Top Deal: A Sweet Solution To Wound Care

Key Stats:

Summary

The SanMelix Labs team has been selected as a “Top Deal” by KingsCrowd. This distinction is reserved for deals selected into the top 10% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to [email protected]. 

Problem

In the US, chronic wounds affect around 6.5 million patients costing in excess of $25B to treat chronic open wounds. This is only increasing with the aging population, a sharp rise in diabetes (causes diabetic ulcerations), and the growing cost of healthcare. 

It is estimated that the advanced wound care market is to reach $14.89B by 2026 growing 4.5% from $10.34B in 2018. 

As mentioned above, this is driven by the continued rise of geriatric (65+) individual that will account for 42.5% of the total US population by 2030, and more than 100M US adults that are living with diabetes or prediabetes. 

Be it accidents caused by old age or ulcers caused by diabetes, wound care is a serious issue in these cohorts of patients that continue to grow at an uncomfortably elevated rate. 

In diabetics, ineffective wound care to get rid of these types of injuries are the leading cause of non-traumatic lower extremity amputations in the United States with about 14-24% requiring amputation. 

The only decent solution for patients today is Cefazolin, which is typically prescribed to patients with open wounds in an effort to prevent bacterial infection. However, numerous patient side effects, resistance to MRSA (a potentially deadly infection), and negative ecological effects on natural ecosystems are all issues that would lead one to surmise that a more natural solution for wound care is needed.  

A natural remedy for open wound care is needed if the healthcare community wants to decrease the number of non-traumatic amputations and lessen the impact on the environment. SanMelix Laboratories has a solution to offer. 

Solution

SanMelix is offering a product that brings a solution to the healing of chronic wounds that has actually been around for thousands of years. In 3000 BC, Egyptians used honey as a wound treatment. 

Researchers found that the ancient Egyptians “wound salve” revealed that it is strongly bacteriocidal to Staphylococcus aureus, Escherichia coli, and coliform bacteria. Honey contains antibacterial agents that are active against nearly all bacteria, including common resistant strains found today. 

BEECure utilizes buckwheat honey compared to manuka honey because of its superior healing properties since buckwheat honey has higher anti-inflammatory and higher antioxidant activities. SanMelix’s advanced wound care products have been fortified with antimicrobials to ensure a higher standardization and broader spectrum antibacterial activity.

Buckwheat honey is higher in antioxidants and rich in vitamins which promotes healing in the body and supports immune function. Because honey draws moisture out of the wounds, it has the ability to eliminate bacteria. The high sugar content and low pH in the honey can also prevent bacteria and other microbes from growing in the wound. 

BEECure is made from buckwheat honey which is sustainably made and safe to the environment compared to synthetic and semi-synthetic drugs. Because of its bioactive enhancements, BEECure will improve skin and tissue regeneration and debriding action. This prevents the necessity for excess skin grafts or skin substitutes. 

SanMelix’s bioactive honey dressing with its patent pending is the first microbial barrier claim in the US. The dressing prevents biofilms from forming, control wound odor, reduces pain and treatment time while being more cost effective and more environmentally sound. Their honey treatment can also be used for acne treatment, diabetic foot cream, burn care ointment, radiodermatitis, eczema, eye drops, and diaper rash. 

Go To Market Plan & Challenges

SanMelix Laboratories is working with Trauma Insight for the testing phases of BEECure. Trauma Insight has formed a CRADA (cooperative research and development agreement between government agency and private company) with the United States Air Force. The Air Force is performing the 510(k) performance and microbial barrier testing. Currently, there’s an antibiotic-resistant infection affecting military personnel overseas. The BEECure dressings create a barrier between the insides of the body and the harsh environment that will keep the wound clean.

The advanced wound care MGO dressing is currently in the testing phase being carried out by the Air Force. The radiodermatitis cream is in the testing phase for product and packaging. While SanMelix has other ideas for where their formulated product can go, they are still just ideas that have not been created yet. 

A challenge associated with investing in a company that is still in the testing phase is simply time frame. However, the product seems sound and novel and the company is progressing nicely through test.

SanMelix is looking to continue testing the advanced wound care (AWC) products to obtain 510(k) pre-market clearance from the FDA while also continuing their pending patent formulation applications.

They are currently in negotiations with a European company to distribute its existing buckwheat honey CE mark products in order to secure a main and authentic raw buckwheat honey supplier. A concern associated with going with a European company and distributor is the increased regulations with bringing in products from overseas to the FDA to approve. An upside to having a distributor overseas is the opportunity to enter the global market more easily and seamlessly. 

