeting product development partnerships, new technology acquisitions, and business combinations. Then thirdly, we want to substantially expand the clinical efficacy dataset that we have on our platform products to increase their therapeutic value and number of indications and clearances to drive greater market adoption. So those are the three things that we’re driving on and we feel very optimistic about our future.

BJ: Well, it sounds like you have a lot happening there and that the progress has been very good. Thanks so much for joining us today.

M.E.: My pleasure.

BJ: That was Mel Engle, the chief executive of ThermoGenesis, traded KOOL on NASDAQ. Thanks again for joining us. This is Brett Johnson in New York at  OneMedRadio signing off.

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