For larger health-care companies such as Baxter
In the latest such deal to go down, Baxter licensed privately held Innocoll's antibiotic "sponge." The implantable device releases the antibiotic gentamicin from a biodegradable matrix that's inserted before the surgical patient is sewn back up. Innocoll is currently testing this in two phase 3 trials to see whether the slow release of antibiotics lowers the rate of surgical infections. If the trials are a success, Innocoll will file for marketing approval with the Food and Drug Administration next year.
The sponge, which is already approved for use in 49 other countries, would be the only implantable, biodegradable sponge that's approved to help reduce surgical site infections. It would presumably compete against other antibiotics -- gentamicin is available as an injectable generic from APP Pharmaceuticals
Most of the terms of the deal weren't disclosed, but hopefully, Baxter tied a majority of the payments to the sponge gaining U.S. approval; the FDA has seemingly tightened down on approving antibiotics over the last few months. The FDA recently turned down both Johnson & Johnson's
Assuming Baxter didn't overpay, the product seems like a good addition for the health-care giant, which already sells products that stop bleeding and seal up tissue. Wringing out some additional revenue from the sponge shouldn't be too hard.
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a selection of the Fool's Income Investor newsletter. The Fool has a disclosure policy.