Reasons To Stay Interested in SNWV
Brian Marckx, CFA
We met with
SANUWAVE's (
SNWV
)
management at the J.P. Morgan Healthcare conference in San
Francisco earlier this month and were encouraged by their steadfast
belief in the ultimate success of dermaPACE. This is despite
the disappointing announcement in December that the FDA issued a
major deficiency letter, rejecting approval of the device. As
a reminder, the FDA letter cites the failure of dermaPACE to meet
the primary endpoint of statistically significant superiority in
100% wound closure compared to sham-control (i.e. - standard of
care) as one of the deficiencies. While the FDA action by no
means dooms dermaPACE's chances of eventually gaining FDA approval,
it does mean the journey towards that end will now be longer and
likely more costly. Among the agency's recommendations to
potentially remedy the deficiencies is for SANUWAVE to conduct
another clinical trial - the design, size, duration, etc. of which
would be decided upon after further discussions between the two
parties - a meeting is expected to take place within the next 90
days. At that point we hope to have a better idea of what
management's strategy will be with getting their technology
commercialized.
As we have outlined in our reports (and include below) since
initiating coverage of SANUWAVE in May 2011, we feel the
compilation of clinical evidence supports that dermaPACE is
significantly more effective than standard of care in healing
diabetic foot ulcers. And while the DFU indication is where
we believe the majority of the near-term opportunity lies,
SANUWAVE's PACE technology may also have utility for derivative
applications - most notably in healing of other types of chronic
wounds such as pressure and venous ulcers and in orthopedic therapy
for bone healing and treatment of osteoarthritis.
While there is certainly no guarantee that SANUWAVE's device will
gain FDA approval for any of these applications, we think there are
a number of reasons that should keep investors very interested in
the name. This includes their experienced (and based on our
numerous conversations with them, very capable and trustworthy)
management team, a regular stream of published clinical data
showing the efficacy of their technology, a business model that
makes sense (which is definitely not always the case, especially
with new technologies), very large and potentially very receptive
target markets, and a healthcare system quickly moving towards a
"pay-for-performance" model which should increase demand for
efficacious yet less expensive therapy (such as what dermaPACE aims
to provide) at the expense of costlier treatments.
Below is from our May 2011 initiation report on SANUWAVE in which
we make a comparison of the dermaPACE DFU pivotal clinical trial to
that of already established and FDA approved DFU treatments.
Dermagraft is now owned by Shire Pharmaceuticals (
SHPGY
) while Kinetic Concepts (taken private in 2011) dominates the
V.A.C. market. Apligraf, previously marketed by Novartis (
NVS
), is now manufactured and marketed by privately-held
Organogenesis.
dermaPACE VS. COMPETITION
While clinical trial data of head-to-head comparison between the
various advanced DFU therapies is not available, insight into
differences in efficacy may be gleamed through comparison of
studies which used standard of care as the control cohort.
Differences among these trials including size, location and
severity of wounds, background of trial participants, and the
studies' protocol, size, duration and endpoints makes the
comparison of results not necessarily apples-to-apples.
Despite this, we think comparison of the different trial results
suggests that dermaPACE, at the very least, is an effective therapy
- and perhaps, may be a more effective therapy than currently
available advanced DFU treatments. We also note that
dermaPACE will not compete on efficacy alone and has other
(potentially just as compelling) benefits that, combined with the
clinical data, provides a persuasive case that the instrument can
be a be a formidable competitor in the advanced DFU treatment
space.
CLINICAL DATA COMPARISON
Efficacy of DFU treatment in clinical trials is typically measured
by rate of closure and wound recurrence. Aside from efficacy,
other metrics that are commonly included as endpoints are safety
and patient comfort. We summarize data from a select number
of clinical studies of the leading advanced DFU therapies and
compare those to results from dermaPACE's IDE study. Some of
the competitor therapy data is taken from more than one study as
not all metrics were included in a single study. As there
have been several other studies done aside from the ones we
highlight, our comparison does not cover the totality of study data
on advanced DFU therapy. We also note that we have only
included dermaPACE 12-week data as 12-week follow-up was the
protocol for studies used to gain FDA approval of Apligraf and
Dermagraft. While we have excluded the 24-week follow-up data
(which showed statistical significance in complete wound closure)
from our direct comparison, we think it does add further support
for use of dermaPACE in DFU.
