During our quarterly earnings calls, we enjoy taking a few extra minutes to describe a patient story or two.  We’re often advised by Wall Street experts that big pharma companies use their earnings calls just to highlight their financials—and, because we all follow big pharma, we should as well.

We respectfully disagree.  We look forward to hearing from our patients and as Hoji constantly reminds us, companies like Apple are dominant in multiple markets because of their zealous commitment to listening to their customers.  So bear with me as I describe an interesting new patient story.  This one is from Mexico and describes terrific results using our new acne medication, GramaDerm.

Rosa, a 23-year-old female living in Monterrey, Mexico, received samples of our new Microcyn-based GramaDerm HydroGel for her acne.  Our Mexican sales team launched GramaDerm in September 2010, and a dermatologist at an IMSS hospital prescribed GramaDerm for Rosa.  IMSS, or Instituto Mexicano del Seguro Social, is the largest social healthcare system in Latin America.

The dermatologist recognized that Rosa was not making any progress using the standards products—such as those benzyl peroxide-based formulations you see advertised often on television, endorsed by celebrities. So Rosa began using GramaDerm twice a day, has been a regular customer now for four months and describes very positive results.

Here is a photo of Rosa in November 2010, just as she was starting to use the Microcyn-based GramaDerm.

And now here’s a photo of her in January 2011, two months into her new Microcyn-based treatment regimen.

While she’s not blemish-free, it is evident that the resolution of her acne, which was severe, is progressing nicely.  Rosa was so convinced that nothing could help her that she had even made a bet for dinner with the Oculus sales manager in Monterrey.  She was certain that GramaDerm would come up short—like everything else she had tried.  We’re happy to report that the sales manager was treated to a delicious dinner at her favorite restaurant.

Our entry into the Mexican market with the new acne hydrogel was not predicated on just an idea.  In June 2009, we announced preliminary results from a U.S. 40-patient feasibility study that assessed the impact of an enhanced Microcyn Hydrogel formulation in the treatment of acne.

Cheryl Bongiovanni, director of the Lakes Aesthetics Center in Lakeview Oregon, who conducted the study said:  “In the treatment of acne, we have observed preliminary results which suggest that this hydrogel formulation may reduce the need for laser treatment and chemical peels to address skin damage caused by acne or acne treatments.  The promising preliminary results, including elimination of secondary infection and inflammation and reduction of new scarring, warrant further research of the possible long-term impact of this formulation to determine whether the effects are sustainable.”

In that same announcement, we indicated that Oculus’ plan was to utilize this information to evaluate the potential of near-term market opportunities while exploring longer-term partnerships with a number of prospective companies.

We further conducted an 89-person double-blinded study in Mexico in 2009, head to head against benzoyl peroxide.  The Microcyn formulation either equaled or out-performed the benzoyl peroxide in multiple levels of improvement leading the researcher to conclude that Microcyn was an important choice for treating inflammatory acne.

The initial near-term market opportunity was our entry into the Mexican market.  The longer-term partnership came to fruition just a few weeks ago, when we announced a broad multi-market and multi-product collaboration with Amneal (http://www.amneal.com/ and http://www.amnealenterprises.com/).  Included in this agreement was the provision that AmDerma Pharmaceuticals, LLC, an Amneal alliance member, would pay Oculus $500,000 as a non-refundable initial payment as an option to license the Microcyn technology for an acne new drug application, with the option expiring June 30, 2011.  Assuming execution of the option, the new acne drug will be the subject of a separate agreement for U.S. and European rights, with Oculus retaining rights to the rest of world, that will include undisclosed upfront, milestones and royalty payments.  This is exciting because as we have previously identified, the acne treatment market is significant with revenues estimated to reach $3.02 billion by 2016.

At the same time, the many me-too products for sale at CVS and WalMart are not significantly different from the current monotherapies, thus the acne market awaits a blockbuster drug—in other words, something that actually works!  Based upon (1) initial patient reports from Mexico, (2) the preliminary results from the U.S. feasibility study, (3) the head-to-head against benzoyl peroxide in the Mexican study and (4) the recent vote of confidence from Amneal, we believe the Microcyn HydroGel could be just such an exceptional advance in the treatment of this age-old dermatological challenge.

In late 2008, as the economy was faltering and cash at Oculus was running thin, our CEO, Hoji Alimi, CFO Bob Miller and I locked ourselves into a window-less office at our headquarters in Northern California, turned off our phones, closed our laptops and stood before a white board to chart our course.  Our stock price was at an all-time low, our access to cash to fund operations was non-existent (across all industries as you may recall) and we had to right the ship.

