What are the major advantages for Renal Solutions in being acquired by Fresenius?
For any start-up company, when you’re venture-backed, you’re always looking for an exit. And the beauty of our merger with Fresenius is that it certainly provided an exit opportunity for our investors, which you always need to be concerned about. NxStage took a little different route in that they went with the initial public offering. Beyond that, when you’re a venture-backed company, you’re always looking for additional capital to do the things you want to do. No matter how much capital you raise, it’s always difficult to move forward with product development, and it’s difficult to diversify product development from being a one-product company to a multi-product company. So this particular merger affords us the opportunity to maximize development around sorbents and create multiple product development pipelines related to products based around sorbent technology. We all know that sorbent technology has the advantages of minimizing the water volume that you need down to only a gallon-and-a-half, and in the future it will be even less than that. And certainly, Renal Solutions was successful in developing the Allient. With being acquired and merged into the Fresenius organization, we have the resources of the largest global manufacturer of dialysis products and services. That can help us maximize sorbent-based technology. As we know, Fresenius has the dominant market share in products and the largest install base in the world. Just being part of the dominant, vertically integrated company will help maximize the benefit of sorbents worldwide.
Can you give a brief overview of what sorbent dialysis is?
Dialysis is the removal of blood from the body passing it through an artificial kidney. On the other side of the membrane of that artificial kidney you have a chemical solution called dialysate. In order to prepare that dialysate, you need hundreds of gallons of feed water that goes through a de-ionizer or a reverse osmosis system to become purified enough to be used in the dialysis process. But it’s only used once and it goes down the drain. That is why you need such large volumes of water to do conventional dialysis.
With a sorbent-based system, we use a cartridge, which has five layers with various chemicals and we purify the starting dialysate—a gallon-and-a-half—through that cartridge. Once it’s purified, it goes through the artificial kidney, just like in single-pass, but rather than going down the drain, that dialysate, as it comes out of the artificial kidney, passes again through the sorbent cartridge and is repurified and reprocessed. Because you are in essence batch recirculating that dialysate, you only need that gallon-and-half, and the capacity of the cartridge is significant enough that you can do dialysis at fairly high dialysate flow rates with only a gallon-and-a-half of water for up to eight hours. As a result of that, you get the benefits of long-duration therapy, if that’s appropriate for the patient, and significant enough dialysis flow rate so that you get the kinds of urea clearance that are desired by practitioners in today’s dialysis space.
It’s clearly different than single-pass, where you use the dialysate fluid only once. What comes out of the cartridge, each and every time as it batch recirculates, before it goes to the artificial kidney is highly pure, it’s actually more pure than what you receive from a reverse-osmosis system, and it is very near the ultra-pure level. So it is a high-purity dialysate with a very low volume of starting water, and one of the advantage is that you use just that small volume of water, so you’re not exposing the patients to large volumes of water and potential pyogenes that may be in that water, bacteria and endotoxin. Sorbent dialysis also creates a sodium bicarbonate-based dialysate through the chemical reactions that occur in the cartridge, and therefore you don’t need large volumes of sodium bicarbonate and sodium chloride that are mixed and proportioned into the dialysate system, as you do with a single-pass system. It’s inherently safe in the sense that you don’t have any proportioning systems that won’t malfunction and throw the patient into an electrolyte imbalance. With a sorbent cartridge and a small dialysate volume, you always have the patient in a safe zone.
In addition the sorbent technology, what other features differentiate the Allient dialysis machine from others on the market?
There are no internal fluid pathways, so there’s no disinfection that’s required relative to internal fluid pathways. We have a unique blood movement system in the Allient; We’ve eliminated the blood roller pump that moves blood in all other systems, and we use a two-chamber ventricle pump and with very gentle alternating negative and positive pressure, we pull blood from the body and return it back. That enables us, with a simple touch of a button on the graphical user interface, to select whether we want two-needle or two-catheter access to the body, or one-needle or one-catheter access to the body. The advantage of single-needle or single-catheter access, especially in the home, is safety. We have four air detectors in the system, and if you disconnect in single-needle access, the system senses that, alarms and automatically shuts off. So you eliminate the threat of venous disconnect on a dual-needle roller pump system where the patient could potentially bleed to death because the roller pump or the system doesn’t sense that and it continues to pull blood from the body, and when it tries to return it, nobody notices and it just empties on to the floor and the patient could potentially bleed to death. So those are two of the major advantages of the system.
