TELA Bio Stock

TELA Bio, Inc. operates as a commercial-stage medical technology company.

The company focuses on providing soft-tissue reconstruction solutions that optimize clinical outcomes by prioritizing the preservation and restoration of the patient’s own anatomy. The company’s growing product portfolio is purposefully designed to leverage the patient’s natural healing response while minimizing long-term exposure to permanent synthetic materials. The company is committed to delivering its advanced technologies with a strong economic value proposition to assist surgeons and institutions in providing next-generation soft-tissue repair solutions to more patients worldwide.

The company is dedicated to building true partnerships with surgeons and healthcare providers to deliver solutions that provide both clinical and economic improvements. Genuine collaboration with surgeons and healthcare providers results in the development of new solutions that empower patient care.

The company’s first portfolio of products, the OviTex Reinforced Tissue Matrix (‘OviTex’), which the company first commercialized in the U.S. in July 2016, addresses unmet needs in hernia repair and abdominal wall reconstruction by combining the benefits of biologic matrices and polymer materials while minimizing their shortcomings, at a cost-effective price.

The company’s OviTex portfolio consists of multiple product configurations intended to address various surgical procedures within hernia repair and abdominal wall reconstruction, including ventral, inguinal, and hiatal hernia repair. In addition, the company has also designed an OviTex product specifically for use in laparoscopic and robotic-assisted hernia repair, which the company markets as OviTex LPR and began commercializing this product in November 2018. The company recently launched two new, larger configurations of OviTex LPR, designed for ventral and incisional hernias.

The company has also focused on evaluating and publishing clinical data on the effectiveness and safety of the company’s OviTex products. To date, there have been thirty published or presented works relating to these clinical findings, either by the company or a third-party evaluating the OviTex product. Recently in October 2022, the 24-month results of the company’s single arm, multicenter post-market clinical study, which the company refers to as the company’s BRAVO study, were published in the Annals of Medicine and Surgery. The BRAVO study was designed to evaluate the clinical performance of OviTex for primary or recurrent ventral hernias using open, laparoscopic, or robotic techniques in 92 enrolled patients. The recurrence rate at the 24-month time point was 2.6%, and surgical site occurrences (‘SSOs’) were observed in 38% of the study population. Of the enrolled patients, 78% were characterized as high risk for experiencing an SSO based on at least one known risk factor, which included obesity, active smoking, COPD, diabetes mellitus, coronary artery disease, or advanced age (=75 years). The results also indicated that BRAVO patients experienced statistically significant and clinically meaningful improvements in their quality of life and perceived health based on patient responses to the EuroQol-5 Dimension (EQ-5D) health assessment and the validated 12-question Hernia-Related Quality of Life survey (HerQLes). In addition to the BRAVO study and other current clinical initiatives, the company also commenced enrollment in May 2021 for the company’s BRAVO II study, a prospective study evaluating the use of OviTex in robot-assisted ventral and inguinal hernia repairs.

The company’s second portfolio of products, the OviTex PRS Reinforced Tissue Matrix (‘OviTex PRS’), which the company first commercialized in the U.S. in May 2019, addresses unmet needs in plastic and reconstructive surgery. OviTex PRS is indicated for use in implantation to reinforce soft-tissue where weakness exists in patients requiring soft-tissue repair or reinforcement in plastic and reconstructive surgery. The company’s OviTex PRS portfolio is supported by non-human primate data that demonstrated more rapid tissue integration and tissue remodeling compared to the market leading biologic matrix used in this indication.

The company’s OviTex products have received 510(k) clearance from the U.S. Food and Drug Administration (‘FDA’), which clearance was obtained and is held by the company’s exclusive contract manufacturer of these products, Aroa. In April 2019, the company’s OviTex PRS products received 510(k) clearance from the FDA, which clearance was obtained by Aroa and is held by the company. The company has also engaged in discussions with the FDA regarding an Investigational Device Exemption (‘IDE’) protocol to study the safety and effectiveness of the company’s OviTex PRS product for an indication in breast reconstruction surgery. The FDA has stated that a PMA, rather than 510(k) clearance will be required for such an indication. The company has also commenced a retrospective clinical study evaluating the effectiveness and safety of the company’s OviTex PRS products.