Our financial challenges were not a result of our products or our actives (the mix of chemical species that make our product unique) but rather were the nature of the pharmaceutical market.  We had just completed a successful Phase II clinical trial with solid results head-to-head against a robust antibiotic from Johnson & Johnson.  We met with the FDA in late September 2008 and had a clear path towards our Phase III.  But as one colleague suggested, it was good news/bad news–the good news being that our Phase II data was better than expected; the bad news was that most pharmaceutical companies couldn’t access cash to fund their trials in 2008.  The industry average to take a drug through the FDA to approval was more than $802 million on a capitalized cost basis in 2003 [see DiMasi, Journal of Health Economics 22 (2003) 151–185] – the cost to move our drug through Phase III in 2009 and 2010 would have been at least an additional $40 million.

We spent a week locked in that office planning and re-planning our next steps.  We telephoned the best minds in the business to ask their advice; our board members challenged our assumptions, forecasts and budgets; and our employees pitched ideas and suggestions.  When we emerged from this make-or-break change in strategy meeting, we came out united: We were no longer a clinical stage biotech company focused on a Phase III drug opportunity.  Instead, we flipped a switch to transition into a commercial healthcare company with near-term revenue opportunities.

Look how far we’ve come in two years:

• We have 29 SKUs in the animal healthcare market, the Dog Whisperer (Cesar Millan) is our pitchman and our partners at Innovacyn are firing on all cylinders.
• Our dermatology product opportunities are stacking up like airliners at JFK.  We recently announced our partnership with Onset Therapeutics, a division of Collegium Pharmaceuticals (http://www.onsettx.com/) and launched an acne product (GramaDerm) in Mexico.  Stay tuned here, lots of good news coming in the derm space.
• Our U.S. sales team is growing quickly and showing solid wins with 13+ SKUs in the dermatology, surgical and wound care markets.
• Our R&D pipeline is robust with five products pending before the U.S. FDA and more to come.

Our product margins are improving:

• For the period ending September 30, 2008:  38%
• For the period ending September 30, 2010:  69%
• We are targeting 75%-80+% product margins.

We have a reasonably smart team and would love to take credit for navigating Oculus through these trying economic times and all the while, improving our margins.  But really, the star performer here has been our Microcyn Technology—its efficacy validated each day as we receive patient success stories.  These stories never cease to amaze, the clinical results are consistently better than expected, customer feedback has been strong and the cost-benefit of using our products is even being noticed at the Center for Medicare/Medicaid Services in Washington D.C. as we look to better our reimbursement opportunities.

If Microcyn was simply another me-too product, then all our brainstorming sessions two years ago would have had minimal impact.  But the aggregate voice of our progress since our change in strategy really speaks volumes about the uniqueness, safety and efficacy of our Microcyn products in multiple applications in multiple markets around the globe.

Microcyn is simple and it works.  Our marketing team will hate the tagline, but Microcyn simply works.

Stay tuned.

Last week, we released our earnings for the quarter ending June 30, 2010 and have received lots of feedback from our shareholders and analysts.  Several highlights:

• We hit our numbers for the 6th quarter in a row on both revenue and operating expenses,
• Our cash position is healthy, and
• We’ve converted from a one compound company into a commercial stage enterprise with more than 20 products in the market, just in the US.

My wife, Cindy, and I are so bullish on the OCLS opportunity that we purchased more OCLS stock on the open market the very day our management team’s trading window opened (August 9, 2010).  As Warren Buffett once said, “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”   We agree – Cindy and I are highly interested and hope that we are ahead of the stampede that sees the oil under our feet.

During our earnings call, we announced that our revenue split with our animal healthcare partner would begin on July 1, 2011. This is an important relationship for us so bear with me for several highlights:

1. In March of 2010, we disclosed that sales of the Vetericyn (www.vetericyn.com) products, after only nine months of operation by our partner, had achieved an annualized run rate of $6 million.  This is very impressive – at day one, Vetericyn had no infrastructure, no distribution, no sales team, no marketing materials and no market awareness.  In other words, Vetericyn went from zero to $6M in less than 9 months.
2. Vetericyn is a subsidiary of Innovacyn, the parent company that will also be marketing our Microcyn-based OTC human wound care products (www.puracyn.com) in the United States.
3. On July 1, 2011, we start sharing gross profits with Innovacyn for both Vetericyn and Puracyn products.
4. Our CFO, Bob Miller, expects us to book profits of anywhere from 30 to 40 cents on each dollar of revenue Innovacyn generates, assuming current pricing.  In other words, for every $1M that Innovacyn generates in annual sales, Oculus will receive $300 to $400K that goes straight to our bottom line.

To say the least, we’re most excited about this important partnership and corresponding timelines.  We believe these dates are potential game-changers and will keep you up to date.

