Paracrine chairman and CEO Christopher J. Calhoun

The most successful drug or cell therapies are often mechanistically simple and work through a single molecule or cell type. But broadly speaking, when we consider more complex diseases—heart disease, kidney failure, or stroke—or conditions requiring bone regeneration and wound healing, the idea of a silver bullet doesn’t quite apply. Complex diseases have multiple underlying pathologic issues that need to be addressed, such as ischemia, inflammation, tissue damage, fibrosis, remodeling, and healing. In cases where a single bullet won’t suffice, a biological grenade may do the trick.

Based in San Diego, Paracrine is a clinical (late-stage) biopharmaceutical company that says it has developed the world’s first autologous, device-based cell therapy platform focused on vascular, immune, and inflammatory conditions. Unlike drugs to be used by the patient for a lifetime, Paracrine is a one-time, completely natural procedure that works through interactive “paracrine signaling”—restoring blood flow, reducing inflammation, and repairing tissue naturally with the patient’s powerful regenerative cells.

The medical device company is engaged in IDE clinical trials for the treatment of patients with nonhealing diabetic foot ulcers (ASCEND), hand dysfunction due to diffuse scleroderma (STAR II), and Class II or III chronic heart failure (ATHENA III).

GEN Edge met with Paracrine chairman and CEO Christopher J. Calhoun to discuss how the company’s namesake treatment will reduce the need for lifelong therapies by repairing the underlying structural condition of damaged cells.

GEN Edge: Is Paracrine a biotech company or a medical device company?

Calhoun: Looking at the box and the consumables, we’re a medical device company. But if you look at the syringe of cells, we’re a biologics company. It’s just that our syringe of cells is fabricated at the point of care with the patient’s own cells. They’re not engineered and manufactured in a facility.

GEN Edge: What is Paracrine’s business model?

Calhoun: When you think about cell therapies like CAR T-cells, it’s an excellent commercial model at the average cost. Out of the top drugs, most of them are some kind of engineered cell therapy for oncology. They’re charging hundreds of thousands of dollars for cancer treatment per patient over a few years. That’s just not affordable to the healthcare system, which is already over cost. It’s so expensive to develop and manufacture these things.

With our model, we have a device and consumables. The cost of the consumables is in the hundreds of dollars. We can have a therapeutic in the range of a few thousand dollars, an order of magnitude less than any other cell therapy out there. We can put this device into the hospital, and our model is just to place it there. I don’t get stuck in committees about purchasing this device in exchange for committing to use it five or ten times a month. The device can be used 20 times a day, as it’s about a 1-hour cycle time.

My model, particularly in North American markets, is to place the device for a consumable. Regardless of how you model it, your $50,000 cost-of-goods device is irrelevant. You give them the razor, and they buy the blade. So, let’s say we put 1,500 devices in centers around the country. If used once daily, five days a week, we are doing about $3 billion in revenue on sub $10,000 price per patient consumable. The economic value proposition is enormously cost-saving, and life-saving for certain indications. It’s most definitely life-changing for all of them.

GEN Edge: What is Paracrine’s strategy for getting the device into hospitals?

Calhoun: We’ve studied a lot of different conditions and have a good understanding of where the device works and, more importantly, where it’s safe. To have a marketable indication, we need three things.

First, we need robust clinical data that comes through running robust clinical trials. Second, we need the marketing indication. For each indication we go for, we need to go through clinical trials with the FDA’s guidance and then through the Pre-Market Approval (PMA) path, which is similar but different to Investigational New Drug (IND) tracks. We’re going through the device track to get the claims because we’re putting the consumables on the market; we’re not putting the cell on the market. If we want to say that the output of that consumable will heal a diabetic foot ulcer, we need to show the clinical data.

The third part is reimbursement.  As an example, the additional direct cost of treating a patient’s diabetic foot ulcers with the current standard of care is on average in the range of $25,000 to $35,000.  Our model reflects a projected average cost savings of $10,000 per patient when factoring in higher healing rates and lower recurrence rates by using Paracrine’s Cell Therapy.  This would translate to a cost savings to the healthcare system of one billion dollars in every 100,000 patients treated. We need to validate this in our clinical trials and that will ultimately support reimbursement.

