Jim Stommen08.09.11
Companies to Watch
A look at four growingmedtech firms with the technology—and temerity—to play in the big leagues.
Cardio Net
LOCATION: Conshohoken, Pa.
STATUS: Public Company; $141 million, 2009 annual revenue
LEADERSHIP: President and CEO Joe Capper
SECTOR: Cardiovascular
ONLINE: www.cardionet.com
CARDIONET TOUTS CLINICAL EVIDENCE IN ITS WIRELESS MEDICINE PUSH
Operating in a crowded market segment loosely defined as “wireless medicine,”CardioNet is basing much of its pitch on the clinical evidence supporting its Cardiac Outpatient Telemetry (MCOT) technology. Former president and CEO Randy Thurman put it this way in a company earnings statement last fall: “CardioNet is the only mobile cardiac outpatient telemetry company to have a significant portfolio of clinical evidence supporting [our] technology.”
Thurman, who continues as chairman of the company after being succeeded as president and CEO by Joseph Capper in June, cited the findings of clinical studies for various applications of the technology, including post-atrial fibrillation (AF) ablation, sleep disorder indicator, neurology and arrhythmia diagnosis, adding, “Physician surveys indicate that our growth and success against competitors is driven in part by our outstanding clinical research, which includes 29 published abstracts or studies.”
Prior to joining CardioNet, Capper was president, CEO and a director of Home Diagnostics, a leading manufacturer of diabetes management products.
The CardioNet system incorporates a lightweight patient-worn sensor attached to electrodes that capture two-lead ECG data measuring electrical activity of the heart and communicates wirelessly with a compact, handheld monitor. The monitor analyzes incoming heartbeat-by-heartbeat information
from the sensor on a real-time basis by applying proprietary algorithms designed to detect arrhythmias.
When the monitor detects an arrhythmic event, it automatically transmits the ECG to the CardioNet Monitoring Center, even in the absence of symptoms noticed by the patient and without patient involvement. At the monitoring center, cardiac monitoring specialists analyze the sent data, respond to urgent events and report results in the manner prescribed by the physician.
CardioNet, which is based in the Philadelphia, Pa., suburb of Conshohoken, repeatedly has rolled out clinical and reporting enhancements to the MCOT service. It reported the release of a new atrial fibrillation-reporting package to enhance its current AF management program in October 2008. The program offers a tool to the physician for the diagnosis, treatment and management of their AF patients. The program additionally provides physicians with amonitoring program to evaluate the clinical efficacy of catheter and surgical ablation procedures allowing improved management of these post surgical patients.
According to the company, enhancements added in early fall 2009 assist physicians to access more in-depth data to better diagnose AF, heart pauses, and ventricular tachycardia. The company said the new clinical indicators were important for monitoring patients who are suffering from cardiac events, both symptomatic and asymptomatic. It added that those indicators become even more important when used in combination with SomNet, CardioNet’s program for identifying a sleep disorder indicator, which was launched inMay 2009. In the case of SomNet, the company said the enhancements meant amore definitive diagnosis could be made as to the relationship of arrhythmias to sleep disorders.
One big drawback for CardioNet, as for anyone else in the mobile cardiovascular telemetry space, is the absence of a national pricing reimbursement rate for mobile cardiovascular telemetry in the Medicare final rule for the physician fee schedule. Reimbursement for mobile cardiovascular telemetry continues to be carrier-priced by Highmark Medicare Services (HMS) in 2010, and apparently will do so for 2011 as well. CardioNet said in late June that the Centers for Medicare & Medicaid Services (CMS) had proposed that the technical component of mobile cardiovascular telemetry remains carrier-priced
for calendar year 2011. That proposal was included in the Medicare Physician Fee Schedule Proposed Rule released on June 25.
Thurman repeatedly has voiced frustration over the decision, noting that “the mobile cardiac outpatient telemetry industry has now served over 400,000 patients nationally, of which 37 percent were Medicare patients. The industry provided CMS and HMS substantial data that we strongly believe justifies a
significantly higher national rate.This decision has serious implications for the economic viability of the current CardioNet business model.”
Originally located in San Diego, Calif., before its move to the East Coast, CardioNet went public in an initial public offering that raised about $81 million in March 2008, at $18 for each of its 4.5 million shares. That result was at the lower end of the company’s anticipated range of $18 to $20 a share.