We also announced on our earnings call that we are dipping our OCLS toes into the acne market.  As you may know, our dermatology product line is growing leaps and bounds and acne is the largest dermatology Rx ad OTC market segment.  We are launching our first acne product in September in Mexico.

Our team in Mexico is preparing marketing materials and a promotional campaign for the expected September 2010 regulatory approval from the Mexican Ministry of Health.  Immediately after the approval, we’ll launch to dermatologist in the big markets of MX City, Guadalajara and then roll out nationwide.

Our team in Mexico has demonstrated what happens when you combine an outstanding product and a solid plan = in the antiseptic market in Mexico, we have a 40+% market share for our prescription Microcyn. We hope to repeat our results in the dermatology market in MX and beyond.

OCLS colleagues and partners around the world are anxiously looking forward to their pace setting performance in this large acne market.

As always, thank you for the continued support.

As director of investor and public relations at Oculus, I have one of the best jobs in the company.  Since I joined the Oculus team in January 2004, I’ve had the pleasure of meeting with hundreds of doctors/patients from around the globe (in my efforts to document through video, photos and written chronicle, their experiences) that have been successfully treated with the Microcyn Technology.  It’s truly an uplifting experience when you can see the real-world impact of saving patient lives.

As an example, I share with you recent accounts of two patients on opposite ends of the U.S. continent—thus, the tale of two cites.   As is often the case in these retellings, I’ve changed the names of the patients, but have held true to the cities of origin.

Our first story involves Cindy and Chantael from Oxford, New York, a village of 4,000 people on the Chenango River with beautiful old homes, churches and well-kept parks.  Without divulging ages, Cindy, who is Chantael’s friend and caretaker, shared with us that Chantael was born the same day that the Titanic sank, but her birth coming just a few years after its sinking. Chantael has traveled all over the world—as a ballroom dancer as well as a French and German language teacher.   She effuses culture and is highly thought of by all in Oxford.

This March, Chantael was diagnosed with dry gangrene in her foot, and she was seen by her primary care physician, who originally prescribed a conservative regimen of silfadene cream.  Cindy felt frustrated with this approach because it didn’t seem to be doing anything and she was spending hours each day scraping away the silfadene paste, which acted like a wax and would plug the creases in Chantael’s skin.  But eventually the wound deteriorated to a point that was cause for the doctor to strongly suggest they amputate the foot.  That wasn’t an easy conversation for either Cindy or Chantael, so on March 11, 2010, they opted instead to have Microcyn Wound and Skin Care added to her treatment regimen.

Twenty days later, on March 31, Cindy shared with me via email:  “Thanks so much for all your help and interest. Chantael is doing much better.  The Microcyn is helping to bring back both the toes and heel back. We have a nursing service that comes to the house twice a week and they work with the doctors and her doctor is not opposed to anything that will help her gangrene. I can’t begin to thank you enough for all your help.  There is no more talk of amputation! It won’t be long and Chantael will be up and about – just in time for good weather.”

Most recently, I spoke with Cindy on May 14, and having seen the phenomenal recovery of Chantael’s foot, she has taken it upon herself to become the Microcyn Technology town-crier in the city of Oxford. She is working with the local pharmacies to get it placed on their shelves as well as with the local newspaper to share the good news of Chantael’s recovery and the role that Microcyn played in it.  Thanks Cindy!

Now we fly via the magic of the written word to the capital of California, the sunny city of Sacramento.  But life isn’t always sunny there, as Marilyn and Claudia (another caretaker/elderly patient tandem) can attest.  As Marilyn, who is a retired nurse, tells the story, her daughter was to be married on a Sunday in March. The night before the wedding, the rehearsal dinner was held at the groom’s house in one of those stately homes on Capital Avenue.  Though recently refurbished, the outside veranda apparently couldn’t support the weight of the twenty people who had gathered upon it, which included Marilyn’s 90-year-old mother, Claudia.  To make a long story short, the veranda collapsed—a 12-foot fall—and many were injured, including Claudia who suffered an eight-inch gash on her right tibia.  She was transported by ambulance to the local hospital where the wound was debrided and bandaged.  Being of stoic Scottish stock, she refused to be hospitalized, and instead walked with a new cane down the aisle the next day and read a collection of gaelic poetry that brought the house to tears.

Shortly thereafter, however, her wound was diagnosed as being infected with either MRSA, staph or strep–none of it good.  The doctors implemented acute infection management and infused her with antibiotics, but the infection failed to respond.  Fortunately, Marilyn had heard of Microcyn through a family friend and suggested it to Claudia’s doctors.  In that the hospital was trying the last antibiotic available, still to no avail, Claudia’s treatment regimen was changed to include Microcyn Technology.  Her wound responded and within a week the infection disappeared.  Using FAA jargon, Marilyn refers to this experience as a “near miss” that may have turned to disaster if not for the intervention with Microcyn.