Will any of the day-to-day operations of Renal Solutions changes as a result of the merger with Fresenius?
There are always changes that occur when you are acquired and merged into another company. However, Renal Solutions will remain a wholly owned subsidiary and a separate entity. Basically, what Renal Solutions will become in the Fresenius organization is the product development organization focused on advancing sorbents and creating innovative products using sorbents for the Fresenius organization. I think the future is very bright in terms of these innovative products relative to wearability and portability and adaptation to the existing product lines that Fresenius has.
What does the acquisition say about home hemodialysis therapy and where it might go in the next 10 years or so?
I think it’s very positive for home hemodialysis. If you look at Fresenius and DaVita as recently as two to three years ago, and got comments from leadership in those two organizations, they would indicate they’re just not sure about home hemodialysis. Yet today, you have a strong collaborative relationship between DaVita and NxStage, and now you have Fresenius acquiring Renal Solutions. And the language out there is different. They’re both saying that the market has moved and will continue to move. There’s still a question of how much it will move over the next two to five years, but it is clearly moving in that direction. I think you’re going to see these two organizations taking very active roles to improve the quality and quantity of dialysis for patient, and clearly, home is in that equation.
Did the technology have to catch up to the idea in order to make it plausible for these companies to start looking seriously at home hemodialysis?
It was in part the technology. There needed to be simpler, safer technology, but also efficacious technology that needed to be developed. Certainly, we had the pioneer in Aksys, who unfortunately failed early on but may resurge in the form of technology through Baxter. You’ve got NxStage, and you’ve got Renal Solutions. These three companies have primarily been change agents in this space working on new and innovative technologies, and they helped convince the DaVitas and Freseniuses of the world, the clinicians associated with those two organizations, as well as the independents that home is a viable option—patients have improved clinical and quality-of-life outcomes and it’s important to move in that direction.
What challenges do companies like Renal Solutions face when convincing companies this is a viable treatment option?
There are a number of variables, but clearly education is a key component. I’m not a nephrologist and I don’t need to speak for nephrologists, but those who are experts in the field, especially the gurus around home dialysis, have said to me that nephrologists today don’t get a lot of education on dialysis in general, let alone home dialysis. We need to do a better job educating the physicians and the nurses. We also need to do a better job educating patients about their options. A lot has been published around all of that; surveys have been done. What’s interesting about those surveys is most of them are consistent in saying that if that education took place—with the physicians, nurses and patients—as many as 30 to 40 percent of the patient population are projected to be able to go home and want to go home, on a combined mix of peritoneal dialysis and home hemodialysis.
How does the Allient system fit into the current reimbursement system and still be financially viable for a clinic in terms of home use?
That’s a very good question. Our focus has been different than Aksys and NxStage, who have primarily focused on short daily, six days a week, two to three hours worth of therapy. Not that those aren’t good therapies. Clearly, the clinical outcomes are obvious. Patients do better when they get more dialysis, both in the form of short-daily and extended-duration dialysis. We’ve taken the approach, based on our core technology in sorbents, that longer is better. It has the benefits that short daily doesn’t have. The idea that we had was to achieve the ideal dialysis dose against the current reimbursement methodology. We clearly believe the gold standard is five or six nights a week for eight hours, but the challenge we have is the reimbursement methodology that typically only reimburses for three days a week, regardless of duration of therapy. Because we can do long-duration dialysis with our sorbent cartridges, the appropriate balance between therapy dose and reimbursement methodology is three to three-and-a-half days a week. In other words, three nights a week of up to eight hours or every other day so that you don’t skip that 48-hour period over the weekend. So our protocol is focused on a Monday, Wednesday, Friday, Sunday, Tuesday, Thursday, Saturday, Monday kind of rotation where you only have one day off between. And if you do it at night, you have all of your days free and at least every other day free. If reimbursement changes, our technology is totally suitable for doing four nights a week, five nights a week or six nights a week. But you’re seeing a lot in the literature about the every-other-day protocol being a very adequate dialysis dose. It’s clearly not six days a week, and we admit that, but it’s a beautiful balance between increasing dialysis dose substantially over in-center dose and at the same time living within the reimbursement structure that
In what other ways can the Allient be used outside of the home setting?