The company also continues to expand its service offerings and diversify the company’s supplier base as the company continues to create a soft tissue restoration portfolio, including through the development of complimentary solutions targeting surgical wound management and infection control. In January 2023, the company announced an exclusive development and distribution partnership with Collagen Matrix, Inc. (‘CMI’), pursuant to which the company launched the commercialization of its NIVIS Fibrillar Collagen Pack, an absorbent matrix of Type I and Type III bovine collagen designed to manage moderately to heavily exudating wounds and to control minor bleeding. The company also previously commercialized through a distribution agreement with Next Science Technologies Pty Limited (‘Next Science’), a proprietary antimicrobial surgical wash in the U.S. plastic reconstructive market. The company is assessing additional strategic partnerships with medical device companies whereby the company may enter into distribution, product development and/or licensing agreements for new products complimentary to, or related to, existing and future products in the company’s distribution channel.

The company has a broad portfolio of intellectual property protecting the company’s products that, when combined with the proprietary manufacturing processes associated with the company’s products and the company’s know-how, provides significant barriers to entry. The company’s intellectual property applies to the company’s differentiated product construction and materials. In addition, the company’s exclusive manufacturing and long-term supply and license agreement (the ‘Aroa License’) with Aroa creates a competitive advantage by allowing the company to secure an exclusive supply of ovine rumen at a low cost. Ovine rumen, the forestomach of a sheep, is the source of the biologic material used in the company’s OviTex portfolio products. In manufacturing the product, the company uses biologic material from ovine rumen because of its plentiful supply, optimal biomechanical profile and open collagen architecture that allows for rapid cellular infiltration.

The company markets its products through a single direct sales force, predominantly in the U.S., as augmented by a smaller number of sales representatives and distributors in certain European countries. The company has invested in its direct sales and marketing infrastructure to expand the company’s presence and to promote awareness and adoption of the company’s products. As of December 31, 2022, the company had 67 sales territories in the U.S. As part of the company’s commercial strategy, the company plans to continue to invest in its commercial organization by hiring additional territory managers and administrative and field-based support employees to support and service new accounts for soft-tissue reconstruction procedures. The company can enhance the productivity of its sales force by improving customer segmentation and targeting, implementing and further refining the company’s proprietary training programs leveraging support from the company’s medical education and clinical development functions to drive physician awareness and education on the company’s products, and utilizing engagement analytics to support product development. Additionally, the company has contracted with three national GPOs covering the company’s OviTex portfolio and plan to continue to contract with additional GPOs and other integrated delivery networks (‘IDNs’) to increase access to and penetration of hospital accounts.

The vast majority of the company’s revenue as of December 31, 2022 had been generated from sales of the company’s OviTex and OviTex PRS products in the U.S., with the remainder generated from sales of the company’s OviTex products in Europe and the sale of other products.

Solution

The company has created a new category of tissue reinforcement materials that were purposefully designed in close collaboration with more than 100 surgeons to address the unmet clinical needs in soft-tissue reconstruction. The company’s portfolio of products, designed with over 95% biologic material, combines the benefits of both biologic and polymer materials while addressing their limitations by interweaving polymer fibers through layers of a minimally-processed biologic material. These products are priced competitively and designed for use with a range of surgical techniques, allowing the benefits of an advanced biologic repair to be available to more patients for use in accordance with the products’ 510(k) clearances and instructions for use.

The biologic material serves as the natural building block from which the company can fabricate devices that meet specific clinical and surgical handling requirements. This material consists of an intact, minimally-processed extracellular matrix derived from ovine rumen, which is the forestomach of a sheep. Polymer fibers are interwoven through the layers of biologic material in unique embroidered patterns and contribute to approximately 5% of the overall device by mass. The interwoven polymer utilized can be either permanent, made from polypropylene, or resorbable, made from polyglycolic acid (‘PGA’). The embroidering pattern varies between the company’s OviTex and OviTex PRS portfolios to impart different biomechanical properties tailored for their respective intended clinical applications. The company’s OviTex products are designed with a lockstitch embroidery pattern that is sewn in a grid pattern to create a ripstop effect and minimize unraveling (when cut). The company’s OviTex PRS products are designed with a patented corner-lock stitch pattern designed to resist deformation and to control the degree and direction of stretching of the product.

The company’s capabilities in polymer science, biologics, textile engineering and analytical testing enable the company to quickly design innovative products for development and manufacture. These competencies also allow the company’s technical team to tailor the degree of stretch, direction of stretch, overall strength, handling properties, permeability, thickness, texture, size and shape of each reinforced tissue matrix to suit the needs of particular clinical applications and surgical techniques. This expertise has been utilized in the development of the company’s OviTex and OviTex PRS products and is being leveraged in the development of the company’s additional OviTex product pipeline seeking to enhance product features for various applications within the company’s indications.