SanMelix anticipates their customers will be the Veteran’s Affairs (VA) and Department of Defense (DoD), medical supply distributors, physician networks, hospitals, and indirect sales channel for over the counter opportunities. They plan to market directly to customers through digital marketing and social media. 

The Team

Dr. Kenneth A. Sabacinski is SanMelix Laboratories’ chief medical officer. Dr. Sabacinski is board certified and has over 30 years worth of clinical experience in foot and ankle medicine, surgery, and limb salvage. 

Dr. Sabacinski performed his internship, residency and fellowship training at the Beth Israel Deaconess Medical Center, Harvard Medical School, Boston, MA. During his residency at the Beth Israel Deaconess Medical Center and the Joslin Diabetes Center, he was specifically trained in the treatment of acute and chronic diabetic foot ulcers. 

Diana Sabacinski is SanMelix Laboratories’ chief executive officer. Mrs. Sabacinski is a Certified Public Accountant (CPA) and Certified Fraud Examiner (CFE) with more than 25 years of public accounting and C-level management experience in the service, manufacturing, distribution, government contracting, and healthcare industries. She began her career at the international accounting firms of Deloitte, Haskins & Sells and Coopers & Lybrand. 

After obtaining her CPA license, she worked as a Vice President of Finance of a public manufacturing company. Subsequently from 1989 to 2001, she co-founded, co-owned, and operated a multi-location (7) computer training organization, ExecuTrain of Florida (ETF). 

Upon sale of the company, Mrs. Sabacinski started LKJ Associates, Inc., a consulting firm, to assist others in the development, planning, start-up, and operations of their companies and has provided advisory services at other firms as well. 

John Kaufman is SanMelix Laboratories’ director. Mr. Kaufman has 40 years of management experience working with and for the Government, business startups, and large-scale manufacturing, He is the founder or cofounder of three separate companies (InteSec Group Fla LLC, Be Power Tech Inc., International Battery). 

On the advisory board is Dr. Jason Green, a Board Certified Dermatologist, and founder of Green Dermatology & Cosmetic Center in Deerfield Beach, as well as 

Colonel George E. Peoples, a military career staff surgeon at a level I trauma center and multiple combat deployments. 

Additionally, Allison C. Komiyama, a former FDA reviewer who is an expert in regulatory submissions, quality systems, and biocompatibility evaluation is also working in an advisory role to the organization.

The Team

• Differentiated Solution: This product is a uniquely differentiated natural solution to solving wound care in the US, which is a fast growing market. With antibiotic concerning role in healthcare treatment, SanMelix has a product that can help curb and bypass resistance while improving overall care. SanMelix’s patent on the three products that are specific to buckwheat honey combined with antimicrobials increases the near to long term defensible moat of the business since replicating its formula is largely protected.
• Government involvement: While government involvement can often mean slow moving and costly, in this case it actually can mean even more upside for the business. The reality is, the reason the government often gets involved in these types of projects is because of the recognition that there is a growing concern or issue facing the nation. In this case, growing resistance to synthetic drug solutions in the form of antibiotics is threatening our long term ability to treat patients. The Air Force’s role in testing this product for use in the field signals to big pharma and the general wound care market that new natural solutions are desired by the government to protect our long term interest as a country. SanMelix has a unique opportunity to win large contracts with the military for wound treatment while also putting on notice the general wound care market that a natural solution is a real viable alternative to current medical treatments.

• Large Addressable Market: SanMelix is capitalizing on a $23.3B global wound healing market, a $3.6B global diabetic foot ulcer treatment market, and a $310.9M global radiodermatitis market. This is considering only the markets their current products would enter not the potential of other applications SanMelix Laboratories is considering. Big pharma, which will need to adapt to pressures for less utilization of antibiotics, could very likely look at this company as a prime acquisition target.

The Rating: Top Deal

The likelihood that SanMelix Laboratories will undergo a positive acquisition is high considering the depth of the market they want to enter and the reported effectiveness of their product. 

In addition to a big pharma buyout, a possible buyer may be Net Health, a leading provider of clinical solutions for specialty care owned by PE behemoth The Carlyle Group. Net Health acquired Wound Care Strategies, a wound and skin care documentation provider and three other companies to solidify its position in the wound care market. 

SanMelix Laboratories is being led by a team with deep experience at some of the most prestigious hospitals and branches of the armed forces and government. While they are hoping to enter a field already claimed by big biopharma companies, their unique formula of natural ingredients will likely become the preferred treatment plan especially if it becomes approved by the Air Force. 

The approval from Air Force testing would be a major point of defensibility and long term revenues for SanMelix Laboratories. We are impressed by the strength of management, the product and the potential for acquisition in a market that is as large as wound care. 

SanMelix Labs is a step toward revolutionizing wound care.