Now I suppose I could end here, but in the spirit of Charles Dickens (who penned the original Tale of Two Cities), I must digress to the British Isles, where another amazing Microcyn story came to light a few years back.  Rather than performing a Yankee-translated disservice to her prose, I simply include this woman’s email in 2007, which reads like a Victorian novel and serves as a heart-warming closing to today’s tale.  Microcyn is sold as Dermacyn in the EU:

Dear Dan
Many thanks for your note and interest in my mother’s condition. We had the best Christmas ever – hard work, as I prepare sufficient quantity and variety to feed the Russian and US armies – as not only was Mum able to join us with my beloved daughter and new grandson, but she was absolutely free of pain and discomfort. My prayers for her continuing survival, free of trauma, were answered and I can assure you that I have said thank you not just to God but to you and the Dermacyn scientists over and over – and over again. Finding this product, and having access to your phenomenal support, is akin to winning a thousand major lotteries (not that I have ever won any!) although, to be honest, there is no material thing in the entire universe which could come close to matching what we have just experienced over Christmas. On Boxing Day, my mother thanked me for her best Christmas to date – what could better that? My response is always that it is a team effort: it is an amalgam of prayers, products and phenomenal people like you, all wrapped up as a gift from God.

During the awful time of my last email, sent before Christmas, my mother had succumbed to a new symptom, again on the poor circulation right leg, with awful water retention, which saw clear fluid pouring from the pores, from knee to ankle. It left the skin tender and red and ultimately a sore, blackened, spider shaped area of about one an a half inches in circumference, developed, which I am continuing to treat twice daily with Dermacyn. The papery, red skin remains but the blackened areas are diminishing and that section of skin is a lot less sensitive than before. The foot remains stable, with slowly demarcating areas lifting between healthy and necrotic points.

The doctors and nurses here are utterly dumbfounded at the stability and clean status of the necrotic toes and, even more so, of my mother’s renewed buoyancy. It is with extreme pride that I have made them all aware of Dermacyn’s existence and most have been made to sit and read the data about this product. There is no doubt they expected Mum to perish after she nose-dived before Christmas and more or less gave up on her. It was the loneliest time of my life and all I had was my faith in God to do whatever was best for Mum. She slept virtually non-stop like a drowsy, weighty caterpillar for about a week and then suddenly emerged like a lively butterfly from a chrysalis of gloom and doom on Christmas Eve: it was truly the best family gift, ever.

Forgive this wieldy response – I am simply overwhelmed with the miracles, which have surrounded my mother since I have had the privilege of having been born in her care. Her life has been full of the most incredible adventures and I hope I can find time to start my book about her, while she can read and help edit. She has a virtually encyclopaedic memory of family events and accurately graphic recall over more than eight decades Anyone who has ever known her has always been utterly captivated by her grace, charm and good humour, all of which she has employed to change the negatives of her life into the most glittering and unbelievable positives. I just pray she has sprinkled a little bit of that gold dust into the DNA of her daughter!

I send the very best of loving gratitude and good wishes to you, your family and colleagues for the healthiest, happiest and most successful year ever in 2008. I shall be forever grateful to you and those unseen Dermacyn personnel who have helped me to reclaim precious time with my lovely mum.
Jocelyn

I hope this message finds you all well.

All is well at Oculus after a solid Q4 earnings call in early June.  In anticipation of our earnings calls, we typically prepare several days in advance to ensure our message is clear and concise.  Our message on this call was clear-cut: Revenue was up in the United States, Mexico, China, India and the Middle East with 65%+ growth and expenses were flat across the board.

We focused portions of the call on our U.S. efforts. A year ago this time, for the quarter ending March 31, 2009, we generated $79,000 in U.S. product sales. This year, for the quarter ending March 31, 2010, we generated $600,000 in U.S. product sales and for the quarter ending December 31, 2009, we generated $307,000 in U.S. product sales. Looking at our annual numbers, for the year ending March 31, 2009, we generated $298,000 in U.S. product sales and for the year ending March 31, 2010, we generated $1,196,000 in U.S. product sales. We experienced all this growth while expenses remained flat.

We spend a lot of time at Oculus discussing patient stories as we listen to our end customers–the patients–in an ongoing effort to improve upon our Microcyn products. We receive plenty of feedback from patients (please keep them coming) and dissect the information along product lines, regulatory and basic science.  Our CEO, Hoji Alimi, challenges us to expand these patient stories into clinic or hospitals stories whereby our Microcyn products can then impact entire wings of patients rather than just one patient at a time.

