This Salt Lake City startup says its stem cell treatment will regenerate skin; a New Orleans doctor says it’s working for a burned boy

(Steve Griffin | The Salt Lake Tribune) Janet Tayon and her husband, Leonard Tayon, in their Grantsville home. Leonard Tayon was severely burned at U.S. Magnesium in 1992 and spent months in the University of Utah Burn Center. He feels it’s important for medicine to continue to improve burn treatments for patients and their families.

The blast of gas and steam burned through Leonard Tayon’s coveralls and skin, down to his muscles and tendons. The liners in his hard hat melted into his head. His rubber gloves melted onto his hands.

Skin grafts saved his life after the accident at U.S. Magnesium’s plant on the Great Salt Lake. But he endured pain so intense that he clenched his teeth even when he was unconscious. His skin remains scarred. During his recovery, he had “the worst feeling of loneliness, more intense than the burn itself because it was in my heart.”

Burn victims, he says, need a better treatment. Doctors at PolarityTE, Inc., a Salt Lake City biotech startup, say they’ve got it.

Their invention — a stem cell mixture in a thick paste that can be spread onto a burn from a syringe — is now being tested by use on patients at more than a dozen undisclosed hospitals around the country.

At the only one revealed so far by Polarity, Children’s Hospital in New Orleans, plastic surgeon Gerhard Mundinger said its SkinTE product is regenerating full-thickness skin in a 10-year-old boy. His severely burned chest was scarring badly after conventional skin-graft treatment.

“He’s doing well. His parents are happy,” Mundinger said.

He intends to treat the boy with SkinTE again this summer, if no harmful side effects occur.

This is where SkinTE is different from many medical innovations — there are no human studies to guide him. The company didn’t test it on humans in traditional phased clinical trials and federal officials didn’t evaluate its effectiveness before doctors began trying it on patients.

“I had a frank conversation with the parents about using this product and established a clear exit strategy if it didn’t work,” Mundinger said. He doesn’t have concerns about SkinTE now, he said, but noted it’s early in the boy’s recovery.

Polarity is moving fast — and that was the point when CEO Denver Lough left his plastic and reconstructive surgery residency at The Johns Hopkins University School of Medicine in 2016. The bureaucracy of academia and the limits of daily medicine were frustrating, he said.

“You can only see so many patients a day. You can only operate for so many hours, you can only throw so many stitches in a given time,” said Lough, 36. “How can we help more patients within a given amount of time? … By really developing the technology that is what people refer to as ‘too good to be true.’

To help raise money quickly, Polarity merged with a public but failing video game maker. To move straight to market, it has skipped the clinical trials and lengthy pre-approval process required by the U.S. Food and Drug Administration for many medical inventions, choosing a streamlined option available for cell and tissue products.

Lough predicts SkinTE will “change the face and practice of regenerative medicine” for burn victims, injured soldiers, diabetics and others with deep wounds.

But the company has its skeptics.

White Diamond Research, which focuses on technology and health care, issued a 14-page critique in October that said without traditional clinical trials, Polarity lacks data to help convince physicians of the product’s effectiveness — and that could hurt sales.

Lough’s patent application hasn’t been approved, White Diamond added, and Polarity was not identifying the institutions where it says doctors are trying SkinTE. (On Feb. 5, Polarity disclosed Mundinger’s work.)

Leigh Turner, an associate professor of bioethics at the University of Minnesota who has studied the marketing of unproven stem cell therapies, believes other hospitals will question Polarity’s lack of data about outcomes with humans and any adverse effects.

“If they had all kinds of safety and efficacy studies behind their product, I’d have greater reassurance that this is ready for prime time for the U.S. marketplace,” Turner said. “It’s powerful marketing rhetoric but the quality of the science behind it is now, I would say, very much in question.”

Making cells feel at home

While skin grafts remain the standard treatment for burn victims and others with severe wounds, researchers have grown sheets of skin from cells for decades, with an early success involving stem cells in 1984.

Typically, lab-created skin grows slowly. It’s thin, without all the layers of normal skin. It doesn’t contain hair follicles or sweat glands. And it’s expensive.

Lough describes routine work with stem cells this way: Researchers “chop up tissue, they’ll put enzymes on it, they’ll push it through filters, they’ll try to … get that single cell and put it in the middle of an empty dish and give it a growth [supporting] factor and say, ‘Turn into bone.’“

He said Polarity’s twist is to place and nurture the stem cells within a patient’s injury — where they can communicate and have a sense of “polarity.”

(Drawing by Christopher Cherrington | The Salt Lake Tribune) Removal of a dime-size sample of full-thickness skin from a patient is the first step in the Polarity skin-regeneration process. (Sources: PolarityTE, Tribune reporting)

The company announced last June that it had regenerated skin in wounds on pig skin, which closely resembles that of humans. In October, it said the FDA had signed off on its application to register SkinTE as a human cellular and tissue product (HCT/P), a designation that sharply reduces the number of preclinical tests and procedures a new product must clear to be marketed commercially.

Doctors who try Polarity’s treatment take a dime-size sample of full-thickness skin from a patient and ship it to Salt Lake City in a box that keeps it cool, using a kit the company provides.

Lough’s patent application describes this general process in the lab: Stem cells and a portion of the tissue that surrounds them are combined with what he described in an interview as an oatmeal-like paste supplemented with components that support cell growth. That mixture is loaded into a syringe and sent back to a doctor in 24 to 48 hours, he said.

“Everything that’s in there is your own tissue and then a couple of things we added that are already FDA-approved fluids,” Lough said.

The paste can be applied by nurses and physician assistants, he said, dramatically cutting costs. He expects wounds to begin healing, as the cells develop into tissue, within five days.

