Osteoarthritis (OA) is one of the most common chronic diseases and underestimated by those who do not suffer from it, characterised by intense pain with little tendency to resolve and consequent reduced mobility. Osteoarthritis (OA) affects about 250 million people worldwide and is the leading cause of disability in the US. Studies have shown that the prevalence increases with age, with 80 per cent of cases occurring in people aged 75 years and older. [1]To date, the economic burden for society counts for the US market alone health care costs of about $45.4 billion (2019 figure). On average, adults with OA lose about 5.4 days during the year, and the only non-surgical products currently approved are steroids and hyaluronic acid, which means that there are no products that can prevent, stop, or halt the progression of OA. The direct consequence is that approximately 3.5 million Americans are potential targets for prosthesis surgery each year.
The size of the global market for arthrosis therapies has been estimated at around $7 billion in 2020 and is estimated to reach $16 billion by 2030, growing at a CAGR of 8.8% over the decade. Over the same period, Asia-Pacific is expected to register a CAGR of 9.1 per cent, due to an increase in the prevalence of osteoarthritis, population growth, rising healthcare expenditure and lack of physical activity due to new lifestyles.
In the US – the main market – the prevalence of symptomatic OA has increased in recent decades, mainly due to an increasingly ageing population and rising obesity rates.
The global OA market currently has a number of unmet needs: the first is the lack of effective therapeutic options, most available pharmaceutical treatments provide only short-term benefits, corticosteroids, although effective in temporarily relieving joint symptoms, have been associated with cartilage deterioration, and other injectable options are limited by the lack of proven clinical trials, resulting in difficult access to reimbursement.
Furthermore, it should be emphasised that current therapies only prolong joint function by minimising pain and inflammation, but cannot change the course of the disease or reverse the damage.
Consequently, there is a strong need for disease-modifying approaches that regenerate lost cartilage or prevent further damage rather than simply slowing its progression. This need is great because, although total knee replacements are effective and durable, there persists a large segment of patients who require an improvement in quality of life without surgery at the cost of doing nothing and keeping the pain.
Traditionally, treatment has focused on mere symptom control, however, more recently more emphasis has been placed on developing new modalities in order to slow down the progression of the disease or even reverse the process.The size of the global market for arthrosis therapies has been estimated at around $7 billion in 2020 and is estimated to reach $16 billion by 2030, growing at a CAGR of 8.8% over the decade.
The state of the art to date counts oral analgesics/anti-inflammatories that only address the pain problem, intra-articular injections of corticosteroids that are effective in reducing pain in the short term and used when signs of inflammation arise, injections of hyaluronic acid with a joint lubricant and shock-absorbing function, and, finally, the use of stem cells with reparative and anti-inflammatory functions, tested in a variety of animal models with potential tissue repair goals.
Lipogems International Spa, a company founded in Milan in 2012 from the idea of its two world-renowned co-founders (Dr Tremolada and Prof. Ricordi), has inserted itself into this landscape of absolute need for novelty.
Trying to briefly explain the solution devised and patented by Lipogems (8 patent families declined in 70 patents applied in the USA, EU, Japan, Australia, China with a focus on the ‘Method and Device’ and its derivatives expiring in 2031), the new proprietary technology is based on the use of adipose tissue taken from the patient himself, which is micro-fragmented while maintaining intact the cellular and tissue microarchitecture, supporting tissue healing and repair over time (approximately 30-60 days).
The first main focus was on the treatment of knee osteoarthritis (KOA).
As an autologous injection, Lipogems targets patients with moderate and severe knee OA who fail steroid and HA therapies.
The entire procedure takes place in a single surgical episode. Through minimal manipulation, without the use of enzymes or other additives, in a closed, aseptic system, there is a progressive reduction in the size of adipose tissue clusters and the elimination of residual oil and blood [2].
The treatment takes place under complete immersion in physiological solution, thus minimising any traumatic action on the cellular products. The product obtained is micro-fragmented, non-expanded adipose tissue intended for autologous tissue transfer. The absence of gross physical destruction of tissue components, or enzymatic treatment, preserves tissue integrity and makes the tissue ‘minimally manipulated’.
Mature autologous ‘stem cell’ technology is characterised as a unique opportunity to take orthopaedics to the next level, with broad clinical applications ranging from the early stages of osteoarthritis to post-traumatic and oncological reconstructions (the subject of subsequent clinical developments by the Lipogems team, among others).
The team’s real ability was to exploit a space in which the previously permissive regulatory framework allowed the use of autologous transplants. In this timeframe, Lipogems has been able to develop its proprietary product and apply it to different areas, gaining both recurring revenues and tested clinical data in the process. Today, the regulatory framework is evolving and the time window in which Lipogems has been operating is closing. However, the team has been ready and is adapting to the new regulations, having started the process of obtaining Pre Market Approval for the main product and planning the same for the other clinical indications in the pipeline.The new proprietary technology is based on the use of adipose tissue taken from the patient himself, which is micro-fragmented while maintaining intact the cellular and tissue microarchitecture, supporting tissue healing and repair over time (approximately 30-60 days).
From the point of view of the tests required to obtain FDA certification, with a natural consequence in the reimbursability process, no negative surprises are expected from the multi-trial tests as the 50,000 treatments already carried out over their ten-year history have not, to date, shown safety and efficacy problems.
Lipogems aims to create value for the different actors in the process: for physicians (1) the broad clinical utility in the treatment of knee OA addressed to a large segment of their target customers, in particular those (young or elderly) who are unwilling or unable to undergo knee surgery. For patients (2), the duration of clinical response and potential delay of disease progression towards more expensive/invasive treatment is a key component to which Lipogem products provide a solution resulting in a high impact on the healthcare budget freed up, for partners (3), Lipogems’ solution represents a significant commercial opportunity in knee OA given the prevalence and lack of effective therapies.
Lipogems’ commercial strategy aims to achieve a global reach, starting with the Italian and US markets (which together have already generated around €3.5 million in revenues in 2021), Japan (a market where the medical device is newly certified) and China. The attainable market in these markets is very substantial with over 100 million prevalent cases counting the four main markets.
Each of these realities has different barriers to entry, mainly identified in their regulatory systems, and market penetration has been estimated on the basis of regulatory approval timelines and product suitability for insurance reimbursement.
Particularly attractive is also the exit strategy that has identified a portfolio of companies that could be of interest to Lipogems for several reasons: there are several industry players actively involved in regenerative medicine approaches, and Lipogems is already in the crosshairs of companies that do not have or need to augment their product portfolio or cell/tissue platform (Ex Integra’s acquisition of Derma Life Sciences in 2017 for $204m is an example of a strategic acquisition by a medical device company with the aim of expanding its portfolio of advanced wound care drugs with regenerative medicines).
Furthermore, Lipogem could also appeal to potential partners consisting of companies with portfolios ranging from sports medicine, orthopaedics and wound healing to diversify the pipeline with complementary products.
In this specific sector, technology valorisation is often driven by a competitive process and the extent to which the business/technology would fill a key gap in the partner’s portfolio.
Should the FDA’s regulatory plan be successful (as can be expected), once reimbursement has been obtained, the company would be a very attractive target for Big Players who currently have hyaluronic acid, cortisone and prosthesis solutions in the pipeline but do not have a regenerative therapy product such as Lipogems can.
On the basis of the evidence provided by the company (guided by strategic recommendations provided by consultants with recognised expertise such as Back Bay Life Science and Alira health) and the independent research conducted by Liftt’s team, it is safe to assume an early exit for Lipogems when the first process milestones are reached.