CardioNet reported in July 2009 that it had terminated a planned deal for Eagan, Minn.-based Biotel, with no reasons given for the cancellation. The acquisition of Biotel was intended to expand CardioNet’s product portfolio with a recently approved wireless event monitor, the company said at the time.
Competitors in the wirelessmonitoring sector are numerous and widely varied, including such large medical device players as GE Healthcare, Philips Healthcare and Welch Allyn, along with more tightly focused firms such as eCardio, LifeWatch, Intelli-Heart and Healthtronics.
ConforMIS
LOCATION: Burlington,Mass.
STATUS: Privately held, venture-backed
LEADERSHIP: CEO Philipp Lang,MD
SECTOR: Orthopedics
ONLINE: www.conformis.com
CONFORMIS MEASURES ITSELF BY THE FIT OF ITS IMPLANTS
Measure twice, cut once.That old carpentry adage obviously applies at least as well in the matter of medical implants, and that’s where ConforMIS comes in.
The company is using a combination of detailed imaging and rapid prototyping to make a definitive statement in the knee-replacement field. Definitive, as in what it labels “patient-specific” implants. ConforMIS says its philosophy is simple: “Make the implant fit the patient rather than forcing the patient
to fit the implant.”
Since its founding in 2004, the Burlington,Mass.-based firm clearly has differentiated itself from the very substantial competition by offering patient-specific knee resurfacing implants designed to offer osteoarthritis patients a more customized fit based on measurements obtained from a computer tomography scan.
That is a significant departure from practice. Most manufacturers in the space make the implants in a variety of sizes—usually 10 or so at most—so when it comes time to put an implant into a patient, a surgeon has to do a fair amount of manipulation of the surrounding bones. But ConforMIS’ iUni fits
the patient by taking imaging data from a CT scan and using the company’s iFit technology to create a custom implant, usually taking about six weeks from scan to the completed implant being in the surgeon’s hands.
ConforMIS essentially competes with every company in the replacement-knee space, including firms such as Zimmer Holdings Inc., Stryker Corp., Johnson & Johnson’s DePuy business, Smith & NephewOrthopaedics and Biomet. Each is a big player in the space, and some are absolute giants.
But there’s that “patient-specific” thing. ConforMIS CEO Philipp Lang, MD, puts it this way: “We take a completely different approach. We get the imaging data and then we make a tailor-made implant for that patient.”
The CT data is transformed into patient-specific implants and instrumentation via its iFit technology, which converts CT data into implants that are precisely sized and shaped to conform to the unique topography of each individual knee joint. The company’s iJig instrumentation uses the same data to create cutting and placement guides that the company says eliminates the need for manual sizing, reduces surgical time and trauma, and improves reproducibility.
The platforms are supported by proprietary intellectual property consisting of more than 250 patents and pending patent applications that encompass imaging software, image processing, implant design, surgical techniques and orthopedic instrumentation. While ConforMIS at present is focused on the knee, it says the technology is applicable to all major joint systems.
ConforMIS launched the latest iteration of its unicompartmental knee-resurfacing device, the iUni, in the United States late last year, with CE-mark certification coming this past April. Dubbed the iUni G2, its enhancements include an improved, wear-optimized design, instrument changes designed to make
for even simpler surgical techniques, and iView patient-specific images for improved surgical planning. It is available for both medial and lateral compartment treatment.
Lang said the iUni G2 was designed with surgeon feedback playing a large role. He said the technology represents not only advances in implant characteristics, but also in the experience surgeons will have in the operating room.
Terry Clyburn, M.D., an orthopedic surgeon in Bellaire,Texas, who performed the first iUni G2 procedure last fall, cited the “more streamlined surgical process”possible with the new system. He praised ConforMIS for listening to surgeons and providing rapid updates, saying that is “a testament to the
advantages of their just-in-time model.”
In addition to the iUni for unicompartmental procedures, ConforMIS has developed the iDuo bicompartmental knee resurfacing system, which resurfaces only the affected areas of either the medial or lateral compartment of the knee plus the patellofemoral compartment, in the process preserving far more bone than in a traditional knee replacement surgery.