That’s the model. We’ll expand into multiple clinical indications, which will scale over time. Then we’re going to have the instruments installed in a growing number of hospitals. The system is on wheels, so you can treat a scleroderma patient. Then, you can roll it down the hall and treat a diabetic foot ulcer, or, if you’re going to use it for heart failure, they might roll it down to the cardiac catheter lab. Or we might have another system dedicated in the catheter lab, and they can process tissue there.

Hundreds of patents have been issued to the company on this technology globally over the years. There really has not been much competition because the paradigm is still focused on the single mechanism, the proverbial silver bullet. But the wheels are starting to turn now toward multi-modality therapies or combination therapies.

GEN Edge: Could Paracrine set up centers of excellence based around these indications?

Calhoun: In the Middle East, where diabetes is rampant, people don’t go to the hospital and die of diabetes; they’re going in because of the complications. So, you could set up a center of excellence with a diabetic management side for monitoring and education, and then you put up a diabetic therapeutic side. You could set up a global, world-class center of excellence to treat stuff like this, even regenerative therapies.

But right now, what we’ve got to do is pick a couple of very low-risk, high probability of success, commercially viable indications: diabetic foot ulcers, scleroderma, and heart failure. It’s a massive range in everything from rare diseases to one of the biggest killers in the world. The clinical data will drive the world towards adopting this new paradigm of multiple mechanisms and the team approach to complex disease and wound healing.

GEN Edge: How does Paracrine approach partnerships?

Calhoun: As the device is approved in several countries around the world, researchers have the right to do investigator-initiated studies; they have the right to use it for whatever they want, as long as it’s safe. They may need Institutional Review Board (IRB) approval to study it in humans, but they get all that and use it. So far, there have been 80 different investigator-initiated studies.

All of that data is instructive, the good and the bad. We learn where it’s working, where it’s not working. We learn how to deliver drugs and affect the local signaling systemically. That’s why we’ve had 10,000 or so patients treated that have helped us learn. I love that open architecture model to let them design therapeutic indications on our products. I’m open to that all day long, but we need to make a very focused pathway towards a market to be funded as a company. We can’t just let everybody else go and do the hard work. We’ve got to fund the heavy lifting to get it approved, reimbursed, and commercialized. Indeed, there’s room in there for investigator-initiated studies. I’m a huge supporter of that.

GEN Edge: What is the status of Paracrine’s patents?

Calhoun: We’ve patented the methods, devices, enzymes, and mechanisms. There’s a pretty substantial fortress of patents out there, but while they’re getting older, that’s not really the barrier to entry. The barrier to entry is the know-how, the device, and the clinical data.

Let’s say we’re successful, and a big company says that they’re going to go out and compete with us; it’s going to take them a couple of years to engineer the device, minimum. It’s complicated even if they take ours and try to knock it off. We put $400 million into this. It’s not easy!

The next thing is they have to go through the same regulatory path we did. They’ve still got to run a safety trial and then an efficacy trial, and that’s 5–10 years at best. By the time they ultimately hit the market, we’re already installed in every major hospital around the world. Now they’ve got to get us out and replace us. It’s going to be tough. On top of that, we will be expanding our clinical indications.

GEN Edge: Will Paracrine apply this medical device technology to treat other cell types, such as those in the brain?

Calhoun: What surrounds nerves in the body? Blood vessels and adipose (fat tissue). Growth factors for the nervous system, like nerve growth factor (NGF) and brain derived nerve growth factor (BDNF), are all part of the paracrine signaling of these adipose-derived regenerative cells. You can potentially use these cells for a stroke or other injuries like concussions, or even to treat the long-term effects of COVID-19.

GEN Edge: Does Paracrine plan to go public?

Calhoun: We’re raising a $42-million Series A. That being said, we’re more like a Series C because we’re in late-stage trials, and a crossover to IPO is hopefully our next step.

We had a tremendously positive response at the JP Morgan biotech showcase [in January]. I think we’ve identified our lead investor, and now we’ve got real interest from around three dozen players. I’d say the bulk of the reception is around the high-net-worth family office guys, because they can get this broader vision of what’s required for complex disease. It just resonates.

Hopefully, Series A will get done by March or April. We now have two approved late-stage clinical trials. We want to get patients enrolling. If we can get 20 centers in each up-and-running and a critical mass of centers by May or mid-summer, then we’ll start looking at the process for either IPO or SPAC early next year. That’s our timeline.

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