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EQUR: Healing Chronic Wounds With Electrical Stimulation

01/09/2017

OTC:EQUR
 

E-QURE Corp. (Electric Quick Ulcer Remedy), a publicly traded company (OTC:EQUR) headquartered in New York, is a premier provider of innovative medical devices in the field of active advanced wound management. The key shareholders are the founders themselves, Ron Weissberg, Ohad Goren and Itsik BenYesha. The company has about 22 million shares outstanding and a market capitalization of about $2.8M.

Chronic wounds affect about 2% of the population in the U.S. which translates to about 6.5 million people. Treatment of such non-healing wounds imposes an economic burden and contributes to the already increasing health care costs. The company’s BST (Bioelectrical Stimulation Therapy) technology is an active advanced wound management device that is designed to produce an electrical stimulation, combining electrical noise and a pulse train to the wound site. This specific mode of electrical stimulation activates sensory nerves in humans via stochastic resonance and accelerates the body’s mechanism of wound healing. The safety and efficacy of BST therapy was evaluated in controlled randomized studies at several centers internationally and the results were favorable. The BST device has been approved as a non-invasive electrical stimulation device for hospital, nursing home, and in-home care treatment of chronic wounds in Europe and is pending approval in Israel, Canada and Australia.

Pivotal studies are required for obtaining regulatory approval from the U.S. Food and Drug Administration (FDA) which will enable EQUR to distribute the device in the U.S.  In Q4 2016 the FDA granted conditional approval of the company’s IDE to initiate its U.S. clinical trial. The BST device is seeking approval for treating recalcitrant stage III and IV pressure ulcers. The goal is to complete clinical trials and launch the product in the U.S. in 2018.

Expected Upcoming Milestones

Q1 2017 – Start enrollment of first 10 patients in U.S. trial; Launch new observational pilot trial in Israel; Launch new pilot trial in Europe; Receive AMAR (Israeli) approval; Ship BST Device to Argentina

- Q2 2017 – Uplist EQUR to NASDAQ

- H2 2017 – File trial data (from the U.S. clinical trial) describing all device related adverse events and side effects

- Q3 2017 – Conclude and report pilot trial results in Israel and Europe; Launch sale activities in Europe and Israel

- mid-2017 – Enroll remaining 80 patients in the U.S. trial.  The results of the multi-center clinical trials are expected in about fifteen months’ time from the date of commencement.

- H1 2019 – Launch BST device in the U.S.

Meanwhile, EQUR will explore strategic alliances with key distributors to penetrate the U.S. market or preferably build its own marketing and sales capabilities.  Pending FDA approval, we expect the product to be launched in the U.S. market sometime in 2018.  Following launch, EQUR will work vigorously towards obtaining a reimbursement CPT code.

Clinical Trials using the BST Technology:

Randomized Controlled study with BST device in Israel:

A multi-center, randomized, double-blinded, placebo controlled study was conducted in 2002-03 using the BST technology in a patient population of 63 (28 patients in the placebo group and 35 patients in the treatment group) at 12 medical centers and hospitals in Israel. The mean age of patients enrolled in the study was 72±19 years. Hospitalized or institutionalized patients with chronic non-healing stage III pressure ulcers (more than 30 days of an open wound) whose ulcer duration was less than 24 months were considered for the study. The location of the ulcer other than on the head, upper back or chest were chosen for treatment and had dimensions of 1 to 50 cm
2. The placebo group as well as the patient group underwent surgical debridement as required, followed by a hydrocolloid or collagen dressing and pressure relief. All patients were treated for eight weeks. Twenty minute treatment sessions were performed twice per day during the 56 days of the study. There were ten assessment days (1, 7, 14, 21, 30, 45, 57, 90, 120 and 147) during which the ulcer was assessed. The efficacy evaluation was based on the results observed during and at the end of the treatment, i.e. – through day 57 with a follow-up period of 90 days following the last treatment. The efficacy of the treatment was evaluated with complete wound closure as the primary endpoint and any progression towards closure as the secondary endpoint. A total of 25 patients terminated participation due to medical complications and other reasons.

The mean healing rate (complete ulcer closure) in the BST group was 27.3%, which was three times that of the placebo control group (9.5%). 50% of patients who had ulcers above the knee in the BST group achieved complete wound closure compared to 9% in the control group. A positive trend in complete closure was indicated for ulcers below the knee (18% for BST group and 10% in the placebo group), although this effect did not reach statistical significance. The average decrease in wound area from day 1 to day 45 was found to be 45% in the treatment group and 10% in the placebo group  - the difference  was not statistically significant. The mean progression of the wound edges by contraction of the wound and formation of new skin from day 1 to day 45 was 4.6mm in the active group and 2.3mm in the placebo group – the difference was statistically significant (P = 0.033). The efficacy and significance of epithelial growth and area reduction, were both higher on day 45 compared to the intended follow-up on day 57. The BST treatment was found to be safe and no adverse effects were reported.

