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Artes Medical is creating a completely
new category in the injectable aesthetics market with their dermal filler ArteFill®
product that permanently corrects wrinkles
Artes Medical, Inc.
5870 Pacific Center Blvd.
San Diego, CA 92121
Diane S. Goostree
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
Published April 12, 2007
Diane S. Goostree has been Artes Medicals Chief Executive
Officer since November 2006 and President since March 2006. She also served as Artes
Medicals Chief Operating Officer from March 2006 to November 2006. From September
2002 to February 2006, Ms. Goostree was employed with SkinMedica, Inc., a dermatology
specialty pharmaceutical company, most recently serving as Senior Vice President,
Corporate Development and Operations. From May 2002 to September 2002, Ms. Goostree served
as a consultant for SkinMedica, Inc. From November 2000 to May 2002, Ms. Goostree served
as Vice President, Business Development at Elan Pharmaceuticals, a biotechnology company.
Prior to that, Ms. Goostree worked for Dura Pharmaceuticals in a variety of roles,
including Regional Sales Director, and most recently as Vice President of Business
Development from September 1995 until its acquisition by Elan Pharmaceuticals in November
2000. Ms. Goostree holds a B.S. in Chemical Engineering from the University of Kansas and
an M.B.A. from the University of Missouri in Kansas City.
Artes Medical is a medical technology company focused on developing, manufacturing and
commercializing a new category of aesthetic injectable products for the dermatology and
plastic surgery markets. The Company's initial product, ArteFill®, is being marketed to
men and women as a treatment option for the correction of nasolabial folds, known as smile
CEOCFO: Ms. Goostree, you are new to the
CEO position at Artes Medical; what is your vision and how are you getting there?
Ms. Goostree: Our company is in the
medical device space marketing an injectable aesthetic product, ArteFill, that is a
treatment for facial wrinkles. As we all know, baby boomers are aging and looking for a
way to age gracefully. We have developed the first and only injectable wrinkle filler that
has a permanent component that provides a long-term effect compared to the existing dermal
fillers on the market that are all temporary in nature and required repeated and frequent
injections. Therefore, our product is very differentiated. We have just launched it into
the marketplace in the US, and we will be reaching out to physicians and consumers who are
interested in a long-lasting wrinkle filler. This product competes in the area that most
people have heard aboutthe injectable aesthetics market which includes Botox®
(Botulinum toxin) from Allergan, Inc. (AGN-NYSE), Restylane® (a clear hyaluronic
acid-based gel dermal filler), and collagen. ArteFill is the first and only product
approved by the FDA with a permanent component and we have clinical data showing that
smile-line wrinkles can be corrected for up to 5 years, so it is really a break-through
product in this category.
How do you get the medical community to pay attention, and do you go to the people first,
the doctors first or both?
Ms. Goostree: It is important to reach
out to both interested constituents there. We reach out to our physicians by making sure
that all of our scientific information is readily available to them. Recently at the
annual American Academy of Dermatology, a meeting held in Washington D.C., with over 9000
dermatologists in attendance, we presented our five-year data at one of the dermal filler
sessions. We will also be publishing it in a peer-reviewed journal and will be submitting
it to the FDA in order to obtain enhancement of our labeling, which contains the official
guidelines for using the product. Separately we are reaching out to consumers to help them
become aware of this new product, ArteFill®, by working with various womens and
beauty magazines. We will be having a beauty editors luncheon in New York in the next
couple of months with some of our key opinion leaders who are very active in helping
womens magazines and beauty editors understand what new technologies have been
approved by the FDA, and are available. We will be educating them at this event in the
near future and they will be reaching out through selective PR and articles in these
womens magazines to help get the word out to women that there is a new option
available to them and for those who would like to have longer-term wrinkle
How is your product unique?
