Gauze is good for Newport News firm

A Newport News company whose bread-and-butter is developing high-tech wound-healing products had two major announcements in February, including receiving substantial funding that could help it capture a share of the defense industry in addition to its pursuits in the consumer realm. Soluble Systems LLC announced it received $800,000 in federal funding to conduct a clinical study of its flagship product, TheraGauze.

Congress approved the funding from the 2010 Defense Appropriations Bill with the hope that TheraGauze can be proven to be a successful new battlefield wound dressing.

TheraGauze, which the company manufactures in Hampton, is a complex piece of gauze that has the ability to sense and respond to moisture within a wound. If part of a wound needs less moisture, the product can absorb it. If part of the same wound needs extra moisture to promote healing, the gauze helps produce that moisture, jump-starting or speeding up the healing process. The company calls this its proprietary Skin Moisture Rebalancing Technology.

The science behind TheraGauze came to be in the late '90s when Dr. Guy Levy, a local dentist, now the company's chief technology officer, secured a patent for a polymer intended to help combat dry mouth in Levy's dental patients.

Levy and attorney Allan Staley, now the company's president, "ultimately discovered [the polymer] had a lot more attributes than originally anticipated," Staley said.
Without getting into its patented chemical specifics, the polymer seems to magically know how to handle moisture in a wound. From there a wound-care dressing was developed and the two brought in CEO Kerry McCarter, a former Johnson & Johnson exec.

Finally in late 2007, after raising $5.9 million, Soluble Systems was able to bring TheraGauze to market. It's manufactured in a high-tech clean room in the facilities of the Arc of the Virginia Peninsula, a group that helps put individuals with developmental and other disabilities to work.
In addition to studying its moisture capabilities, one of the goals of the Department of Defense-funded study will be to further confirm the product's ability to deliver antibiotics to a wound, particularly serious wounds and infections seen in battle.

The study will take place at multiple sites including Eastern Virginia Medical School in Norfolk, Harvard Medical School, Johns Hopkins Medical Center and The University of Cincinnati Medical Center.

The study will begin later this year and will run for about two years, Staley said, and more funding will be sought from DOD to supplement the initial $800,000. It sought $4 million for the study initially.

The other big news for Soluble Systems came when it received notice that it was granted trademark protection on its skin graft product known as TheraSkin.

TheraSkin refers to cryogenically preserved grafts of human skin that are applied to wounds that are not healing properly. The technology behind this product provides important skin elements such as cytokines and collagen to and around the wound to jump-start the healing process.

TheraSkin was launched in 2009 after the company secured a partnership with Virginia Beach-based organ procurer LifeNet for its supply of human skin.

"We were looking to expand our product line and wanted to create a synergistic product expansion," Staley said. "[TheraGauze and TheraSkin] work together as part of the wound solution."

That combination of products, and a few more undisclosed Thera-brand ideas up its sleeve, gives Soluble Systems reason to be excited for the future.

The company employs 22 workers, including a sales force that calls on 10 major markets all over the U.S.

It is approaching $1 million in annualized sales, Staley said, with a target of just under $2 million in total sales for 2010.

It's in the midst of raising a second round of private capital, some of which will come from local investors, though its track record now allows it to look elsewhere for funding.

The money will be used to expand its sales efforts into 20 markets with 65 sales reps over the next five years.

Its biggest challenge, Staley said, remains competing with its multinational competitors and getting the Thera-brand and Soluble Systems names out there. The market in which TheraGauze competes is ripe with competition. TheraSkin, however, has just two main competitors, Staley said, both of which use bioengineered tissue rather than actual human skin.
TheraGauze has been plugged into the industry distribution chain and is available to consumers by the box or the case with a prescription.

A 2-inch-by-2-inch piece of the gauze runs about $8. The price goes up for larger versions.
Soluble Systems hopes to one day sell TheraGauze as an over-the-counter product.

It has been selling TheraSkin to customers such as VA hospitals since the fall.

The big question - what's the end game for Soluble Systems?

The biotechnology industry is a frontier for venture capital, acquisition or even going public.
For now, "we're looking to grow a company - to build a company here in Virginia," Staley said. "We'd like to employ more than 22 people."

Availability of private capital and a disdain toward public offerings will keep an IPO off the table for now, he said.

"It truly is an exciting opportunity to build this company and help the patient population to heal better and faster," Staley said, "and ultimately provide a solid return for our investors."

By Michael Schwartz Inside Business