While it battles both industry giants and surgeons’ long-established ways of doing things, it is clear that ConforMIS has many believers. In the summer of 2009, the company reported raising its largest round of funding to date—$50million—from private-equity and sovereign-wealth funds in the United States,
Asia, Europe and the Middle East.
NuVasive
LOCATION: San Diego, Calif.
STATUS: Public company; $370 million, 2009 annual revenue
LEADERSHIP: Chairman and CEO Alex Lukianov
SECTOR: Orthopedics
ONLINE: www.nuvasive.com
NUVASIVE'S LATERAL MOVE GIVES IT TRACTION IN SPINE SPACE
No segment of the orthopedics sector has generated more company, investor, patient and physician interest over the past decade or so than spine. And that’s little wonder, given that the world is full of people with serious back problems with few choices for alleviating their conditions. And many of those precious few choices have involved highly invasive, downright dangerous forms of surgery.
As is made abundantly clear at each year’s meeting of the North American Spine Society, physician interest in lateral access spine procedures, motion preservation and minimally invasive surgery procedures continues to increase.
It stands to reason, then, that companies such as NuVasive, with a variety of distinctly less-invasive approaches to alleviating painful back conditions, have earned a following. San Diego, Calif.-based NuVasive pioneered the technique known as lateral access, and physician interest has grown apace.
NuVasive’s primary focus is the $5.1 billion U.S. spine implant market. The company also is expanding its participation in the global biologics market and is developing products for the emerging motion preservation market.
During a steady streamof investor conference appearances, Chairman and CEO Alex Lukianov, CFO and Executive Vice President Michael Lambert and other company officials maintain that NuVasive’s goal is to be “cutting edge and innovative” in every aspect of the spinal business, from access to neuro
monitoring and biologics to motion preservation.
With more than 55 products in its portfolio at present, NuVasive spans the lumbar, thoracic and cervical segments of the spine sector. Its principal product offering is based on the Maximum Access Surgery, or MAS, platform. The MAS platform combines four categories of products that the company says collectively minimize soft tissue disruption during spine surgery with maximum visualization and easy reproducibility for the surgeon: NeuroVision, a software-driven nerve avoidance system; MaXcess, a unique split-blade retractor system; a wide variety of specialized implants; and several biologic
fusion enhancers.
The MAS platform’s lateral approach is known as eXtreme Lateral Interbody Fusion, or XLIF, with which NuVasive has pretty much revolutionized spine surgery. Lateral access is undergoing rapid adoption by U.S. physicians, and in response, companies including Medtronic Inc., Johnson & Johnson, Synthes Inc., Alphatec and Globus either are offering or plan to offer lateral access approaches that compete with NuVasive’s, which is far and away the leading lateral access procedure.
Going hand in glove with lateral surgical access is neurological monitoring. The ease of neuro monitoring, which offers safety to the procedure and confidence for the physician, is an important driver for surgeon adoption. Integration of the neuro-monitoring equipment into the procedure differs by
company, but NuVasive’s NeuroVision system is a clear leader there as well.
NuVasive is adding to its platform technology at a steady pace, launching 10 or so new products a year in a bid to capture even more market share in a sector where share shifts occur with the regularity of desert sands. The lateral approach is increasingly being used for multi-level cases, and NuVasive also
is moving into the thoracic spine with product introductions for more complex cases such as corpectomy and scoliosis.
NuVasive also has a growing offering of biologics products, boosted by its initial $15 million investment last year in Progentix Orthobiology, a Dutch company that is developing a synthetic bone substitute that is designed to accelerate bone healing through a novel micro-structure created by a proprietary
manufacturing process. The investment was NuVasive’s third strategic transaction in the biologics arena.
Lukianov said Progentix’s “impressive preclinical data attracted us to this unique technology. We believe there is a large product gap in the $1 billion orthobiologics market between BMP and commodity synthetic and allograft bone graft extenders. The Progentix material, along with Osteocel Plus, will allow NuVasive to offer its surgeon customers superior products, both synthetic and human-derived, that fill an important market need, command premium pricing to commodity bone graft products, and build on our FormaGraft Collagen Bone Graft Matrix product line.”
As for motion preservation, spine surgeons and neurosurgeons—and certainly patients as well—are excited about artificial discs for such purposes. A lack of insurance coverage for motion preservation has been a major impediment to physician adoption, but insurers are beginning to cover the procedure
for more patients, and companies are optimistic the trend will continue.