The data in the table are from clinical studies of each therapy
versus standard of care.
...our take on the data
Keeping in mind that it can be misleading to make an
apples-to-apples comparison of the data, we offer some potential
points of interest in the trial protocols and data sets;
•
Closure endpoint:
dermaPACE data is from the composite analysis (endpoint of >
90%). As noted earlier, dermaPACE failed to show significance
in the primary endpoint of 100% closure in the IDE trial through 12
weeks. All three competing devices showed significance in
their primary endpoint of 100% closure. The difference, in
clinical practice, may be largely meaningless, however (although
FDA, based on its recent major deficiency letter, apparently
believes that it is). Median closure in dermaPACE treated
ulcers achieving > 90% closure was over 99% and anything greater
than 70% indicates that the wound is well on its way to being
completely healed. In addition, ulcers treated with dermaPACE
were almost 60% larger than those in the control group (making
achieving significance that much more difficult). Also
noteworthy is that trial protocol in the V.A.C. study allowed full
closure of ulcers to be completed with surgery - this was not
allowed in the dermaPACE study - had it and it's conceivable that
dermaPACE would have shown statistical significance in 100% closure
over standard of care.
•
Blinding:
dermaPACE was the only trial where both the physician and
patient were blinded to which treatment (experimental or control)
was being used - in none of the trials of the other therapies was
the physician blinded. As the physician must make a (somewhat
subjective) determination relative to efficacy (i.e. - closure
rates, change in size of ulcers, etc), not blinding the physician
potentially introduces bias in favor of the experimental
treatment. Not blinding the physician can impact clinical
trial results and has been cited as a deficiency in the robustness
of trial data for both Apligraf and Dermagraft by insurance
providers in determining reimbursement policy. dermaPACE's
double-blind trial protocol eliminated any physician bias which
further supports the strength of the
data.
•
Treatment duration:
dermaPACE's closure and recurrence rates versus the competing
treatments are especially compelling given that dermaPACE requires
the lowest treatment burden with patients receiving only four
20-minute procedures over a two-week period. Dermagraft
patients received up to eight applications (one per week for eight
weeks) while Apligraf was applied up to five times (once per
week). The V.A.C. treated patients received treatment for up
to 16 weeks. V.A.C. treatment requires that suction is
constantly applied to the wound (i.e. - the patient is hooked up to
the device for the entire 16 weeks) and dressing is changed at
least three times per week.
•
Closure rate:
dermaPACE's 48% closure rate stacks up better than both Dermagraft
and V.A.C. We acknowledge dermaPACE's lower endpoint
threshold could have benefitted its closure rate - but this could
potentially have been more than offset by not allowing surgical
closure or other differences among the trial protocols. While
Apligraf's 56% closure rate slightly bested that of dermaPACE, this
appears to be significantly more than offset by the difference in
rates of recurrence (40% with Apligraf versus only 4.5% with
dermaPACE).
•
Recurrence rate:
only 4.5% of dermaPACE treated wounds reopened after achieving
complete closure, compared with 18% and 40% of the Dermagraft and
Apligraf treated wounds, respectively. The V.A.C. study did
not report rates of recurrence as this study allowed surgical
closure. The results, again, are not necessarily directly
comparable for the reasons already stated.
•
Safety:
while none of the therapies was associated with a higher
rate of adverse events compared to standard of care, we note that
dermaPACE is the least invasive of the four therapies. While
only speculation at this point, given its non-invasive nature, over
time, dermaPACE may prove to be a safer
treatment.
To view a free copy of our most recent research report on
SNWV or subscribe to our daily morning email alert, visit
http://scr.zacks.com/
.
SANUWAVE HEALTH (
SNWV
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research