Big Breaks for a Small Company

NJBIZ, Jan 15, 2007 by Gaudio, Thomas

MONMOUTH JUNCTION

TyRx prepares new products and a major licensing agreement

TyRx Pharma of Monmouth Junction is on a roll. The medical device maker is bringing two products to market and this week is expected to announce a licensing deal with a major New Jersey health care company, NJBIZ has learned from a source close to the proceedings. The deal would be 9-year-old TyRx's second with a major medical manufacturer, following a partnership it formed with Boston Scientific in 2002.

Meanwhile, TyRx CEO Bill Edelman expects the U.S. Food and Drug Administration to approve by March one of the two products. At the core of both is Pivit, a mesh device that is inserted into the body during hernia repair operations.

TyRx sells the standard Pivit, launched in late 2005, as a fence for tissue to grow through after hernia repair surgery in the abdomen or groin. The device prevents the scarring caused by older versions of mesh devices, which often hinder a recovering patient's mobility, says Edelman.

TyRx has modified a standard hernia mesh "so it's extremely soft and pliable, and coated it with our biodegradable polymer so that it's made temporarily stiff to allow it to be easily implanted by the surgeon," says Edelman.

"Once it's implanted, the coating dissolves and die mesh that stays behind is very soft and supple. That soft design allows tissue to grow into the mesh and incorporate it into the wall of the body instead of encapsulating the mesh with scar."

Hernias occur when tissue or an organ protrudes through an opening in the body, usually in the abdomen. There are about 750,000 hernia repair surgeries each year in the United States, according to online health care publisher WebMD.

TyRx is no stranger to licensing. The company currently licenses 16 technologies from Rutgers University and last November one of the patents won an award in the biomaterials category from the Research and Development Council of New lersey.

Bill Adams, director of Rutgers' office of corporate liaison and technology transfer, says the school is "very positive about the collaboration [with TyRx] and its future. Rutgers and the public will benefit from it."

TyRx last year struck a deal with Baylor College of Medicine and The University ofTexas M.D. Anderson Cancer Center, which licensed the company to use three products developed by the schools. At the time, Edelman said the arrangement "demonstrates TyRx's ability to build mutually beneficial licensing relationships with world-class organizations."

Edelman says that in lieu of a steady revenue stream, TyRx has been operating for the most part on about $10 million in funding from various investors. He says the company, which has grown from 18 employees when it was founded in 1998 to 23 today, is not yet profitable. Competitors include Ethicon, a Johnson & Johnson subsidiary; AtriumMedical of Hudson, N.H., and C.R. Bard of Murray Hill.

Another of TyRx's products is Pivit AB, which is similar to Pivit but embedded with antibiotics to "inhibit the colonization of bacteria" in the device area up to 10 days after the surgery, Edelman says. Both are sold to hospitals around the country through sixtI.S. distributors.

TyRx is using its proprietary technology in two other products-Pivit AS and Pivit CRM. Pivit AS, still under development, works like Pivit AB but is infused with anesthesia instead of antibiotics to ease pain for about a week after surgery. Pivit CRM-short for cardiac rhythm management-wraps around pacemakers and similar devices to release antibiotics to stave off post-surgical infections for about 10 days.

Edelman expects Pivit CRM to be approved by the U.S. Food and Drug Administration by the end of the first quarter and Pivit AS to get the agency's OK early next year.

He says TyRx's core technology will allow it to enter many different markets including plastic surgery. However, he adds, "with a technology that has breadth-and we have a lot of capabilities with our technology-you try not to initiate programs that take up resources but don't allow you to reach value quickly," says Edelman.

Charles Cahn, CEO of Tenafly-based investment firm Cahn Medical Technologies and chairman of TyRx's board of directors, would not disclose how much he has invested SnTyRx, but says he eventually expects an annual return in excess of 30 percent. "With these types of companies, sometimes the longer you go the better the return because, in me first few years, you're struggling to get going," says Cahn. "But once you get going, the realization of commercial success happens at a high rate."

Before Cahn put his money on the line, TyRx's lack of management depth and capital had Cahn worried. "They had gone through all of their money," he says.

Cahn says three things ultimately persuaded him to invest: TyRx founder and chief scientific officer Arikha Moses, who is "a smart woman and very science knowledgeable"; Phot's "apparent differentiation from other products"; and an endorsement from Boston Scientific.

E-mail to tgaudio@njbiz.com