The domestic cervical motion preservation market is estimated at about 3,000 procedures and the lumbar motion preservation market at some 2,000 procedures, with more than 30 percent annual growth anticipated in cervical and single digit growth in lumbar. J&J, Medtronic and Synthes have discs
approved in the United States, while NuVasive and several other companies, including Spinal Motion, Spinal Kinetics and Globus, have discs in U.S. trials and development,.
On the financial side, NuVasive has had six consecutive years of growth that has met or exceeded analyst expectations. For 2009 as a whole, revenues totaled $370.3 million, a 48.1 percent increase over the $250.1 million reported for 2008. The company reported 1Q10 revenue of $109.1 million, 36.3 percent up from the prior year.
Vascular Solutions
LOCATION: Minneapolis,Minn.
STATUS: Public company; $68.4 million, 2009 annual revenue
LEADERSHIP: Founder and CEO Howard Root
SECTOR: Coronary and peripheral vascular medicine
ONLINE: www.vascularsolutions.com
STRENGTH IN NUMBERS (OF PRODUCTS AND REPS) PROPELS VASCULAR SOLUTIONS ALONG A GROWTH CURVE
Vascular Solutions is a Minneapolis, Minn.-based medical device company founded in 1997. The firm's focus is on products for coronary and peripheral vascular procedures that are sold to interventional cardiologists, interventional radiologists and vascular surgeons through a direct U.S. sales force and international distributor network.
The publicly held company had revenues of $68.4 million in 2009, up sharply from $61.2 million in 2008, and in 2010’s first quarter posted another record with $18.2 million in revenues, up some 15 percent from the year-earlier mark of $15.8 million.
In a recent interview with Medical Product Outsourcing, Vascular Solutions founder and CEO Howard Root discussed the company’s turnaround from a single-product company struggling in the face of market dominance by a larger competitor to one with a portfolio of more than 50 products that has posted several years of steady growth.
MPO: Your company has created a niche for itself in the medical device field by doing just that—focusing on what the big guys consider“small”products in niche markets. How did you get to where you are today from your origins as a single product company selling the Duett vascular sealing device?
Root: The short answer is that we failed in our first business, which was to take a single product and make it a substantial player in the sealing device market. We got to $12 million in sales and we were losing $15 million a year doing that, and I went back to the board and said that we needed to change our strategy in order to grow and get to profitability. So it’s kind of a business model that no one would create right from the start, because you create a pretty substantial fixed-expense organization that focuses on smaller-revenue products. But once you build that organization, giving you some opportunities to develop these smaller niche products, it’s extremely rewarding, both in terms of the products you launch and on the financial side once you get to a certain scale.
MPO: Your company has become a real model of consistency in sales growth and profitability, sort of a small-market version of Stryker with its longtime mantra of 20 percent earnings growth.
Root: Up until now we really have been focused on the top line, with seven consecutive years of greater than 10 percent sales growth. That’s what you can do with launching new products and growing the products you have. The earnings growth is now going in the last couple of years.
MPO: A key to your strategy of identifying and moving forcefully to penetrate small markets is your access to customers via a strong direct sales force. What was the genesis of your decision to go the direct sales route rather than with a distributor model?
Root: You have to have at least 60 people to cover the U.S. geographically. We’re up at 87, so we have pretty good geographic coverage of everywhere in the U.S. That’s the legacy of the Duett. We knew we needed to have a nationwide sales force, so we created that, and then when we looked at the question
of what we had to leverage off of for the second chapter of our story, it was not the technology as much as it was the distribution network. Once we had that,wemade sure we quickly developed the products that could go to the same call points with that sales force. Once we got the distribution, what we
needed to do was go find the small products
MPO: Besides revenues, you have touted the direct sales approach as a means of generating ideas for new products.
Root: They are the eyes and ears, dealing with the doctors, and the doctors have ideas—if not what the next new device should be, at least what you ought to do to improve the procedures right now.
MPO: Do you do in-house product development, or are you relying on the physician-innovator?
Root: Both of those are important for us: either generate ideas inside, or if they have ideas that are generated by physicians and brought to us. The idea can be as simple as a napkin. The idea for the Pronto extraction catheter was written on a napkin I still have in my desk drawer. We took it back from
there and started creating the product. Other times, there are complete products that we add through acquisitions. Some of these physicians have actually developed the products and started their own little companies to get it started, and then we take it over from there.
