ITCO Episode 12: Gary Gillheeney, Sr., President & CEO of Organogenesis

Thank you.

Thank you, Jim. So I started my career primarily in the energy field. Spent 19 years with a company called Providence Energy, which was a New York Stock Exchange energy services organization. Spent, as I said, 19 years there. Very highly regulated kind of organization, and as the industry was preparing for deregulation and consolidation, I actually, one of my tasks was to help reorganize and restructure the energy services business units to be in a competitive environment and ultimately consolidate the industry. So as that process was going forward, an opportunity came out for me in the health services area, and I had the opportunity to join an organization called Innovative Clinical Solutions with four other gentlemen. The objective was to go in and help restructure this diversified healthcare services organization. I had never had any healthcare experience at the time; the other four gentlemen did. So we did join the company. It was a public company. They brought me in because of my financial expertise, my relationships on Wall Street, and the financial restructuring that was clearly necessary for this organization. And we did take the company through a restructuring, we turned it profitable, and it turned out to be a success. And that was my first experience in the healthcare field, and I really loved it. And then Organogenesis came along, and I was recruited in to help the company, which again was a public company like Innovative Clinical Solutions was, and struggling financially. Tremendous research, tremendous science behind the organization and the product that it had. And they invited me in, and I joined the company, again took it through restructuring, we turned it to profitable, I took it private, and it was private all the way until 2018 when we took it public again. So that's kind of how I got here. I was viewed as a restructuring kind of expert, which I'm not; I just happened to be in those situations, and it gave me the invitation to join Organogenesis.

I think it was a couple of things. Clearly, Organogenesis was public at the time, so my financial experience, my public company experience was definitely helpful. But my experience at ICSL, which was Innovative Clinical Solutions, was important. That organization actually ran clinical studies for the pharmaceutical industry primarily in CNS, it had a health outcomes division that did health outcomes research and significant registries for the pharmaceutical world. We also owned physician practices, so I got to know exactly what a physician practice and what a clinician's mindset was, and that was incredibly helpful here at Organogenesis because our employees, our representatives are working side by side with clinicians in the hospitals, in their offices, ASCs, and in helping patients heal. So all the collective experience, financially, the public company experience, the work working directly with clinicians, I think is all collectively kind of helped me guide Organogenesis.

Well, the tremendous difference that we make in the lives of patients. I mean, many of our patients are truly really sick, and it's very satisfying to bring them effective technologies to patients that desperately need them. To date, we've changed the lives of more than a million patients, and that's incredibly satisfying. And the passion of our employees, not only for the patient but for innovation, the curiosity of the folks that are here, and the passion for our mission has really kept me here. It's a strong culture. It's enabled us to attract the best and brightest talent and to keep them here. So our executive team collectively has over 125 years of regenerative medicine experience with Organogenesis. So the culture here has really been a competitive weapon for us and helped us persevere through some challenging times, as many medtech companies go through.

Sure. Well, Organogenesis has been a pioneer in the regenerative medicine space since our inception, which goes all the way back to 1985, so we've been around a long time. You're right, the company was a spin-off out of Dr. Eugene Bell's lab out of MIT, and many considered Dr. Bell to be a pioneer in the regenerative medicine space, and clearly in the bioengineered skin space. And today, we continue to conduct research as the company did from 1985 all the way to 1998 when we launched our first product, which was Apligraf. And Apligraf at the time was the first product ever approved by the FDA that's manufactured living and shipped living. And we've continued to innovate and advance the field of regenerative medicine. Today, we have an innovative, evidence-based regenerative medicine portfolio of more than 10 commercial products, as well as a robust pipeline. Our commercial portfolio is the most comprehensive and diversified in the markets that we serve. So our heritage of research has continued since 1985, and we continue to deliver commercialized products to the market going forward. Our focus is to continue to develop and commercialize innovative regenerative technologies in the advanced wound care and in the surgical and sports medicine market.

Sure. Well, Apligraf, as I mentioned, continues to be the gold standard not only in the industry but certainly in our portfolio. It was the first and is still the only therapy that's approved by the FDA to treat both diabetic foot ulcers and venous leg ulcers, which are among the two most common types of chronic wounds. We also have a unique placental portfolio which includes the only fresh placental products in the market. These products, Affinity and Novacore, contain viable cells, growth factors, cytokines, and proteins consistent to our heritage of living technology. And our patent-protected PuraPly antimicrobial brands are the only purified native collagen regenerative products on the market with PHMB, which is a broad-spectrum antimicrobial. Only product like it in the market. Incredible product, helped transform the company and the patients that we serve. And with our placental portfolio and our PuraPly brand, we can treat any wound from head to toe, including the surgical and sports medicine space, excluding third-degree burns. So Apligraf is a below-the-knee product, venous leg ulcers and diabetic foot ulcers. With the introduction of our placental portfolio and our PuraPly brands, we now can treat any wound from head to toe, excluding third-degree burn. So that changed the TAM of the organization by a multiple of six and really expanded the utilization of our regenerative technologies. And to date, our focus has really been on treating chronic wounds, Jim. And chronic wounds are wounds that basically have stalled and are no longer healing, and currently affect over 7 million Americans annually. And chronic wounds are most often associated with other comorbidities, and this is a real problem particularly for the healthcare system. And those comorbidities are things like diabetes, cardiovascular disease, and vascular disease. And as we see the population aging, we're seeing an incredible increase in these comorbidities. And if left untreated, these wounds can lead to further complications, and as many as 30% of these wounds will result in an amputation, which is devastating not only for the patient but also the healthcare system. And 85% of all leg amputations are preceded by a diabetic foot ulcer. And this is a staggering statistic, Jim. The five-year post-amputation mortality rate is 50%. So if you had a diabetic foot ulcer and you had an amputation, your five-year mortality rate is 50%. That's higher than the five-year mortality rate than all cancers combined. So a chronic wound truly is a medical emergency and needs to be treated. And one of our missions is to make sure that not only the payers and Medicare and the policymakers understand the severity of these wounds and understanding the disease state and how proliferate these wounds are and how devastating they are to the patient and to the healthcare systems. And fortunately for our patients, our portfolio addresses every type of chronic wound in all sites of care, from the doctor's office to the operating room. Looking ahead, we'll continue to build on our foundation in wound care and leveraging our regenerative technologies and expand aggressively into surgical and sports medicine.

