The Healing Process

By Business Observer Staff
| 6:00 p.m. August 15, 2008

Entrepreneurs

The Healing Process

Greg Pilant knew he had a blockbuster product to mend hard-to-heal wounds, but costly regulations in the U.S. led him to gain clearance in Europe first. Now, he's got a licensing deal with colossus 3M to distribute his product all over the globe.

ENTREPRENEURS by Jean Gruss | Editor/Lee-Collier

Greg Pilant burned himself 16 years ago and decided to try out a sample of a cream that had been sitting unopened on his desk for six months.

A small Winter Park company had mailed him the sample, asking his newly formed health-care marketing company to help sell it. The stuff was somewhat unusual because its active ingredient came from oak bark. Back then, the medical profession didn't accept botanical agents as well as they do today.

Pilant was so impressed by the speed with which his burn healed while using the cream that he bought out the Florida company that had created it. But the product had one big wall to climb: federal regulatory clearance. At the time, Pilant was facing a staggering $20 million cost to get the nod from the U.S. Food & Drug Administration to sell the cream.

But Pilant knew he had a chance to get the drug approved in Europe first, at a fraction of the cost of the U.S. Once secured, European clearance would make it easier to gain acceptance in the U.S., he reasoned correctly.

The story of Fort Myers-based Greystone Pharmaceuticals' success highlights the tortuous process of how a beneficial product took more than a decade to wind its way through the regulatory labyrinth to finally reach U.S. patients. Yet, despite these odds, it is also a testament to small and innovative entrepreneurial companies such as Greystone, which raised $50 million in financing from institutional investors and high-net-worth individuals to get the product to market.

Going Dutch

When Pilant used the oak-bark cream for the first time, he dug a little deeper into its success. It turned out that studies performed at the University of Miami confirmed that wounds healed 50% faster with the cream.

But no one really knew why the cream's active ingredient was beneficial. They only knew it worked. That wasn't good enough for the FDA, which required the firm to create a synthetic version of the natural ingredient and conduct expensive safety studies.

Pilant knew he had to obtain FDA clearance to sell what's now called Tagederm with the claim that it worked to heal chronic wounds. At the time, there was very little available on the market to treat hard-to-heal wounds. But without FDA's consent, the product would be a much tougher sell to doctors and hospitals.

In 1996, Pilant formed Greystone and acquired Stanley Pharmaceuticals, the company that had sent him that sample. He won't say how much he paid for Stanley, which had been facing financial troubles and been taken over by the bank. To pay for the acquisition, Pilant gave investors a minority stake in Greystone. He is now chairman, chief executive officer and president of Greystone.

Then Pilant jetted off to Europe, where the cost of gaining clearance is one-third of the U.S. What's more, European regulators are more lenient about giving conditional clearance to see whether a product works, as long as there's good quality control in place. After a year or so, they'll reevaluate the product and may give it longer life depending on the results. By contrast, the FDA seeks definitive results first before it clears a product for sale.

Pilant says Europeans are generally more open-minded about alternative sources of medicine. "They're more flexible with botanicals," he says.

But even more important, the Dutch government gave Pilant the authority to perform biopsies on patients who were using the medicine while it was being studied by researchers at Free University in the Netherlands.

"They were very kind to me in the beginning years," Pilant says. Greystone had limited financial resources at the beginning but later funded the research through grants it made to the university.

With the help of Dutch researchers, Pilant eventually received full clearance in 2003 to sell his products in Europe with claims that it works. It was a back-door way to get the product cleared in the U.S. Armed with all the research and evidence that it worked with humans, the medicine was cleared for sale in the U.S.

Deal with 3M

The regulators weren't the only hurdles for the product, which had been developed as a cream from a tube. Tubes are messy, so Pilant created sterile packets of bandages each containing just the right dose of cream. That keeps nurses from using too much or too little of the stuff and results in fewer infections.

Meanwhile, 3M's health care division had its eye on Greystone in part because the corporate giant has a substantial wound-care business. "I've known Greystone for about five years," says Steve Fletcher, business manager for 3M's advanced wound care division. Fletcher used to be involved in mergers and acquisitions for 3M and it was his business to keep tabs on innovative companies such as Greystone.

"What Greystone offers us is to accelerate the wound-healing process," Fletcher says. "The clinicians believe in the product."

The advanced wound care industry is growing at 8% to 12%, but drugs such as Tegaderm that help accelerate wound healing are growing at a faster 20% annual rate. "That's really where we'd like to take our business," Fletcher says.

For Greystone, 3M offers a global distribution channel. The terms of the deal were not disclosed and Pilant is reluctant to discuss it. But Pilant says the key to creating a partnership with a Fortune 50 company is to "make sure they know you have the same emphasis on quality and safety as they do."

That includes hiring professionals who are well known as experts in their industry. Kel Cohen, Greystone's chief medical officer, is widely considered to be the "godfather" of wound care, for example. He directed the first clinical wound-healing center in the country and was a founder of the Wound Healing Society and Wound Healing Foundation, two leading organizations in the field.

To accommodate the growth, Greystone plans to increase the size of its manufacturing facility in Memphis, Tenn. from 8,000 to 22,000 square feet. Pilant declines to cite financial data, including revenues.