The graph above shows treatment using the BST technology was twice as effective as the placebo for all wound sizes. For leg ulcers, BST’s effectiveness was almost two times greater than the placebo, and for the treatment of upper body ulcers, BST was more than five times more effective.

The trial results showed that the average size of the ulcer that closed using the BST treatment was substantially bigger than the average size of the ulcer that closed in the placebo group.  In order to perform statistical analysis on the trial data that comprised of patients having variable wound sizes, wound geometry was considered as a factor influencing the closing of the wound. A parameter termed “critical path” was defined as the distance traversed by the epithelia for complete closure from the periphery to the center of the wound. This model took into account the area and shape of the ulcer as both have an impact on the distance that should be covered by epithelia in order for the wound to close completely. The results that were obtained following this analysis revealed that for a specific ulcer to close, the odds of full closure in the treatment group was 5.7 times that of the odds of closure in the placebo group (P=0.04).  Although achieving 100% wound closure is the goal of wound healing, being able to achieve a reduction in the wound area in the treatment group (twice the placebo group) is quite significant to the patient since reduction in wound area implies that the wound is showing signs of healing albeit at a slower than normal pace. This randomized, double-blinded, placebo-controlled, multicenter trial demonstrated that application of the BST therapy, three times daily for 60 days is safe and stimulates rapid healing of chronic, non-healing stage III pressure ulcers in geriatric patients. This is the first well-controlled trial to demonstrate a statistically significant difference in both the number of patients healed and the healing rates in patients with chronic wounds treated with the BST technology.

A study was conducted in a 22-month period between July 2008 and May 2010 using the BST device at the University of Turin, Italy. The criteria for inclusion in the study were patients with chronic wounds, ranging from 0.8 to 12cm
2 in size, not responding to surgery, traditional and advanced wound care therapies for at least three months. The average age of the patients was 69 years. The patients were treated with the BST device for 30 minutes, thrice every day. The patients were taught to use the device so that the treatment could be provided at home without external help. All patients had a weekly follow-up. Standard wound care was continued throughout the study period.

The first group was evaluated for wound healing and composed of patients with wounds that were not responding to conventional therapies for at least 3 months.

The second group was evaluated for the effect of electric therapy on pain 
control and composed of patients with severe pain with Visual Number Scale (VNS)>8, requiring heavy use of painkillers.

Results:
In the wound healing group, 71% of patients showed progress from chronic wounds to acute wounds in an average time of 34 days. At the end of the follow-up period, 87% of the wounds were completely closed in an average time of 97 days (range 10–150 days), while 13% were still in re-epithelialization. 

45%of patients reported complete disappearance of pain, 36% reported a reduction in pain after seven days of treatment, 19% reported a reduction of pain from 9.5 to 2.5 after seven days and stopped morphine-like painkillers after two weeks of treatment.

Study conducted at the Difficult Wounds Unit, San Luca Hospital, Turin, Italy

 

Figure A: Pre-treatment wound dimension 3cm×2 cm. Figure B: Bioelectrical stimulation therapy (BST) device applied close to the wound area. Figure C: Wound dimension 2•5cm×1•5 cm after 30 days of treatment. Figure D: Wound dimension 1•5cm×1•5 cm after 50 days of treatment. Figure E: After One hundred and twenty days of treatment.

A study was conducted in a 22-month period between July 2008 and May 2010 using the BST device at the University of Turin, Italy. The criteria for inclusion in the study were patients with chronic wounds, ranging from 0.8 to 12cm2 in size, not responding to surgery, traditional and advanced wound care therapies for at least three months. The average age of the patients was 69 years. The patients were treated with the BST device for 30 minutes, thrice every day. The patients were taught to use the device so that the treatment could be provided at home without external help. All patients had a weekly follow-up. Standard wound care was continued throughout the study period.

The first group was evaluated for wound healing and composed of patients with wounds that were not responding to conventional therapies for at least 3 months. The second group was evaluated for the effect of electric therapy on pain control and composed of patients with severe pain with Visual Number Scale (VNS)>8, requiring heavy use of painkillers.

Results:
In the wound healing group, 71% of patients showed progress from chronic wounds to acute wounds in an average time of 34 days. At the end of the follow-up period, 87% of the wounds were completely closed in an average time of 97 days (range 10–150 days), while 13% were still in re-epithelialization.

45% of patients reported complete disappearance of pain, 36% reported a reduction in pain after seven days of treatment, 19% reported a reduction of pain from 9.5 to 2.5 after seven days and stopped morphine-like painkillers after two weeks of treatment.