MPO: You recently acquired a package of vascular access products from Escalon that seem a good fit with your product portfolio.What kind of criteria do you apply when you’re looking at acquisitions?
Root: We’re looking at acquiring products, not projects; we have plenty of ideas and projects in here. Take the Smartneedle product line from Escalon. It was a single product in a company that tried to create a sales force just for that, and the economics just don’t work for a $4 million revenue product to have a direct sales force in the U.S. For us, it’s the same exact call point, the same physicians we already are calling on, it’s a product they know well and doesn’t require a lot of up-front training, and it fits nicely in our bag. That’s almost the perfect acquisition for our size right now.
MPO: Is the need for more clinical data more daunting to you now in terms of any new products that you might look to develop, or does it cause you to just look for existing products that are out there?
Root: For acquisitions, we certainly want to look at existing products. Some of the partnerships that we have had have been for projects where we have had to get the U.S. clinicals or U.S. regulatory work done. We have done a couple of PMAs (premarket approval applications), so it’s not like we don’t have the ability to do that. But you have to be realistic and realize the FDA is not going to get easier on approvals. That makes you step back and look and say, “How long is it going to take and how expensive is it going to be before that product is ready to come to market?”
—Jim Stommen, contributing writer
A look at four growingmedtech firms with the technology—and temerity—to play in the big leagues.
LOCATION: Conshohoken, Pa.
STATUS: Public Company; $141 million, 2009 annual revenue
LEADERSHIP: President and CEO Joe Capper
SECTOR: Cardiovascular
ONLINE: www.cardionet.com
CARDIONET TOUTS CLINICAL EVIDENCE IN ITS WIRELESS MEDICINE PUSH
Operating in a crowded market segment loosely defined as “wireless medicine,”CardioNet is basing much of its pitch on the clinical evidence supporting its Cardiac Outpatient Telemetry (MCOT) technology. Former president and CEO Randy Thurman put it this way in a company earnings statement last fall: “CardioNet is the only mobile cardiac outpatient telemetry company to have a significant portfolio of clinical evidence supporting [our] technology.”
Thurman, who continues as chairman of the company after being succeeded as president and CEO by Joseph Capper in June, cited the findings of clinical studies for various applications of the technology, including post-atrial fibrillation (AF) ablation, sleep disorder indicator, neurology and arrhythmia diagnosis, adding, “Physician surveys indicate that our growth and success against competitors is driven in part by our outstanding clinical research, which includes 29 published abstracts or studies.”
Prior to joining CardioNet, Capper was president, CEO and a director of Home Diagnostics, a leading manufacturer of diabetes management products.
The CardioNet system incorporates a lightweight patient-worn sensor attached to electrodes that capture two-lead ECG data measuring electrical activity of the heart and communicates wirelessly with a compact, handheld monitor. The monitor analyzes incoming heartbeat-by-heartbeat information
from the sensor on a real-time basis by applying proprietary algorithms designed to detect arrhythmias.
When the monitor detects an arrhythmic event, it automatically transmits the ECG to the CardioNet Monitoring Center, even in the absence of symptoms noticed by the patient and without patient involvement. At the monitoring center, cardiac monitoring specialists analyze the sent data, respond to urgent events and report results in the manner prescribed by the physician.
CardioNet, which is based in the Philadelphia, Pa., suburb of Conshohoken, repeatedly has rolled out clinical and reporting enhancements to the MCOT service. It reported the release of a new atrial fibrillation-reporting package to enhance its current AF management program in October 2008. The program offers a tool to the physician for the diagnosis, treatment and management of their AF patients. The program additionally provides physicians with amonitoring program to evaluate the clinical efficacy of catheter and surgical ablation procedures allowing improved management of these post surgical patients.
According to the company, enhancements added in early fall 2009 assist physicians to access more in-depth data to better diagnose AF, heart pauses, and ventricular tachycardia. The company said the new clinical indicators were important for monitoring patients who are suffering from cardiac events, both symptomatic and asymptomatic. It added that those indicators become even more important when used in combination with SomNet, CardioNet’s program for identifying a sleep disorder indicator, which was launched inMay 2009. In the case of SomNet, the company said the enhancements meant amore definitive diagnosis could be made as to the relationship of arrhythmias to sleep disorders.