With the help of a brilliant ex-McKinsey and Pfizer veteran who is helping us craft our U.S. sales strategy, we identified a large East Coast skilled nursing chain with the intent of flooding a single unit within their chain with our Microcyn products for care of chronic wounds.  As you may know, skilled nursing facilities serve patients who require constant nursing care due to pressure ulcers, or what are commonly referred to as bedsores.  We were so convinced that we would improve wound-healing times and save this facility money, we offered 30 days worth of free product–as much as they could use– and then followed up with them to collect data.

The results were terrific – one floor of this large chain, which shall remain confidential due to our agreements with them, healed 25 pressure ulcers in 30 days.  These are ulcers that previously showed no ability to heal.  The management of this chain detailed the data and they are continuing to provide raw numbers on their cost savings by using Microcyn liquids and hydrogels in lieu of less efficacious and more expensive wound care products. They’ve offered to publish a poster of their experience at a large industry conference and are hoping to introduce us to other local skilled and unskilled nursing facilities, home health care companies and local hospitals.  We’d like to repeat this experience over and over at other similar large facilities across the country.

A second success story focuses on our successful and aggressive “collaborative” strategy we use to help sell our Microcyn products.  Biofilm destruction is large problem in chronic wound care; and especially so for doctors who uses expensive skin substitutes.  There are a handful of skin substitute companies that manufacture human, bovine or porcine skin to help accelerate stalled wounds.  But if you don’t remove the underlying biofilm before using one of these $1,000-plus skin substitutes, then you may have to start from scratch if an infection grows under the skin substitute or if the skin substitute doesn’t take.  Our Microcyn liquids are compatible and do no harm to every single one of the skin substitute products we’ve tested to date – and that is no surprise to us since Microcyn is non-toxic to mammalian cells.

One skin substitute company, again for confidentiality purposes we won’t identify the company’s name, has found that they sell more of their skin substitutes and their doctors experience better takes by killing biofilms with our Microcyn products before layering on their skin substitute.  A large percentage of this company’s 100-person sales force is now selling and advocating the use of Microcyn as a necessary biofilm killer before and after layering their product. This is an interesting relationship and opportunity for us – as we generate Microcyn evangelists/salepeople in other companies at no cost to us.  To the contrary, these salespeople are actually ordering Microcyn at our regular price by the case!

Our CEO likes to say that we’ve turned a corner at Oculus, evolving from a clinical story to the commercial revenue growth story we are today.  We are growing our sales team daily and hope to feed these commission-based sales professionals an entire portfolio of innovative products.  Revenue is up across the board, the product pipeline is full and expenses are flat. Our CEO is right – we’ve turned an interesting corner as we continue to ramp revenues around the globe.

Thank you to everyone who continues to read our posts for your continued support.

The conference is a whirlwind affair and keeps us running all day long.  I enjoy these meetings—not only because I get to share the expanding Oculus story—but perhaps more importantly because I also get direct feedback from our investors and the stock market as to what they think of our story—what they see as our strengths and what they see as our weaknesses.

All I can say is, “What a difference a year makes!”

A year ago, we had a single formulation launched into the U.S. market – the Microcyn Wound and Skin Care.  And while this is a fantastic product that is helping save lives and limbs, companies often get grouped into a “single product” category, which these fund managers view as high risk.  They say, “You have one shot on goal and that’s it.  If you miss, there’s no backup.”

In contrast, this year I was able to discuss at length our expanded product portfolio now commercialized in the U.S. with 12 new product launches just in this past year alone!

And the 12 new products doesn’t even include the international products that have been–or will soon be–launched outside the U.S. Nor does it include our new dermatology hydrogel that we are launching next week.

Last year, we needed an infusion of cash to pay for the development and launch costs of our new products. As you might recall, the cost of capital (if you could even find it) a year ago was expensive, if not prohibitive. So this year, as bankers and fund managers asked, “How much money are you interested in raising to support your ongoing operations?” Our answer was: “None as it relates to accomplishing our promised milestones. We’re not here for funding.”

We went on to explain that we have sufficient cash in the bank and survival is no longer an issue for Oculus. Rather, our eyes are on rapid revenue growth. We expect six additional FDA clearances and product introductions in the next ten months just in the U.S. These new approvals will open multi-billion dollar markets to us such as the allergy, oral and atopic dermatitis. While most of the bankers and fund managers were disappointed, since they make their living investing, they were also very excited about Oculus’ growth trajectory.

Our rapid growth strategy is focused in large part on supporting our partners. Innovacyn, which is marketing the Vetericyn animal healthcare products, has grown its revenue to a $6 million run rate after just nine months of commercialization in the U.S. We have a 50/50 revenue sharing agreement with Innovacyn, which will be triggered no later than 2011. Their success in the animal market is not only evidenced by the rapid revenue growth, but also the endorsement of the Vetericyn products by industry influencers such as Cesar Milan of The Dog Whisper and horse trainer Clint Anderson.