Ms. Goostree: All of the other dermal
filers on the market essentially act as plumping agents, which is a non technical way of
explaining it. Basically all of these other products are injected under the wrinkle to
provide volume underneath the wrinkle to hold up the wrinkle and smooth out the area. The
dermal fillers are usually used on the lower half of the face. Botox® is also used for
wrinkles, but it is used in the top half of the face and it actually paralyzes muscles so
that you cannot frown. As you can imagine, you would not want to use a paralytic agent
such as Botox® on the lower half of the face. Therefore, that is where the dermal fillers
are used---for wrinkles such as smile lines between the mouth and the nose. Our product is
different from the other dermal fillers because in addition to being a plumping agent like
the others, we also have a permanent component. The permanent component, a synthetic
polymer, is incorporated into our injectable gel in the form of very small and round
particles called microspheres. The microspheres are so small that you cannot feel them in
the gel, but they are the right size to stimulate a cell in the body called a fibroblast
that naturally produces your own collagen. With all dermal fillers, the body reabsorbs the
plumping material usually in three to six months. However, with our product, after that
plumping material is reabsorbed, we still have the permanent part of our formulation,
which is the microspheres, stimulating the cell in the body to make collagen. It makes
human collagen the same natural way that collagen is always made throughout the body to
smooth out the skin. We can stimulate this natural process in the body to make additional
collagen, even when you have a situation such as when you age where your body is not
making as much collagen as when you were younger. We are stimulating those cells to behave
as if they were in a younger body.
Do you own this technology?
Ms. Goostree: Yes, we own the
technology and our scientific founders originally developed the technology. They have
assigned the rights to the company as we have further developed the technology and done
all of the work for approval from the FDA. We have worldwide ownership of this technology
and we have the ability to use it for a variety of applications. The initial approval is
for wrinkles on the face such as a smile line or nasolabial folds. In addition, there has
also been some work in other countries with our technology using it to repair scars and
for reconstructive uses for things like reconstruction after mastectomy. There are many
areas we are considering for this technology beyond wrinkles. At this time, we are excited
about this initial use of ArteFill for wrinkle correction. ArteFill provides a long
lasting wrinkle correction option for consumers who would like to have a longer lasting
Often a new idea or technology will come out, and years down the line people find out that
it was not quite what thought it was thought to be; how can you be sure this is the real
Ms. Goostree: ArteFill is an FDA
approved product; in fact, ArteFil is the only dermal filler that is approved by the FDA
that contains a permanent component. The FDA has very strict requirements for development,
manufacturing, quality control, and clinical trials showing both safety and efficacy. The
FDA has reviewed our data and found our product to be safe and effective. It was a very
long process, taking millions of dollars to do that. Because we have been approved by the
FDA, I think consumers and physicians can be comfortable, that the safety and efficacy of
the product has been well reviewed and approved by the FDA as part of this process.
You are going from being an R&D company to a commercial stage; what is the financial
Ms. Goostree: When we previously
developed ArteFill®, Artes Medical was a private company. We raised about $80 million
from private investors including venture capital during that time. After we received
approval for ArteFill® from the FDA in October of 2006, we then moved forward with an
initial public offering to take the company public. We went public in December of 2006 and
raised $30 million. Therefore, we believe we now have sufficient capital in the company
and on our balance sheet to execute on our launch plans, so we started shipping product to
our customers in February of 2007. We have a great management team on board. We have a
head of sales and a head of marketing who combined have over 25 years of experience
selling dermal fillers and marketing dermal fillers in the US market. We have a head of
regulatory affairs who was previously responsible for the approval of Botox® Cosmetic at
Allergan. We have a very experienced team and they are doing a great job now launching our
product and reaching out to the physicians and consumers who have an interest in a
longer-term wrinkle correction product like ArteFill®.
do you produce the product; do you own facilities or contract out?
Ms. Goostree: Artes Medical is a fully
integrated medical device company unlike a number of medical device companies that rely on
outside contract manufacturing. We have our own sterile manufacturing facility here in San
Diego. We have gone through a full FDA inspection of our facility including a full
eight-day inspection during the review and approval process. We have our own staff of
manufacturing and quality control associates here that do all of our manufacturing. Our
heads of manufacturing and engineering previously had extensive experience with collagen
and a variety of dermal fillers and our quality control people had experience in sterile
manufacturing. Therefore, we have a great team and full ability to control our
manufacturing, to scale up as needed and continue to enhance those manufacturing processes
as we grow.
What is the marketing opportunity in the male area?
