Biomedical Engineering Reference
In-Depth Information
skin sample. The utility in patients with high percentage body surface area burns
is obvious. The shortfallings of CEAs, however, have limited their use. These
include expense, friability and lack of a dermal layer. CEAs have been relegated to
the role of a biological dressing. The other existent options for biological dressings
for patients with extensive burns now make use of CEAs impractical.
Epicel (Genzyme Biosurgery, Cambridge, MA) is the best known CEA on the
market. Autologous keratinocytes are expanded
ex vivo
in co-culture with murine
3T3 fibroblast feeder cells. After expansion, the neoepidermal layer comprises
keratinocyte layers of variable thickness and arranged in sheets. These sheets are
placed on a carrier and shipped back to the patient in need. Epicel is expensive
(US$21/cm
2
) and
has a 24-day shelf life in the cooled packing system.
2.4
The marketplace
For obvious reasons, the skin replacement marketplace has been an area of intense
interest for both physicians and Wall Street investors for the past decade. As we
have shown, the potential market for these products is enormous. Skin substitutes
represent a high risk, high reward proposition for all involved - companies,
physicians, patients and investors. The financial term for volatility, and therefore
risk, is beta. Why is this a high beta sector?
In 2000, Krieger and Shaw investigated the financial characteristics of five
publicly traded companies whose primary revenue source came from skin substi-
tutes.
11
The companies and their products were Organogenesis/Apligraf, Advanced
Tissue Sciences/TransCyte, Lifecell/Alloderm, Integra Lifesciences/Integra and
Genzyme Biosurgery/Epicell. The purpose of their study was to compare Wall
Street's attitudes towards these companies to other, similarly sized companies in
the biotech space.
The rationale for such a study is that Wall Street tends to assess the risk profile
of companies in predictable ways. Although not always accurate or foolproof, the
metrics used to evaluate the potential profitability of a company provide observers
and investors with some objective tools by which to compare different companies
within a particular sector. The metrics used in the Krieger study included the
degree to which different independent analysts agreed on revenue projections, the
volatility of the stock price and the concordance of buy/sell recommendations by
the analysts. The results of the study are not surprising to surgeons with experience
using these products. Companies who make skin substitutes have higher stock
price volatility and lower concordance among analysts regarding both revenue
targets and buy/sell recommendations than do other companies in this sector.
The authors' explanation of these results was that there was an inefficient
correlation between reported clinical results and potential market share of a given
product. In other words, what companies regard as success has not translated into
the magnitude of sales predicted by analysts. This leads to overestimation of
revenue projections, which, when unmet, results in stock price volatility. At the