One big drawback for CardioNet, as for anyone else in the mobile cardiovascular telemetry space, is the absence of a national pricing reimbursement rate for mobile cardiovascular telemetry in the Medicare final rule for the physician fee schedule. Reimbursement for mobile cardiovascular telemetry continues to be carrier-priced by Highmark Medicare Services (HMS) in 2010, and apparently will do so for 2011 as well. CardioNet said in late June that the Centers for Medicare & Medicaid Services (CMS) had proposed that the technical component of mobile cardiovascular telemetry remains carrier-priced
for calendar year 2011. That proposal was included in the Medicare Physician Fee Schedule Proposed Rule released on June 25.
Thurman repeatedly has voiced frustration over the decision, noting that “the mobile cardiac outpatient telemetry industry has now served over 400,000 patients nationally, of which 37 percent were Medicare patients. The industry provided CMS and HMS substantial data that we strongly believe justifies a
significantly higher national rate.This decision has serious implications for the economic viability of the current CardioNet business model.”
Originally located in San Diego, Calif., before its move to the East Coast, CardioNet went public in an initial public offering that raised about $81 million in March 2008, at $18 for each of its 4.5 million shares. That result was at the lower end of the company’s anticipated range of $18 to $20 a share.
CardioNet reported in July 2009 that it had terminated a planned deal for Eagan, Minn.-based Biotel, with no reasons given for the cancellation. The acquisition of Biotel was intended to expand CardioNet’s product portfolio with a recently approved wireless event monitor, the company said at the time.
Competitors in the wirelessmonitoring sector are numerous and widely varied, including such large medical device players as GE Healthcare, Philips Healthcare and Welch Allyn, along with more tightly focused firms such as eCardio, LifeWatch, Intelli-Heart and Healthtronics.
ConforMIS
LOCATION: Burlington,Mass.
STATUS: Privately held, venture-backed
LEADERSHIP: CEO Philipp Lang,MD
SECTOR: Orthopedics
ONLINE: www.conformis.com
CONFORMIS MEASURES ITSELF BY THE FIT OF ITS IMPLANTS
Measure twice, cut once.That old carpentry adage obviously applies at least as well in the matter of medical implants, and that’s where ConforMIS comes in.
The company is using a combination of detailed imaging and rapid prototyping to make a definitive statement in the knee-replacement field. Definitive, as in what it labels “patient-specific” implants. ConforMIS says its philosophy is simple: “Make the implant fit the patient rather than forcing the patient
to fit the implant.”
Since its founding in 2004, the Burlington,Mass.-based firm clearly has differentiated itself from the very substantial competition by offering patient-specific knee resurfacing implants designed to offer osteoarthritis patients a more customized fit based on measurements obtained from a computer tomography scan.
That is a significant departure from practice. Most manufacturers in the space make the implants in a variety of sizes—usually 10 or so at most—so when it comes time to put an implant into a patient, a surgeon has to do a fair amount of manipulation of the surrounding bones. But ConforMIS’ iUni fits
the patient by taking imaging data from a CT scan and using the company’s iFit technology to create a custom implant, usually taking about six weeks from scan to the completed implant being in the surgeon’s hands.
ConforMIS essentially competes with every company in the replacement-knee space, including firms such as Zimmer Holdings Inc., Stryker Corp., Johnson & Johnson’s DePuy business, Smith & NephewOrthopaedics and Biomet. Each is a big player in the space, and some are absolute giants.
But there’s that “patient-specific” thing. ConforMIS CEO Philipp Lang, MD, puts it this way: “We take a completely different approach. We get the imaging data and then we make a tailor-made implant for that patient.”
The CT data is transformed into patient-specific implants and instrumentation via its iFit technology, which converts CT data into implants that are precisely sized and shaped to conform to the unique topography of each individual knee joint. The company’s iJig instrumentation uses the same data to create cutting and placement guides that the company says eliminates the need for manual sizing, reduces surgical time and trauma, and improves reproducibility.
The platforms are supported by proprietary intellectual property consisting of more than 250 patents and pending patent applications that encompass imaging software, image processing, implant design, surgical techniques and orthopedic instrumentation. While ConforMIS at present is focused on the knee, it says the technology is applicable to all major joint systems.