The company’s reinforced tissue matrices are designed to improve the outcomes of soft-tissue reconstructions by reinforcing tissue while allowing rapid tissue integration, revascularization and biomechanical control. In addition to overall strength, a key property that the company engineers into the company’s products is the degree to which they stretch, known as compliance. Each of the company’s products is designed to exhibit a degree of compliance appropriate for its intended clinical application.

Growth Strategy

The key elements of the company’s strategy are to expand its U.S. commercial organization to support the company’s growth; promote the awareness of the company’s products to drive surgeon use; drive utilization through existing GPO and IDN contracts and secure additional contracts; continue to build upon clinical evidence of the effectiveness and safety of the company’s products; advance the company’s portfolio of reinforced tissue matrices with the introduction of new product features and designs; and expand the company’s service offerings and diversify the company’s supplier base to create a broader soft tissue preservation and restoration portfolio.

Products

Technology Platform

The company’s advanced reinforced tissue matrix technology consists of multiple layers of minimally-processed, decellularized extracellular matrix derived from ovine rumen with interwoven polymer fibers in a unique embroidered pattern. The extracellular matrix is the collagen component of the rumen that is retained following removal of the epithelium, muscle and cellular content, and has an optimal biomechanical profile and open collagen architecture that allows for rapid cellular infiltration. These thin, strong layers of ovine rumen are plentiful in supply and serve as building blocks from which the company can construct multilayered devices to customize products to adapt to clinical needs and surgeon preferences. The layers of extracellular matrix provide a high degree of surface area for tissue remodeling. The company strengthens these reinforced tissue matrix layers with interwoven polymers, that are either permanent (polypropylene), or resorbable (PGA). These polymers were selected because they are well characterized suture materials with a history of significant clinical use and recognized safety profiles. Polypropylene has a high tensile strength and a low inflammatory response in small quantities. PGA is the fastest resorbing polymer and within three months it tends to be fully absorbed into the body.

The company’s highly specialized and customizable textile engineering capability allows the company to tailor the degree and direction of stretch, overall strength, handling properties, permeability, thickness, texture, size and shape of each reinforced tissue matrix to suit the needs of particular clinical applications and surgical techniques. The company’s textile engineering utilizes a computer-controlled fabrication method that is scalable, reproducible, efficient and customizable. This embroidery process creates hundreds of micro-channels to allow the multi-directional passage of the patients’ native cells and fluids throughout the product. The interwoven polymers are embroidered using a lockstitch pattern, which allows for the device to be trimmed while minimizing unraveling (when cut), and the company uses a patented corner-lock pattern, which creates a stable polymer fabric within the biologic material. The company manipulates the polymer thread patterns to control the degree and stretch of the company’s products. Denser grid patterns increase the amount of reinforcement and less dense patterns of different geometry allow for greater stretch. The company is also able to manufacture products with smooth external layers that minimize the amount of exposed polymer such that the product can be placed in contact with the viscera.

OviTex Reinforced Tissue Matrix

The company’s OviTex Reinforced Tissue Matrix has received 510(k) clearance from the FDA, which clearance was obtained and is held by Aroa and is intended for use as a surgical mesh to reinforce and/or repair soft-tissue where weakness exists. Indications for use include the repair of hernias and/or abdominal wall defects that require the use of reinforcing or bridging material to obtain the desired surgical outcome. The company’s OviTex products can be used in a variety of hernia repairs, including simple and complex ventral, inguinal and hiatal hernias, as well as abdominal wall reconstructions.

The company’s OviTex products are sterile reinforced tissue matrices derived from ovine rumen with either polypropylene or PGA. The product is provided in a dry, hydratable form and packaged in a double pouched configuration. The product can be stored at room temperature and only needs five minutes of rehydration for use. To be used in surgery the company’s OviTex product is placed in a sterile dish, rehydrated with sterile saline for five minutes, trimmed to fit the site, if needed, and then positioned to achieve maximum contact between the device and the surrounding tissue. The device may be sutured, stapled or tacked into place.

All of the company’s OviTex products were designed to minimize the amount of polymer material implanted in patients. The synthetic material in the company’s OviTex products comprise less than 5% of the company’s final product. Depending on the configuration selected, the amount of polymer is approximately 75% less than the polymer content of the most widely implanted permanent synthetic mesh, thereby reducing the patient’s foreign body inflammatory response to the polymer.