Absolutely, Jim. And we see tremendous potential for our regenerative technologies within the surgical and sports medicine space. And we're leveraging our expertise to address a variety of musculoskeletal conditions with our regenerative technologies. And our goal is to be the biologics market leader serving in multiple surgical specialties in the musculoskeletal condition markets. One area of particular focus for us is osteoarthritis, which is a degenerative joint disease that affects more than 30 million Americans and accounts for more than $185 billion of healthcare expenditures in the United States. A staggering number. Our ReNu product, which is our most exciting pipeline product, is designed to address a significant unmet medical need in this space. It's the $4 billion chronic inflammatory and degenerative condition market, which includes osteoarthritis of the knee, the hip, the shoulder, as well as tendonitis and plantar fasciitis. An enormous market without a lot of solutions in that market. And we're hoping that our ReNu product can really bring relief to the millions of patients not only in the US but around the world that suffer from osteoarthritis. Today, we're currently conducting Phase 3 clinical studies for ReNu to support FDA approval for knee osteoarthritis. And knee osteoarthritis alone is estimated to affect about 14 million Americans annually from the age of 25 and older, with 8 million of those patients under the age of 65. So the number of knee replacement surgeries is growing every year, and it's expected to rise from approximately 680,000 in 2014 to over 1.3 million by 2030. So a significant unmet medical need here, and our objective is to attack that need with our ReNu technology. We're also in the planning stages to conduct a similar clinical study with ReNu for the management of hip osteoarthritis, which has many of the similar comorbidities of knee osteoarthritis. So we're pretty excited about that. And beyond that, we believe that ReNu has the potential to treat additional osteoarthritis and tissue regeneration applications, tremendously impacting more patients every year as the population continues to age.

Well, you hit right on it. Particularly for us, commercial organizations, manufacturing capacity is a challenge. And as we continue to innovate and bring new therapies to market, we need to make investments in biomanufacturing capabilities. Now in Massachusetts, there's been a tremendous effort and focus on the entire ecosystem, including building the capacity of biomanufacturing in Massachusetts, and it has become an enormous component of the economy. From 2017 to 2022, Massachusetts GDP in biomanufacturing has doubled to almost $8 billion, but still behind North Carolina and some of the other places that you mentioned. So that is an enormous focus for us, enormous focus I believe for the state, and we are making some progress, but it will be, like talent, one of the major challenges to continue to expand the ecosystem here in Massachusetts.

Sure. Well, thank you for the opportunity to talk a little bit about Organogenesis. We certainly have transformed the organization into an established commercial regenerative medicine industry leader. And today, we compete in a combined $24 billion market. We've grown annual revenues by nearly 400% to about $400 million at about a 30% CAGR, and we more than doubled our employee base to approximately 900, and we achieved profitability in 2020, which is way ahead of Street expectations. So we're proud of that. We have a great organization, we have great products, and we certainly have great people that have helped transform this company. And we've grown from one technology platform and two products, basically a below-the-knee company as I mentioned earlier with Apligraf, and then we eventually acquired Dermagraft, which is also a below-the-knee product, in a single site of care which was the outpatient setting, to four technology platforms in a diverse portfolio of more than 10 commercialized products spread across multiple sites of care and physician specialties, and we have multiple pipeline products. So that's been extremely helpful for the organization, having multiple technology platforms, expanding the utilization of the technology among different physician specialties, and again going above the knee has really helped a lot of patients and really helped the company grow. As for the future, we envision a world where health equity that's driven by patient needs and health outcomes exists. Our mission is to provide solutions that improve lives while lowering the overall cost of care. And over the next 10 years, we'll continue to pursue innovations that improve lives and advance the science while delivering sustainable value to the healthcare system and improving health inequities that exist particularly in our patient population.

Great question. So disparities in social determinants of healthcare have a profound impact on individuals' overall health, as you know, Jim, including when it comes to wound healing. And wounds are often associated with chronic conditions, as I mentioned, such as diabetes, that disproportionately affect racial and ethnic minority populations. And amputations in the US are substantially more prevalent in these populations. So disparities in access to care exacerbate these existing inequities and affect patient health outcomes significantly. In our space, one example of our ongoing advocacy, and we are advocates for health equity for our customers and our patients, is our comments in response to the recent CMS proposal under the Physician Fee Schedule. We addressed our serious concerns about how proposed methodologies for Medicare payments for skin substitutes could affect patient access, potentially result in poor outcomes such as avoidable amputations, and further exacerbate health inequities. So we've lobbied CMS, we've lobbied our delegations, and continue to make sure that this message is out there, that these folks are really disadvantaged, they're the sick of the sick, and they clearly are disadvantaged by social determinants in the markets that we serve.