ConforMIS launched the latest iteration of its unicompartmental knee-resurfacing device, the iUni, in the United States late last year, with CE-mark certification coming this past April. Dubbed the iUni G2, its enhancements include an improved, wear-optimized design, instrument changes designed to make
for even simpler surgical techniques, and iView patient-specific images for improved surgical planning. It is available for both medial and lateral compartment treatment.
Lang said the iUni G2 was designed with surgeon feedback playing a large role. He said the technology represents not only advances in implant characteristics, but also in the experience surgeons will have in the operating room.
Terry Clyburn, M.D., an orthopedic surgeon in Bellaire,Texas, who performed the first iUni G2 procedure last fall, cited the “more streamlined surgical process”possible with the new system. He praised ConforMIS for listening to surgeons and providing rapid updates, saying that is “a testament to the
advantages of their just-in-time model.”
In addition to the iUni for unicompartmental procedures, ConforMIS has developed the iDuo bicompartmental knee resurfacing system, which resurfaces only the affected areas of either the medial or lateral compartment of the knee plus the patellofemoral compartment, in the process preserving far more bone than in a traditional knee replacement surgery.
While it battles both industry giants and surgeons’ long-established ways of doing things, it is clear that ConforMIS has many believers. In the summer of 2009, the company reported raising its largest round of funding to date—$50million—from private-equity and sovereign-wealth funds in the United States,
Asia, Europe and the Middle East.
NuVasive
LOCATION: San Diego, Calif.
STATUS: Public company; $370 million, 2009 annual revenue
LEADERSHIP: Chairman and CEO Alex Lukianov
SECTOR: Orthopedics
ONLINE: www.nuvasive.com
NUVASIVE'S LATERAL MOVE GIVES IT TRACTION IN SPINE SPACE
No segment of the orthopedics sector has generated more company, investor, patient and physician interest over the past decade or so than spine. And that’s little wonder, given that the world is full of people with serious back problems with few choices for alleviating their conditions. And many of those precious few choices have involved highly invasive, downright dangerous forms of surgery.
As is made abundantly clear at each year’s meeting of the North American Spine Society, physician interest in lateral access spine procedures, motion preservation and minimally invasive surgery procedures continues to increase.
It stands to reason, then, that companies such as NuVasive, with a variety of distinctly less-invasive approaches to alleviating painful back conditions, have earned a following. San Diego, Calif.-based NuVasive pioneered the technique known as lateral access, and physician interest has grown apace.
NuVasive’s primary focus is the $5.1 billion U.S. spine implant market. The company also is expanding its participation in the global biologics market and is developing products for the emerging motion preservation market.
During a steady streamof investor conference appearances, Chairman and CEO Alex Lukianov, CFO and Executive Vice President Michael Lambert and other company officials maintain that NuVasive’s goal is to be “cutting edge and innovative” in every aspect of the spinal business, from access to neuro
monitoring and biologics to motion preservation.
With more than 55 products in its portfolio at present, NuVasive spans the lumbar, thoracic and cervical segments of the spine sector. Its principal product offering is based on the Maximum Access Surgery, or MAS, platform. The MAS platform combines four categories of products that the company says collectively minimize soft tissue disruption during spine surgery with maximum visualization and easy reproducibility for the surgeon: NeuroVision, a software-driven nerve avoidance system; MaXcess, a unique split-blade retractor system; a wide variety of specialized implants; and several biologic
fusion enhancers.
The MAS platform’s lateral approach is known as eXtreme Lateral Interbody Fusion, or XLIF, with which NuVasive has pretty much revolutionized spine surgery. Lateral access is undergoing rapid adoption by U.S. physicians, and in response, companies including Medtronic Inc., Johnson & Johnson, Synthes Inc., Alphatec and Globus either are offering or plan to offer lateral access approaches that compete with NuVasive’s, which is far and away the leading lateral access procedure.
Going hand in glove with lateral surgical access is neurological monitoring. The ease of neuro monitoring, which offers safety to the procedure and confidence for the physician, is an important driver for surgeon adoption. Integration of the neuro-monitoring equipment into the procedure differs by
company, but NuVasive’s NeuroVision system is a clear leader there as well.