We’ve purposely designed it to be a very versatile system. Currently it’s approved for acute and chronic uremic patients. We’re currently conducting a trial to be able to market it in the home. Once that indication approved, it’s a very versatile machine that has applications in the acute, sub-acute and chronic environments. What that means is, it can be used in a hospital environment, a nursing home environment, assisted living environment and in the patient’s home environment. When a clinician uses our system, they determine whether they want to use it in the acute mode or in the home mode. In the acute mode, the graphical user interface and the screen selections allow the clinician to have much more control and versatility of how they use the system in that acute sub-acute supervised environment. In the home mode, it’s made for simplicity. The difference is that, in the home mode, you are using it on one patient continuously. In the acute mode, you are going from patient to patient. So in the home mode, it retains the patient prescription and there are only three entries the patient has to make in order to get into treatment. The main point here is that it has been designed to be a very versatile system and to be used in a multitude of environments.
Can it also be used in emergency situations?
It has great application there because, of course, when you have natural disasters—hurricanes, earthquakes, etc.—part of the challenge relief personnel have is water. In dialysis, you not only need water, but you need a lot of it, and it needs to be purified. With sorbent-based systems, the advantage is you only need a gallon-and-a-half of drinkable water, so it doesn’t need to be purified, the cartridge does that for you. Envision, for example, a mobile trailer that might have four, six or eight sorbent systems in it, that mobile trailer could be taken into a disaster area carrying its own bottled water, for example, and is quite capable of administering dialysis treatments 24 hours a day.
What’s the lifespan of the sorbent cartridge?
Each cartridge is for one treatment and one treatment only. It has a very precise amount of various chemicals in each cartridge that are specifically designed for a treatment for the urea load of that patient.
With the Fresenius acquisition, is Renal Solutions still going to work with Innovative BioTherapies to develop the wearable kidney?
Yes. We’re continuing to do research there because the outcome of that research and the data generated by that research will help Innovative BioTherapies, but it will also help Renal Solutions and Fresenius relative to future products that Fresenius would produce, as well.
Can you talk a little about the clinical safety study Renal Solutions is conducting?
What we’re looking for is an expanded indication for the Allient system so that we can market it directly for home utilization. It is a safety study; it is very similar to the studies Aksys and NxStage have done where you take a small group of patients and educate them on that system. They are treated on an in-clinic basis for eight weeks. The 10 common adverse events in dialysis are monitored in that first eight-week portion of the trial. They then progress to the point of competency in terms of self-administration and they go home for the second eight weeks. We’ll look at the common adverse events in that second leg of the trial, which is in their home. We’ll compare the two sets of adverse of events in both legs of the trial, and hope to show there is no statistical difference between the two; in other words, the device is as safe to use in the home environment as it is in the clinical environment. Aksys and NxStage have demonstrated that, and there is no reason to believe Renal Solutions won’t have the same kind of success.
Where do you see Renal Solutions going into the future?
We’ll be running as a wholly owned subsidiary of Fresenius focused on innovative sorbent-based dialysis devices, and we’ll become a part of the Fresenius family. If you look at Fresenius, and you look at their footprint, you will see that they do this quite often. They acquire companies that are a fit with their strategic initiatives and long-term goals, and many of these companies continue to run independently. Take their acquisition of PhosLo, for example. That was their first foray into the pharmaceutical world, and they still pretty much operate as a drug company. A lot of it depends on our performance as a new member of the Fresenius family. If we deliver what we think we can deliver, then we’ll have a very bright future within Fresenius. I think it’s also important for the community to understand that you don’t want to remain totally independent. The beauty of an acquisition and a merger like this is they have access to us and we have access to them. It’s important to create connectivity so that they can benefit from the acquisition and we can access the strong resources that Fresenius has.