Another partner, Union Springs Pharmaceuticals, recently launched their spray into the U.S. over-the-counter retail market including CVS, Duane Reade and others. Our strategy is to continue to develop compelling new product applications for these partners as they continue to fund all the packaging, marketing and sales expenses in an effort to rapidly claim market share.

It’s funny, but to a person, the final question from nearly every one of the investment fund managers at the end of each presentation was, “So what’s the downside at Oculus? When does the other shoe drop?”

Candidly, a year ago, they wouldn’t have asked that question as our challenges were obvious. But this year, our response is “We have 12 new shots on goal. Maybe not all of them will fly at first, but we have eliminated the risk of being a one-product company.” If one is going to have a downside, I think that’s a great one to have!

As well, we’ve taken their other concerns off the table. We don’t need to raise additional capital to support our operation. We have a growing portfolio of commercialized products, both domestic and international. We have a U.S. commission-based sales team for the professional medical products, so we can dramatically grow sales without increasing our overhead. We have six more FDA clearances coming in 2010. And we have fantastic partners, such as our animal healthcare partner, Innovacyn.

Needless to say, the entire Oculus team is excited about this sea change in our situation in just a year’s time. This is not to say that we don’t or won’t have our challenges. That’s the nature of business. However, our challenges are no longer about survival—but rather they are about how quickly we can grow the business and bring the healing of the Microcyn Technology to patients around the globe.

As you may have recently read, we received a clearance from the FDA for our new Microcyn Dermatology HydroGel product, our first dermatology product and a terrific new opportunity for the team at Oculus.

We’ve been quizzed repeatedly the last several days for the “story” behind the new product and our push into dermatology. Bear with me for a peek behind the scenes.

As so often happens at Oculus, our new dermatology product started with a patient story.  Our CEO Hoji Alimi, CFO Bob Miller, and I were visiting a pediatric burn unit listening to a plastic surgeon describe his treatment protocol for severe burns.  The surgeon introduced us to a four-year-old patient, with family in tow, who had severely burned one hand, both arms and portions of his chest from an accident in front of the family fireplace. The surgeon was using our Microcyn liquid on the patient (and others in the ward) and requested that we develop a hydrating gel version of Microcyn to provide continuous contact on the burn site.

What really caught our eyes was this:  The patient had both hands wrapped in gauze. As the surgeon unwrapped the burned hand, we quizzed him why both hands were wrapped if only one was burned.  “Because he itches,” the surgeon replied, “and will scratch off the bandages all over his body, even in his sleep. Itch is a fierce problem.” The surgeon went on to explain that the double-hand wrap was a very common protocol in the general pediatric ward of the hospital for other type of patients, including atopic dermatitis or eczema.

Itch is a fierce problem.

As we drove away, we telephoned our R&D team, spearheaded by Dr. Bob Northey, back in California and added another to-do on an ever-growing list for the team.  Hoji asked Bob to attack the gel R&D project not just from an antimicrobial barrier perspective for burn patients, but to also address the itch.

Jump to May 2009 – after 18 months and manufacturing more than 200 versions of gels, some good, some not so good, Bob and his R&D team nailed it.  In May 2009, the FDA cleared our first wound care hydrogel specifically for burns and other serious wounds.  No details here on how or why Bob nailed down the formulation (no trade secrets here either, this is well protected intellectual property), but even after the FDA clearance, the team continued to perfect, synthesize and work on the gel to attack the second major issue: the itch.

Itch is a fierce problem.

Jump to March 2010 – after 27 months and hundreds and hundreds of discarded bottles and tubes of various gels, Bob and team nailed it.  Again.  This week, the FDA cleared our new Microcyn Dermatology HydroGel to address itch and pain relief.  As our recent press release indicated, this is a large new market for us, the U.S. dermatology market estimated to be multi-billion dollar in size.  And the number one reason people visit their dermatologists? The general complaint of itch.

With our growing product portfolio, we want to help that family in the burn unit get home faster.  We want to help that family undergoing surgical procedures to heal faster with our new post-surgical product.  And we want to help those patients suffering from fierce itch to sleep well at night.

Thanks for reading this long, coffee-fueled story—but behind each patient story lies more opportunities for improved patient outcomes. That’s what drives us here at Oculus.

I just returned from three days in San Francisco where I presented at one of the largest investor healthcare conferences of the year. The economic sentiment this year, versus last, was upbeat and optimistic. As CEO of Oculus, I was elated to share with the investment community that Oculus has reached an inflection point in our growth, with seven new FDA clearances and product introductions targeted for the United States in 2010. The investors we met with this week along with the general market response has been favorable to our news.

