A Unique First-To-Market Investment Opportunity Look Into Sepsis, The 10th Most Common Cause Of Death
Do you know what illness causes millions of deaths globally each year and in the United States affects approximately 3 out of every 1,000 people? Can you name the disease that accounts for more than 200,000 deaths each year and is the second leading cause of death in the intensive care unit (ICU)? The answer is Sepsis and until recently I had never heard of this deadly disease and I imagine the same is true for the majority of the readers of this article. The statistics blew me away and so I had to learn more. Sepsis is the tenth most common cause of death overall, occurs in 1-2% of all hospitalizations, affects 750,000 people each year and accounts for as much as 25% of ICU bed utilization.
Sepsis is a serious medical condition caused by an overwhelming immune response to an infection. When we get sick our body naturally releases an immune response in which cytokines, small cell-signaling protein molecules, fight the illness. The opposite effect of this natural response by our body can occur in extreme circumstances such as someone who has faced trauma in a car accident for example or who has cancer in what is referred to as a cytokine storm. Effectively what occurs is your system overproduces cytokines throughout your entire body which it is unable to handle and stabilize, eventually leading to widespread inflammation, organ damage/failure and death.
Sepsis, like Alzheimer’s and Cancer, has no cure, only treatments that are aimed at trying to stabilize the outbreak of the disease creating a unique high risk/high reward investment opportunity. Antibiotics and IV fluids are used, but the facts are that each hour that goes by without diagnosis the disease gets radically worse. According to the Sepsis Alliance, a 2006 study showed that the risk of death from Sepsis increases a staggering 7.6% with every hour that passes before treatment begins and even after it begins there are no guarantees for success.
Eli Lilly’s (NYSE: LLY) drug Xigris® was cleared by the FDA in November 2001 and is the first and only drug to be approved for the treatment of severe sepsis. In 2011 after completing a follow up study required by the FDA, it was subsequently determined that it does not have a statistically significant mortality benefit and was withdrawn from all worldwide markets in October 2011. Eli Lilly’s Xigris® failure opened the door for other companies to enter the space.
I have detailed below opportunities to invest early into the burgeoning, underserved, and undertreated sepsis industry, each at various stages of development. I do remind readers of this article that the market capitalizations of some of the companies I have detailed below are under $250 million. I present these opportunities because I strongly believe that larger players such as Baxter (NYSE: BAX), Eli Lilly and Fresenius (NYSE: FMS) who have already entered and invested in the space are following closely these up and coming therapies who are acquisition targets at much higher valuations. These are very high risk/high reward investments and I strongly recommend conducting your full due diligence before considering an investment.
Gambro, which was recently acquired by Baxter, launched their Prismalex eXeed system in August 2009 and introduced SepteX intended to treat patients with acute renal failure and the removal of inflammatory mediators from the blood. The filter treatment is not specifically intended for sepsis, but for Acute Kidney Injury (AKI) which is most commonly caused by bacterial sepsis. In Europe, Fresenius launched a high molecular weight cutoff hemodialyzer, similar to Gambro’s product.
CytoSorbents (OTC BB: CTSO.OB) is commercializing and generating revenue from the sale of CytoSorb®, a blood filter, which is approved for sale in all 27 countries within the European Union. CytoSorb® is approved for use in any clinical situation where cytokines are elevated such as trauma, burn injury, pancreatitis, high risk surgery and many others. Acting as a filtration or dialysis device, thousands of tiny beads within it act as an absorbent as blood flows through it. Unlike typical dialysis devices the blood can flow in and out of the device freely for a certain period of time as opposed to only once. In a randomized European trial specifically for sepsis, CytoSorb® demonstrated a statistically significant reduction of a number of key cytokines by 30% to 50% and improvements in mortality in patients at high risk of death. CytoSorbents is working with the U.S. government in preparation for rolling out their U.S. strategy for treatment.
CytoPherx, a medical device company focused on inflammation-based diseases, is currently undergoing a 344 patient clinical trial at 30 sites focusing on patients who are already experiencing kidney failure with a goal to reduce the mortality rate with medical devices. In January 2012, CytoPherx raised $34 million from Early State Partners, Onset Ventures, and Capital Midwest Fund to complete the clinical trial.
Kaneka Corporation (OTC Markets: KANKF.PK) first introduced LiXelle™ a hemodialysis device in Japan. After conducting small human studies, LiXelle™ showed signs of cytokine reduction. Kaneka has since developed CTR which is also designed to remove cytokines. In 2009, CTS was used in an 18-patient randomized, controlled trial in patients with septic shock. I have been unable to find the published results of this trial.
Toray Industries (OTC Markets: TRYIY.PK) currently markets a cartridge called Toraymyxin™ for the treatment of sepsis in Europe, Japan and 16 other countries, but is not yet approved in the United States. It has been used to treat more than 80,000 patients since 1994. Spectral Diagnostics (OTC Markets: DIAGF.PK) has obtained the exclusive development and commercialization rights of Toraymyxin™ for the U.S. In early February, Spectral announced the results of the first interim analysis for its EUPHRATES trail which demonstrated no safety issues. It should be noted that this study is for the treatment of endotoxemia which leads to a cytokine storm.
Sepsis is a major and costly worldwide health problem that may be getting overlooked in the public eye. I am following closely the industry and possible treatments for the disease in the same way I am following many of the other unfortunate diseases such as Alzheimer’s and cancer that plague us and our loved ones everyday. I believe that larger corporations such as Eli Lilly and Baxter are following the progression of the space carefully and acquire smaller players. Even if they are not acquired, as milestones are achieved and the proper funding is secured to enact their plan, they will achieve higher valuations.
* All references and footnotes can found by clicking here