The company markets a variety of OviTex products in a range of sizes, thicknesses and degrees of reinforcement in order to suit surgeon preference and desired surgical technique. The company’s OviTex portfolio is designed to allow surgeons to select a device appropriate for any abdominal tissue plane. Generally, surgeons may place the reinforced tissue matrix in direct contact with internal organs, known as intraperitoneal placement, or away from these internal organs in a variety of tissue planes, known as pre-peritoneal placement. When selecting a product for intraperitoneal placement, surgeons require a surface that minimizes the risk of tissue attachment, whereas when selecting a product for pre-peritoneal placement, surgeons are able to use a product with polymer exposure on both sides. Surgeons may select the most appropriate product from the company’s OviTex portfolio based on the size of the defect, necessity or surgeon preference for internal organ contact, use of a minimally invasive or open surgical technique and risk of infection.

OviTex Laparoscopic and Robotic Procedures

The company’s OviTex LPR product was specifically designed for use in laparoscopic and robotic-assisted hernia surgical repairs. OviTex LPR was designed for use with a trocar and requires the same rehydration and fixation as the company’s other OviTex products. This product includes design elements to improve surgical handling, including two extra embroidered lines of blue colored polypropylene fibers to enhance endoscopic orientation and alignment. This product can be introduced into the patient’s body through various sized trocar ports. Based on surgeon feedback, OviTex LPR was designed in an elliptical or circular shape to minimize trimming.

OviTex Plastic and Reconstructive Surgery — OviTex PRS

OviTex PRS, has received 510(k) clearance from the FDA, which clearance was obtained by Aroa and is held by us, and is indicated for use in implantation to reinforce soft-tissue where weakness exists in patients requiring soft-tissue repair or reinforcement in plastic and reconstructive surgery. The company’s OviTex PRS product can be stored at room temperature and comes in the same packaging and requires the same rehydration and fixation as the company’s OviTex products.

The company’s OviTex PRS product is a sterile reconstructive reinforced tissue matrix composed of three layers of ovine rumen joined by a patented corner-lock embroidered diamond patterned polymer (PGA or polypropylene) that allows the product to stretch while also maintaining its shape. Machine punched regularly spaced fenestrations, or holes, and die-cut slits in the product facilitate fluid management, allow for rapid cellular infiltration and create a directional bias to the stretch. The company’s OviTex PRS product is available in arced rectangle and half-moon shapes in a range of sizes (4 × 16 cm through 20 × 20 cm) to suit surgeon preference and nature of the soft-tissue repair in plastic and reconstructive surgery. The device may be trimmed to a desired shape to further accommodate individual anatomy. The shelf life of permanent OviTex PRS is 36 months and the current shelf life of resorbable OviTex PRS is 12 months.

Product Pipeline and Research and Development

The company continues to advance its product pipeline to broaden the company’s treatment capabilities for soft-tissue reinforcement. As the company innovates and develops its products, the new features and improved surgical techniques expand the clinical applications for soft-tissue reinforcement. Areas of focus include enhanced surgical handling, increased permeability, and longer-acting resorbable polymers. Improving the surgical handling and implementation of the company’s devices benefits both the clinician and patient. Increasing product permeability encourages a more-natural healing response. Longer-acting polymers can provide additional support for patients that need more time to heal. These technology enhancements will continue to bolster the company’s portfolio and expand the successful use of its products.

Intellectual Property

Aroa License

In August 2012, the company entered into the Aroa License, which was amended and restated in July 2015, pursuant to which the company obtained an exclusive license to certain patents and know-how to develop, commercialize and sell bovine and ovine extracellular matrix products for hernia repair, abdominal wall and breast reconstruction in North America and Europe, which the company refer to as the Licensed Territory. In addition, under the Aroa License, Aroa is the company’s exclusive manufacturer and supplier for the development of the company’s bovine and ovine extracellular matrix products.

The company is responsible for commercializing the products manufactured for the company by Aroa. The company pay Aroa for the supply and manufacturing of the company’s products through a revenue sharing agreement. Pursuant to the Aroa License, the company retain 73% of the net sales of all of the company’s products and pay Aroa the remaining 27%.