Study conducted at the Difficult Wounds Unit, San Luca Hospital, Turin, Italy

Another study that proved the BST device’s effectiveness on recalcitrant ulcers of various etiologies was conducted at San Luca Hospital, Turin, Italy in 2009-2010. The study was an open-label, observational, case series and recruited patients with chronic, non-healing wounds who had previously undergone standardized as well as advanced treatments (such as debridement, tissue engineering or topical negative pressure) and whose wounds had neither reduced in size nor demonstrated signs of healing such as epithelialization, granulation or scar formation. The study group comprised nine patients with a total of 11 non-healing ulcers. The wound was a stage IV pressure ulcer and had been at least 1.5 years and up to 20 years old. The patients were treated with BST device for 30 minutes, three times a day for a total of 60 days. The wounds were followed up on day 0 as well as on days 15, 30, 45, 60 and 90. The follow-up observation continued for 30 more days for recurrence and/or progression of wound healing. Standard wound care (dressings), including pressure relief, debridement and/or antibiotics, and compression therapy were administered when necessary.

Results: The study demonstrated that applying BST Therapy to hard-to-heal pressure ulcers, post-actinic, ischemic and postsurgical ulcers, for 60 consecutive days reduced the wound surface area to less than half its original size in eight out of the nine subjects. The mean area of the wounds reduced in size by 82.5% and 45% of those exhibited closure within the 60 days of commencing the treatment. In three of these five ulcers, complete closure was observed between 45 to 60 days of treatment. The remaining two ulcers healed at 90 days (30 days after the end of treatment)
[if !supportFootnotes][3][endif].  From the table below it is evident that the time to heal recalcitrant ulcers was 90 days or less regardless of the duration the wound remained chronic and unhealed (130 months in patient 4, 240 months in patient 7, about 45 days in patients 1 and 9).

Although this study was done with a small sample size (eight subjects with 10 wounds), noteworthy is that the wounds had been present for many months or years and had not responded to standard or advanced care treatments. The capability of the BST device to stimulate healing of hard-to-heal ulcers (wounds that had not responded to standard or advanced tissue engineering treatments) was particularly evident from 55.5% of the patients who achieved complete wound closure. One of the participants with an 18-month-old post-surgical lesion achieved complete closure after 45 days of treatment and the wound stayed healed. Another patient with grade IV pressure ulcers (with durations of 19 and 23 months) showed reduction in the surface areas by 32% and 86% respectively.

The potential effect of the BST device is compelling as the therapy has shown to facilitate complete wound closure on patients with grade IV pressure ulcers that have not healed in many years.

OUTLOOK
We think the BST device is the primary value driver for EQUR.  The successful development of the BST device is critical for EQUR as chronic wound management market offers opportunities for substantial revenues.  In this regard, FDA clearance represents an important milestone for EQUR in achieving its long-term goal.  Recently (December 2016), the 21st Century Cures Act, which has been under development since April 2014, was passed by the U.S. Congress.  This new legislation significantly affects the way the FDA approves new medical devices and drugs.  E-QURE’s BST device is expected to follow the premarket approval (PMA) FDA pathway.  Under Section 2022 of the bill, the FDA is permitted to accept all scientific evidence including patient histories, data from registry and/or from peer-reviewed published articles as well as data collected ex-U.S. to support regulatory approvals.  Section 2242 of the bill allows for one institutional review board (IRB) to oversee medical device trials, including investigational device exemptions (IDEs).

In the U.S., expenditure on medical devices is controlled to a large extent by the government, many of which are facing increasingly intense budgetary constraints.  Reimbursement rates may be set based on clinical data relating to cost, patient outcomes and comparative effectiveness.  Successfully obtaining FDA approval alone does not guarantee a strong revenue stream.  The efficacy and cost-competitive benefits of the BST device may take some time to bear out after introduction to the clinical market.  If they are successful in obtaining a dedicated CPT code, we expect significant increase in the sale of their devices from there on. Reimbursement should then be available from both private and governmental payers.

We conservatively model steady growth in revenue as device launches and gains market share. We expect the company to gain operating leverage in the out years.  As the market penetration increases over the years, we expect revenue to gain momentum and result in a positive EPS.  Given the uncertainties discussed above, we have also revised our discount rate to 18%.  We have updated our financial model and revised our outlook to a price target of $0.50/share.  We would like to remind investors not to be turned off by our valuation.  The adjustments we have made to guidance are more to reflect the delays associated with progress and developmental goals in the business.  Our financial estimates are subject to change based on the status of regulatory approvals as well as results of the clinical trial as they come through.

Major biotech companies pose a threat to entry, through combination of acquisition or new product development. Despite wound management being an attractive segment to enter due to secular growth and high profit margins, unstable pricing/industry conditions, and regulatory approval can be an impediment. Unexpected delays in the clinical trials related to the approval will result in a lengthier development and commercialization times.

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