EO2 Concepts Aims to Impress CME With Med Device Study, Gain Funding

Xconomy Texas — 

San Antonio — For chronic wounds, there’s a bevy of treatment options attracting the dollars spent on care, from stalwarts like Acelity’s negative-pressure therapies to more standard, basic dressings. Now, a San Antonio medical device company has a product that it believes can potentially be more effective than other treatments and limit healthcare costs.

And EO2 Concepts has released results from a recently completed clinical trial on its device—a therapy that uses a constant stream of oxygen to treat chronic wounds like ulcers—that it says showed the device performed better than the standard of care. The company hopes to use the results to land a new venture capital round to take the product to market.

Called the TransCu O2 System, EO2’s device provides a flow of oxygen to the wound 24-hours a day, along with sensors that can make sure its functioning and adjust the flow of air. The TransCu O2 device uses a fuel cell to constantly generate a pure form of oxygen that can be sent to the wound, and is meant to be portable.

“We’re going to apply oxygen directly to the wound because not enough blood flow gets to it,” says E02’s president Joe Moffett. “Oxygen is very important in almost every part of the healing process.”

The study, published today in The Journal of Diabetes Science and Technology, focused on 100 patients with chronic diabetic foot ulcers, examining the number of wounds that were healed, the amount of time it took them to heal, and how many of the most severe wounds healed. Notably, it was performed as a double-blind placebo study, according to COO Mark Niederauer. Patients were split into two groups of 50; one group was connected to an EO2 device that had oxygen flow onto the wound, while the other group also had an EO2 device that was fully functional but didn’t have any oxygen flow, Niederauer says.

Both devices used the same dressing to cover the wound, above a tube that delivers the oxygen, so any wound healing on the placebo side was attributed to the dressing only.

EO2 says its device healed 46 percent of wounds at the end of the 12-week study, compared with 22 percent for the placebo, calling the outcome statistically significant. The company also noted that wounds receiving treatment from its device healed faster than others, though it didn’t provide details in a news release. It says the device healed 42.5 percent of wounds that “pass published guidelines as being chronic,” while the placebo recorded healing 12.5 percent.

Niederauer co-authored the study with David Armstrong, the lead investigator and director of the Southern Arizona Limb Salvage Alliance at the University of Arizona College of Medicine, and Joel Michalek from the University of Texas Health Science Center at San Antonio. Niederauer says being able to use a true placebo in a medical device study is rare—he believes this is the only medical device study to do so—because the patients and physicians can typically tell if a device is working or not. The same wasn’t true for EO2’s device, he says.

“The oxygen is flowing so slow, you can’t feel it,” Niederauer says. “You can’t smell it; you can’t taste it. There’s no way to know if it’s working or not.”

The trial is also notable because it was not conducted to receive regulatory approval—EO2 received 510(k) clearance as a class II device from the FDA in 2009. Instead, EO2 is seeking to receive a different payment classification code from the Centers for Medicare & Medicaid Services, Moffett says. The code the company originally received, as hyperbaric oxygen therapy, made it difficult to receive reimbursement from both CMS and private insurers, Moffett says.

After Moffett joined in 2011, EO2 developed a plan with CMS to create a study that might allow it to be reclassified. The study lasted for almost five years, partly because enrollment was difficult, Moffett says. The investigators went through 400 patients to find the 100 for the study, with many potential patients declining because they might receive a placebo treatment, he says.

“These patients want to be healed,” Moffett says. “Oftentimes, when you tell them, ‘You could get this placebo,’ even though they’re getting standard of care, the alternative is that the doc could be putting another device on. So they decline.”

There are dozens of other therapies that focus on chronic ulcers, including two other devices (one in the U.S. and one in Europe) that directly send oxygen to a wound. Niederauer believes the EO2 product differentiates itself by the specifications of the device that the others lack, such as an adjustable air flow rate, sensors that detect problems with it, a microprocessor that controls the air flow, and other display features.

EO2 is primarily targeting venous ulcers on the leg, like ones that become bad because of a lack of blood flow, and ulcers caused by diabetes—some 7 million to 10 million patients annually, combined. Niedrauer says other uses are possible in the future.

Other longer-standing treatments include San Antonio Acelity’s devices that use a vacuum of sorts to treat wounds, which has helped the company achieve billions of dollars in annual sales. EO2’s Moffett says Acelity’s tools aren’t used on venous ulcers because the sucking of the vacuum can be painful, and he contends that his device may have an upper hand in treating many patients because he says the delivery of EO2’s treatment doesn’t cause patients pain. (On its website, EO2 has compared its performance to other companies’ devices, indicating positive results.)

Moffett contends the product may be able to lessen healthcare costs to a patient or insurer by fully closing a wound, which not all devices can do, and closing it in less time. Certain wound-healing devices start the healing process and then require other sutures or dressings to finish the job. TransCu O2, which EO2 will charge a monthly fee for, has a similar price point to other devices, Moffett says.

The results of the study, Moffett says, may help him raise a round of capital this year to sell the product, if the company can get a new CMS code. So far, angel investors have backed EO2 by $32 million—a surprising amount of seed capital, Moffett admits. Van Miller, who was the CEO and founder of Waterloo, IA-based home medical equipment company VGM Group, was heavily invested in the company before he died in 2015, leaving an additional amount of money to EO2 in his will, Moffett says.

EO2 has already made some sales, generating about $1 million of revenue from the U.S. Department of Veterans Affairs and the department of Indian Health Services, Moffett says.