Allied Healthcare Group (ASX: AHZ) has delivered positive results from a tissue heart valve study of its ADAPT® Tissue Engineering technology that show a reduction in visible calcification of implanted tissue heart valves.
Managing director Lee Rodne said the results open up the possibility of extending the lifespan of implanted tissue valves dramatically.
“At the moment the build-up of calcification means that implanted heart valve tissue has a shorter lifespan of around 10 years when compared to mechanical valves which is over 20 years.”
The Tissue Heart Valve Study, which was conducted by Allied Healthcare Group’s subsidiary Celxcel, compared the performance (biocompatibility and calcification potential) of the heart valve tissue, treated with the ADAPT anti‐cytotoxic and anti‐calcification process, plus Celxcel’s terminal sterilisation method.
The study demonstrated all forms of the commercial heart valve tissue developed calcification over the 24 weeks.
The tissue subjected to Celxcel’s terminal sterilisation method showed significantly reduced levels of calcification, while the tissue subjected to the ADAPT anti‐calcification engineering process, plus the terminal sterilisation method demonstrated the lowest levels of calcification during the entire study.
Calcification of tissue heart valves shortens the lifespan of implanted tissue. This often results in clinicians choosing to use mechanical valves, which requires patients to undergo lifelong and complicated anticoagulant therapy.
Celxcel chief executive officer Bob Atwill commented, “With the ADAPT process we are aiming to increase the lifespan of tissue heart valves to allow them to become the ‘product of choice’ for surgeons around the world.
“This will allow more patients to be free of the need to be tied to complicated anticoagulant therapy for the rest of their lives.”
Celxcel is also evaluating how the ADAPT process can be used in other surgical applications, such as general surgery (hernia repair), urogynaecology (pelvic floor reconstruction), orthopaedics, cardiovascular repair and as a biological scaffold to grow and deliver stem cells.
Following these positive trial results Allied Healthcare Group has started discussions on partnering and commercial distribution opportunities for Celxcel’s lead product CardioCel, a cardiovascular patch to treat congenital heart disease.
CardioCel has successfully completed Phase II human trials at the Universitas Hospital, Bloemfontein, South Africa and is currently going through regulatory approval in Australia.
The company recently appointed Bob Atwill to drive the commercialisation of the product.
CardioCel is set for Therapeutic Goods Administration audit, approval and launch in 2012. The product is now going through the regulatory approval process in Australia, and this may lead to near-term revenues in the local market as early as 2012-13.
The Western Australian-based healthcare company has recently received a Speculative Buy recommendation at a price target of $0.10 per share, over double its current share price of $0.04.
Around US$700m a year is spent in the US on soft tissue repair procedures such as heart valve replacement, hernia surgery, and pelvic floor reconstruction, and over the past six years Allied has demonstrated that its ADAPT technology can work well in a variety of soft tissue repair situations.
Proactive Investors wrote on 18 November that Allied Healthcare is on the cusp of building a global healthcare company. Here is a peer analysis from that article:
While difficult to compare directly with a peer company given Allied Healthcare’s medical division’s revenues and its Biotech business, the company could be compared with Bionomics (ASX: BNO) which has a Market Cap. of $130 million.
Bionomics has a Phase II and a Phase I program but no revenues. Allied Healthcare has more revenue than Bionomics, closer approvals and still has the platform for new vaccines and a Phase I to be initiated while having a Market Cap. of just $23million compared to Bionomics.
On this basis, the valuation of Allied Healthcare looks very light and undervalued.
The hallmarks are all present – that could springboard Allied Healthcare Group to become a significant healthcare business with global reach -relatively quickly.