Ms. Goostree: Currently the dermal
filler market in the US is a market that is 95% female. Only 5% of the patients who use a
dermal filler are men. When we have conducted focus groups with potential male patients,
what they tell us is that at some point in the future, they may have an interest in
looking younger, but they do not want to go back and visit the physicians again and again
for temporary fillers. They do indicate that when they hear about ArteFill®, a product
that can provide long-term correction with a single injection; they are quite interested
in it. We believe that we have an unprecedented opportunity to expand this market into the
male segment because of the characteristics of ArteFill®. We will be doing that initially
working with physicians to make sure that they are familiar with the data in our clinical
trials, which included men as well as women. We will also be implementing a public
relations outreach through mens magazines to help them become aware of this option
for those who would like to look younger with minimum time investment compared to
How do you attract the patients with injection fatigue and credit card fatigue?
Ms. Goostree: We believe we are
creating a new category of a permanent dermal filler with our product ArteFill®, which
meets the needs of patients who may have tried a temporary filler. They may like the way
it looks but then they experience injection fatigue or credit card fatigue when they
realize how often they have to come back for treatment, and how expensive it is. There is
a large group of patients who have already tried a temporary filler and eventually have
dropped off that temporary filler treadmill and are interested in a longer-term option
like ArteFill®. Our physician customers tell us many of their patients have been waiting
for a long-lasting solution like ArteFill.
Do you see those people as your best potential customers?
Ms. Goostree: We would see them as the
initial low-hanging fruit so to speak. There is already a pool of patients out there who
have previously tried fillers and have dropped out. Many physicians that we speak with
tell us they have a waiting list of patients waiting for ArteFill®, a permanent filler.
That will get us started very quickly. As we continue to educate physicians and patients
about ArteFill® and its long-lasting effects, there will be more and more patients who
are interested in trying and switching to a longer-term filler.
Why should investors be looking at Artes Medical now?
Ms. Goostree: Artes Medical is a very
attractive investment for a number of reasons. We are what can be considered a pure
play in the medical device area, in the aesthetic space. We have a very attractive
business model. First of all, we conduct our own manufacturing at our facility in San
Diego. Therefore, we not only have full control of our manufacturing, we have very
attractive gross margins as we scale up our sales revenue. Secondly, this market is highly
concentrated from a physician perspective. There are in the US, over 23,000
dermatologists, plastic surgeons, and cosmetic surgeons, but we only need to reach out to
1000 of those physicians to cover 50% of the procedure dollars for dermal fillers. We can
cover those physicians with a relatively small sales and marketing organization. The cost
of manufacturing the product, and the cost and expenses associated with reaching out to
sell and market the product are relatively modest compared to many other sectors and types
of products. Therefore, we think it is a attractive business model that will provide very
attractive net income and operating margins to investors in the future.
Is the investment community paying attention to Artes now?
Ms. Goostree: I think they really are.
Because we are a new company in the public market and we have a new technology that is a
breakthrough technology, there has been a lot of interest on the part of equity analysts
to speak with us and learn about ArteFill® and Artes Medical. We currently have 4 equity
analysts covering the company and virtually every other analyst that does cover a dermal
filler or Botox® has indicated an interest in speaking with us and has wanted to know
about ArteFill® so that they can develop a complete model of the entire dermal filler and
aesthetic injectable business. Therefore, we are seeing a lot of interest from the
investor community and we expect that will likely grow as we get the word out more about
our ArteFill® product and our technology here at Artes Medical.
CEOCFO: In closing, what should people
remember most about Artes Medical?
Ms. Goostree: What people should
remember is that we have a truly differentiated product for wrinkle correction with our
ArteFill® technology and the permanent component of our ArteFill® formulation. When we
asked patients in our clinical trial whether they preferred a temporary filler or
ArteFill®, our long-term filler, over 90% of the patients in the temporary filler group
requested to switch over and be treated with ArteFill®. When we asked the ArteFill®
patients if they were satisfied with the results, over 90% said they were satisfied or
very satisfied and they still had full wrinkle correction 5 years after their treatment.
ArteFill provides a new technology for physicians who wish to offer new products to meet
the desires of patients who want to look younger with long-lasting wrinkle
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