Patents

As of December 31, 2022, the company exclusively licensed two issued U.S. patents that will expire in 2029 and 2031. The company owns fifteen U.S. issued or allowed patents which will expire between 2035 and 2038 and nine pending U.S. patent applications, which subject to issuance, are projected to expire between 2035 and 2042, without taking into account potential patent term extensions or adjustments. In addition to the company’s U.S. intellectual property, the company owns three issued non-U.S. patents and four pending non-U.S. patent applications, which, subject to issuance, would be projected to expire between 2036 and 2037 and have exclusively licensed issued patents in Europe and Canada that will expire in 2029.

Trademarks

TELA Bio, OviTex, Minimize the Foreign Body Footprint, and A More Natural Hernia Repair are registered trademarks of the company in the U.S. and TELA Bio and OviTex are registered trademarks in the foreign jurisdictions in which the company conducts its business.

Research and Development

The company’s research and development expenses were $8.9 million for the year ended December 31, 2022.

Commercial Strategy

The company’s commercial efforts are predominantly focused on the U.S. market where the company has established strong relationships with key constituencies, including hospitals, ambulatory surgery centers, GPOs, IDN, third-party payors and other key clinical and economic decision makers by offering a unique high quality, cost-effective product. As part of the company’s overall commercial strategy, the company intends to contract with GPOs and IDNs to increase access and penetration with hospital accounts. As of December 31, 2022, the company contracted with three national GPOs for coverage of the company’s OviTex and OviTex PRS products. The company has invested in its direct sales and marketing infrastructure in order to expand the company’s presence to promote awareness and adoption of the company’s products.

The company markets its products to hospitals, ambulatory surgery centers, surgeons, GPOs, IDNs and medical device supply chain participants primarily through the company’s direct sales force. The company’s sales representatives and sales managers have substantial medical device experience. As of December 31, 2022, the company had 123 employees in the company’s U.S. based commercial organization in 67 sales territories, which includes sales management, territory managers, marketing and administrative and field-based support staff.

Manufacturing

The proprietary ovine rumen used in the manufacturing of the company’s products is obtained from sheep raised for human consumption in New Zealand and is sourced by Aroa from two abattoirs, or slaughterhouses.

Distribution

The majority of the company’s products are shipped directly from Auckland, New Zealand to the company’s headquarters in Malvern, Pennsylvania. The company sells its products directly to the company’s customers, which are hospitals and ambulatory surgery centers. Except for the company’s stocking distributors in Europe, the company does not use distributors to sell its products.

Government Regulation

The company’s products and operations are subject to extensive and rigorous regulation by the FDA and other federal, state and local authorities, as well as foreign regulatory authorities. The Federal Trade Commission also regulates the advertising of the company’s products in the U.S.

All of the company’s medical devices sold in the U.S. are subject to the Federal Food, Drug, and Cosmetic Act (‘FDCA’) as implemented and enforced by the FDA.

The company’s products are subject to premarket notification and clearance under section 510(k) of the FDCA.

When a 510(k) clearance is required, the company must submit a premarket notification to the FDA demonstrating that the company’s proposed device is substantially equivalent to a predicate device, which is a previously cleared and legally marketed 510(k) device or a device that was in commercial distribution before May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process.

After the FDA permits a device to enter commercial distribution, numerous and pervasive regulatory requirements continue to apply to the company’s business operations, products and technologies. These include:

The FDA’s Quality Systems Regulations (‘QSR’), which requires manufacturers, including third party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process;

Labeling and marketing regulations which require that promotion is truthful, not misleading, fairly balanced and provides adequate directions for use and that all claims are substantiated;

Complying with requirements for Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database;

Advertising and promotion requirements, including FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses and FDA guidance on off-label dissemination of information and responding to unsolicited requests for information;

Restrictions on sale, distribution or use of a device;

Device establishment, registration and listing requirements and annual reporting requirements;

Approval or clearance of modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of the company’s cleared devices;

Medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur;

Medical device correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

Recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death;

An order of repair, replacement or refund;

Device tracking requirements; and

Post-market surveillance activities and regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.

The Foreign Corrupt Practices Act obligates companies whose securities are listed in the U.S. to comply with accounting provisions requiring the company to maintain books and records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the corporation, including international subsidiaries, if any, and to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements.

Competition

In the hernia repair market, the company’s primary competitors are Bard, a subsidiary of Becton, Dickinson and Company, which produces Phasix and Ventralight ST, and LifeCell, a subsidiary of AbbVie, which produces Strattice. In the plastic and reconstructive surgery market, the company’s primary competitor is LifeCell, a subsidiary of AbbVie, which produces AlloDerm.

History

TELA Bio, Inc. was founded in 2012. The company was incorporated in in the state of Delaware in 2012.