In a note to investors last week, Wall Street firm Cantor Fitzgerald estimated an average SkinTE treatment cost of $7,300.

Doctors who use the product will help uncover any problems and will produce the data that will convince insurers it works, Lough explained.

“Physicians [at testing hospitals] can act completely independently and publish the material they need to help with the evaluation of our product by insurance companies and payer systems,” Lough said.

‘The opposite of innovative’

Lough had joined Johns Hopkins in 2012 after receiving his medical degree, along with a doctorate in biochemistry and molecular and cell biology, from Georgetown University.

He impressed his colleagues, including Mundinger from New Orleans, who was at Johns Hopkins at the time and saw several of Lough’s presentations on his research.

“I was blown away by Denver’s work in the lab and knew he was onto something amazing — or it was total BS,” he said. “The former turned out to be true.”

Mundinger, a member of Polarity’s clinical board of advisors, said the hospital’s review board examined SkinTE and approved its use there before the burned boy was treated.

Lough’s perspective on his job changed in 2015, as he joined a Johns Hopkins team that advised caregivers in Taiwan who were treating 500 patients burned by a fireball from an explosion of colored dust.

“I learned there had not been a lot of advancement in the treatment of burn patients over the past 20 years,” he said, and he felt doing research on the side while working full-time would not suffice.

So he and plastic and reconstructive surgery colleague Edward Swanson left their medical residencies to develop Lough’s invention in the private sector.

“There’s a problem with the way that medical innovation happens within the system of academia,” Lough said. “If you’re taught at Hopkins that this is how Hopkins does it, or you’re taught at the Mayo Clinic this is the way Mayo does it, you really have to stay within that box. How am I going to improve something when I’m in the box? A paradigm shift has never occurred staying inside the box.”

“It’s the opposite of innovative,” added Harvard Medical School graduate Swanson. The tech world, he said, “doesn’t look at hierarchy. It doesn’t look at legacy. It rewards whoever has the best idea, the most innovative concept, the latest, the best end product.”

The doctors met tech financiers Phillip Frost and Barry Honig, directors of Majesco Entertainment, a video game company known for distributing BloodRayne, Zumba Fitness and Cooking Mama games. For several months in 2016, Nasdaq had threatened to delist Majesco’s stock because shares were trading below $1. But Majesco had regained compliance with Nasdaq’s requirements before the doctors spoke with its largest shareholders about merging, Swanson said.

Polarity signed a definitive merger agreement with Majesco in December 2016, subsequently becoming a public company and receiving $2.2 million from investors. That was added to $6.25 million in the public company before the merger agreement was signed, Swanson said. The infusion paid for initial product testing and an office with high-powered microscopes and other laboratory equipment in Salt Lake City. Lough said the city is attractive because it’s smaller than biotech hubs Boston and San Francisco but has a sophisticated medical community, with institutions such as the Huntsman Cancer Institute.

The company raised millions more through stock offerings last year and hired the University of Utah’s Cell Therapy and Regenerative Medicine program to produce its initial tissue treatments.

In December, Polarity signed a lease to develop its own manufacturing, research and development facility in the former Nellson Nutraceutical warehouse in Salt Lake City. It is buying Ibex Preclinical Research Inc. in Logan to test products on small animals.

This month, Cantor Fitzgerald issued a “buy now” recommendation for Polarity based on projections that, with its own facilities, the company can manufacture 230,000 products per year.

“We think the skin product can achieve over $600 million in revenue,” wrote analyst Elemer Piros, “with perhaps multiples of this number when adding bone, cartilage, heart and muscle products in development.”

Lough said this month that data from its efforts to regenerate bone will be released soon. Cartilage and fat-storing adipose tissues are next in line for study.

Making a difference for patients

Stephen Morris, director of the University of Utah Burn Center, has seen new techniques improve burn-wound care in 39 years of working with skin grafts. But there are, he acknowledges, “a lot of technological barriers we haven’t been able to overcome.”

Bodies tend to reject grafts from other sources, such as family donors. It takes time to transplant skin from other parts of a patient’s body, contributing to infections.

“The potential of stem cell therapy to help with this — or any other disease — is hopeful,” he said.

Morris hasn’t worked with SkinTE, but said generally, “whenever we use a product, we want to feel confident that it’s safe. We rely on scientific data and regulatory directions to help us with these decisions.”

Tayon, who remains scarred by his many skin grafts, believes new solutions are crucial.

He was doing maintenance work in 1992 at U.S. Magnesium when gas and steam burned through his safety gear.

Then 37, the Grantsville man was rushed to the U.’s burn unit, where he was put into a drug-induced coma for two months. He received painstaking treatment for a year. He slept through many of the skin grafts, but even then, the morphine “just took the edge off.”

His wife, Janet, witnessed it all — 18 surgeries and 70-some procedures — and came away recognizing how “blessed Leonard really was that out of all the skin grafts he had, there was only one small one on his knuckle that failed.”

Other families she met were not so lucky.

“It was really discouraging for some of them to go through the whole surgery and not have the skin graft take or to get an infection and have to do it all over again,” she said.

Tayon said he’s “grateful, so grateful to see that they’re still working on [skin regeneration] to make it better for burn survivors.”

He especially hopes Polarity will create full-thickness skin that meshes better with surrounding skin, reducing scarring.

“Scarring is a major challenge, especially for a child or adolescent that will return to school with their peers,” Tayon said. “They are often mistreated horribly because of their scarring or disfigurement.”

Helping people avoid that physical and emotional trauma is a driving force for Polarity, Lough said.

“Our goal has always been to build the best products we possibly can,” he added, “and to get them to as many people as quickly as we can.”