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New Firm Founded to Pursue Biologics of Bone Treatments

Before it became a leading hair-loss treatment, Rogaine was used to lower blood pressure. Scientists found, however, that in addition to controlling blood pressure, the drug made patients markedly hairier.

A similar cross-over is happening in San Diego, though it’s still in the earliest of stages: San Diego-based regenerative medicine company Histogen Inc. is using its proprietary stem cell growth technology to develop a hair-loss treatment. The company is also currently manufacturing and commercializing a line of regenerative skincare products under the brand name ReGenica.

But the stem cell technology has a variety of other applications, so a new company called PUR Biologics Inc. is forming — using Histogen’s patents and resources — to develop products for the regenerative orthopedic market.

Chad Prusmack, chief of neurosurgery at the Rocky Mountain Spine Clinic and a consultant to the Denver Broncos, said that the naturally-secreted growth chemicals as produced by Histogen are known to support stem cell growth in the body, and can be transformational in regenerating musculoskeletal tissues.

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“Regenerative technologies are paramount in advancing the current state of orthopedics and neurosurgery,” Prusmack said.

Histogen’s core technology is based on developing cells in an embryonic-like state. That is, the scientists simulate conditions in the womb to force cells to revert to their original stem cell form. These cells secrete chemicals that rapidly grow new tissues and have a variety of uses, said Histogen founder and CEO Gail Naughton.

Histogen is donating its technology and patents to PUR Biologics, and the investors will invest an undisclosed amount for the first year — a proof-of-concept phase.

The Investors

The funding for the new company comes from Orange County-area angel investor Ryan Fernan and two other partners who wish to remain anonymous. The investors will contribute an undisclosed sum for the first year — the proof-of-concept phase, where scientists will test out Histogen’s technology for its efficacy in orthopedics development.

“The margins in medical hardware — like metal hip replacements — are becoming capped, and many are becoming a commodity to medical device manufacturers,” Fernan said. “But in biologics, like what Histogen is developing, there are still breakthroughs and innovations. I think this is a sweet spot — it’s cost effective, efficient, and it’s safe.”

Fernan will take on the role of CEO of PUR Biologics as he funds the venture. He has worked in medical device manufacturing for about 10 years, most recently as CEO of OC Surgical Inc., which he founded in 2006. Since then, Fernan said he has grown the surgical tool distribution company into a multimillion dollar business.

PUR Biologics has obtained exclusive worldwide rights to Histogen’s proprietary technology to regenerate bone, spinal disc, cartilage and ligament tissues, as well as coatings for medical devices — like titanium hip implants — that are surgically implanted into the body.

“If there’s early success in the proof-of-concept, members of the joint venture will have the option to continue funding the company out of their own pockets, or bring in additional investors to fund the company through commercialization,” Naughton said.

Naughton founded Histogen in 2007. The privately held company completed a $10 million Series A financing round in 2010, and has been approved to receive an additional $23 million in venture capital. It employs 18.

Last year, the company announced a partnership with San Diego-based skincare technology company Suneva Medical Inc. And this January, Obagi Medical Products Inc. joined Suneva to co-distribute ReGenica Facial Rejuvenation Complex.

Through these partnerships, Naughton said Histogen’s sales force has expanded in the U.S. to about 100, and is looking at licensed sales partners in Asia and Europe, focused on its line of skincare products. And the hair growth treatment is showing promise in clinical trials, Naughton said. Histogen is aiming for regulatory approval in Asia in 2015 and the U.S. after that.

Naughton said that the joint venture with the investors will allow a separate group of executives managing the day-to-day processes of orthopedics development, allowing Histogen to focus on its skin and hair care line.

“Shareholders to date have invested in Histogen based on our skincare and hair growth products, so we are focused on generating revenues from these products,” Naughton said. “We wanted to fund the new company without dilution to our current shareholders.”

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