However, to keep the week in perspective, we all received a bit of a jaw-dropping awakening when we learned this week that our neighbor to the south, Haiti, had been hit by a devastating 7.0 earthquake, and that an estimated 100,000 or more people were dead or missing.   So during this week of prosperity and positive meetings in San Francisco, surrounded by institutions and banks with hundreds of millions of dollars to invest, we couldn’t help but think about these millions of Haitians without food, water, security, a place to sleep or medicine.

So while our thoughts and prayers were going out to our neighbors, we didn’t think that was enough.  Especially, when our Microcyn Technology can do wonders to treat the injured and help prevent or cure deadly infections, which is a serious threat in dire situations such as this.  So while it was good that we were reporting positive news to investors about all the new Microcyn products introductions, we couldn’t allow our corporate focus on the dollars and cents to overshadow our human heart.

So in less than 12 hours time, the Oculus team and my wife Linda, in spite of the chaos surrounding transport to Haiti, were able to connect with a relief organization that is preparing to distribute a large shipment of Microcyn Technology to healthcare workers in Haiti this coming week!  We knew time was of the essence in this situation, so the Oculus team actually worked through the night to make this happen.  To the Oculus team, we owe a big thank you for burning the midnight oil.  I know we will, as a result, save lives–and that was the purposeful vision Linda and I shared as co-founders when we started Oculus and the journey so many years ago.

I believe this simply goes to show that shareholder value and humanitarian outreach can fuel each other.  Thanks for listening and for doing all that you can, from a personal perspective, to lend your support to the Haitians.  Hoji.

Dr. Eileen Thatcher
Professor Emeritus
Sonoma State University

The antimicrobial agent in Microcyn Technology is hypochlorous acid (HOCl), is found naturally produced in animals and humans for protection against infectious agents, including bacteria, viruses, yeasts and some fungi. This small molecule is nontoxic to host cells at the concentrations used in Microcyn Technology and does not cause the development of allergic reactions with repeated use.

Antibiotics are molecules that either stop the growth of bacteria (bacteriostatic) or kill them (bactericidal). They are not effective against bacterial endospores. Antibiotics have no effect on viruses or most fungi. Some fungi and some bacteria naturally produce these molecules as a means of controlling competing bacteria for nutritional resources and giving the antibiotic producers an edge in the battle of “survival of the fittest.” For medical and other uses, the antibiotics are either isolated directly from the microbes or the molecules are synthetically produced and chemically modified to improve their function.

Some antibiotics are said to be broad spectrum if they are capable of stopping or killing many different kinds of bacteria, usually both Gram positive and Gram negative species. Some are effective only against a narrow range of bacterial species. Different antibiotics have different mechanisms of action, but most can be broadly classified into four groups: penicillins and cephalosporins, which both interfere with bacterial cell wall synthesis; tetracyclines, which affect bacterial protein synthesis; and flouroquinolones, which inhibit bacterial DNA synthesis. [1] The key point is that these different classes of molecules specifically target bacterial metabolic and growth processes, while not attacking host cellular activities. That’s the good news. So what is the bad news?

Resistance to any specific antibiotic tends to appear clinically within a few short years following the introduction of that antibiotic for treatment or control of infection. [1, 2, 3] Why? Recall that antibiotics are produced by microbes. The producing organisms must have a means of protecting themselves from the toxic molecules they produce. This is accomplished either by specific mechanisms to inhibit or break down the antibiotic or by modified target structures, thereby rendering the microbes immune to the toxic antibiotics that they produce. The genes responsible for this protection can be carried either on the chromosome or on a plasmid, a small independent donut of DNA.

Resistance genes, especially those on plasmids, can be easily transferred between different bacteria, even to unrelated species! [4, 5, 6]  In addition, random mutations occurring in bacteria exposed to antibiotics can yield individual cells that are resistant. [7] These bacteria will grow and replace the dying sensitive population originally targeted. These are real problems due to the widespread and often inappropriate use of antibiotics, which has led to an increasing variety of resistant strains of clinically significant bacteria. The solution has been to synthetically modify the molecular structure of specific antibiotics to render them resistant to breakdown or blockage by the resistant factors. However, use of these next generation antibiotics lead to the appearance of new mutant strains capable once again of resistance. [8, 9] So the arms race continues!

Microcyn Technology has been shown to have antimicrobial activity against antibiotic-resistant strains of bacteria with the same efficacy as antibiotic-sensitive strains of numerous pathogens, including methicillin resistant Staphylococcus aureus [MRSA] and vancomycin resistant Enterococcus faecalis [VRE]. The table below shows a representative sample of pathogens used in standardized industry tests conducted by a variety of GMP/ISO certified independent testing laboratories.  In these tests, Microcyn Technology has been shown to be highly effective. [10]

In addition to the potential of resistance, use of antibiotics can lead to a variety of negative effects, including allergic reactions and incompatibility with other drugs and nutrient minerals. Common side effects of systemic antibiotics include nausea and diarrhea as the natural GI bacterial flora is disrupted, headaches, and photosensitivity. [11]

In contrast, Microcyn Technology has been shown to be non-sensitizing and nontoxic through exposure on skin or mucosal surfaces as shown by GMP & ISO approved animal testing, including skin irritation, dermal sensitization, intracutaneous reactivity, nasal irritation, eye irritation; acute oral, acute inhalation and systemic toxicity. In vitro testing demonstrated that Microcyn Technology was neither cytotoxic nor genotoxic.

[1] Madigan and Martinko, 2008. Brock’s Biology of Microorganisms, 12e. Pearson/Prentice Hall.

[2] Landy JJ, 1958. An historic approach to antibiotic resistance. Am Surg 24 (1):23-31.

[3] Mathema B, Kurepina N, Fallows D, and Kreiswirth BN, 2008. Lessons from molecular epidemiology and comparative genomics.  Semin Respir Crit Care Med 29(5):467-80.

[4] Morschhauser J, Kohler G, Ziebuhr W, Blum-Oeler G,Dobrindt U, Hacker J, 2000. Evolution of microbial pathogens. Phil Trans R Soc Lond B 355:695-704.

[5] Dar J, Thoker M, Khan J, Ali A, Khan M, Rizwan M, Bhat K, Dar M, Ahmed N, and Ahmad S, 2006. Molecular epidemiology of clinical and carrier strains of methicillin resistant Staphylococcus aureus (MRSA) in the hospital settings of north India. Ann Clin Microbiol Antimicrob 5:22

[6] Jones CH, Tuckman M, Murphy E, and Bradford P, 2006. Identification and sequence of a tet(M) tetracycline resistance determinant homologue in clinical isolates of Escherichia coli. J Bacteriol 188(20):7151-7164.

[7] Woodford N and Ellington MJ, 2007. The emergence of antibiotic resistance by mutation. ClinMicrobiol Inf 13:5-18.

[8] Szabo D, Barcs I, and Rozgonyi F, 1997. Extended-spectrum beta-lactamases: an actual problem of hospital microbiology (a review). Acta Microbiol Immunol Hung 44(4):309-325.

[9] Paterson D and Bonomo R, 2005. Extended-spectrum beta-lactamases: a clinical update. Clin Microbiol Rev 18(4):657-686.

[10] Landa-Solis, González-Espinosa D, Guzman B, Snyder M, Reyes-Terán G,  Torres K, and Gutiérrez AA, 2005. Microcyn: a novel super-oxidized water with neutral pH and disinfectant activity.  J Hosp Infect (UK) 61: 291-299.

[11] Owens, Nightingale, and Ambrose, 2004. Antibiotic Optimization: Concepts and Strategies in Clinical Practice, 1e. Informa Healthcare.

The team at Oculus loves to share patient stories, in the lunch room, during the long commutes fighting California’s (and Seattle’s – R&D is in Seattle) traffic and today, on our investor dialogue site, As We See It.

A terrific new patient story made the rounds this week, this one from Phoenix, Arizona.

Several weeks ago, a Phoenix-based podiatrist removed a growth from a patient’s foot.  The incision site was slow to heal and a pronounced skin rash appeared around the wound bed edges.  The podiatrist referred the patient to a world-class wound care expert in Scottsdale who immediately switched the patient to our new Microcyn Skin & Wound HydroGel.  The physician advised that within 48 hours of switching to our new gel, the rash surrounding the wound bed disappeared and the wound itself is now closing quickly.

Our assumption is that the rash surrounding the wound bed was delaying the wound closure.  Opens wounds are a gateway for infection so wound closure is paramount.  Our new HydroGel is non-irritating, non-sensitizing and non-cytotoxic to granulating tissue.

Another great patient outcome – we love these patient stories.

Also, we hope to announce several new products in the next several weeks and a quick note regarding our innovation process.  Our R&D team always begins a new product opportunity with basic chemistry and tissue care biology to create novel new opportunities.  We then poll our network of physicians to ask questions about product performance, packaging, pricing and even distribution.  Our sales and marketing team evaluate timing, competition and complementary or replacement products.  Our manufacturing, regulatory affairs and quality teams kick off their respective responsibilities playing key roles in bringing our new products to market.

Throughout the entire process, we ask ourselves – what is the benefit to the patient?  At each stage of innovation, we ask again what is the benefit to the patient?

After the product launch, at the end of our long new-product introduction, we love hearing these type of patient stories.  To see and hear the benefit to the patient drives our whole innovation process, again and again.

More patient stories to come …if you have one, please share it with us!  Thanks.