NuVasive is adding to its platform technology at a steady pace, launching 10 or so new products a year in a bid to capture even more market share in a sector where share shifts occur with the regularity of desert sands. The lateral approach is increasingly being used for multi-level cases, and NuVasive also
is moving into the thoracic spine with product introductions for more complex cases such as corpectomy and scoliosis.
NuVasive also has a growing offering of biologics products, boosted by its initial $15 million investment last year in Progentix Orthobiology, a Dutch company that is developing a synthetic bone substitute that is designed to accelerate bone healing through a novel micro-structure created by a proprietary
manufacturing process. The investment was NuVasive’s third strategic transaction in the biologics arena.
Lukianov said Progentix’s “impressive preclinical data attracted us to this unique technology. We believe there is a large product gap in the $1 billion orthobiologics market between BMP and commodity synthetic and allograft bone graft extenders. The Progentix material, along with Osteocel Plus, will allow NuVasive to offer its surgeon customers superior products, both synthetic and human-derived, that fill an important market need, command premium pricing to commodity bone graft products, and build on our FormaGraft Collagen Bone Graft Matrix product line.”
As for motion preservation, spine surgeons and neurosurgeons—and certainly patients as well—are excited about artificial discs for such purposes. A lack of insurance coverage for motion preservation has been a major impediment to physician adoption, but insurers are beginning to cover the procedure
for more patients, and companies are optimistic the trend will continue.
The domestic cervical motion preservation market is estimated at about 3,000 procedures and the lumbar motion preservation market at some 2,000 procedures, with more than 30 percent annual growth anticipated in cervical and single digit growth in lumbar. J&J, Medtronic and Synthes have discs
approved in the United States, while NuVasive and several other companies, including Spinal Motion, Spinal Kinetics and Globus, have discs in U.S. trials and development,.
On the financial side, NuVasive has had six consecutive years of growth that has met or exceeded analyst expectations. For 2009 as a whole, revenues totaled $370.3 million, a 48.1 percent increase over the $250.1 million reported for 2008. The company reported 1Q10 revenue of $109.1 million, 36.3 percent up from the prior year.
Vascular Solutions
LOCATION: Minneapolis,Minn.
STATUS: Public company; $68.4 million, 2009 annual revenue
LEADERSHIP: Founder and CEO Howard Root
SECTOR: Coronary and peripheral vascular medicine
ONLINE: www.vascularsolutions.com
STRENGTH IN NUMBERS (OF PRODUCTS AND REPS) PROPELS VASCULAR SOLUTIONS ALONG A GROWTH CURVE
Vascular Solutions is a Minneapolis, Minn.-based medical device company founded in 1997. The firm's focus is on products for coronary and peripheral vascular procedures that are sold to interventional cardiologists, interventional radiologists and vascular surgeons through a direct U.S. sales force and international distributor network.
The publicly held company had revenues of $68.4 million in 2009, up sharply from $61.2 million in 2008, and in 2010’s first quarter posted another record with $18.2 million in revenues, up some 15 percent from the year-earlier mark of $15.8 million.
In a recent interview with Medical Product Outsourcing, Vascular Solutions founder and CEO Howard Root discussed the company’s turnaround from a single-product company struggling in the face of market dominance by a larger competitor to one with a portfolio of more than 50 products that has posted several years of steady growth.
MPO: Your company has created a niche for itself in the medical device field by doing just that—focusing on what the big guys consider“small”products in niche markets. How did you get to where you are today from your origins as a single product company selling the Duett vascular sealing device?
Root: The short answer is that we failed in our first business, which was to take a single product and make it a substantial player in the sealing device market. We got to $12 million in sales and we were losing $15 million a year doing that, and I went back to the board and said that we needed to change our strategy in order to grow and get to profitability. So it’s kind of a business model that no one would create right from the start, because you create a pretty substantial fixed-expense organization that focuses on smaller-revenue products. But once you build that organization, giving you some opportunities to develop these smaller niche products, it’s extremely rewarding, both in terms of the products you launch and on the financial side once you get to a certain scale.
MPO: Your company has become a real model of consistency in sales growth and profitability, sort of a small-market version of Stryker with its longtime mantra of 20 percent earnings growth.
Root: Up until now we really have been focused on the top line, with seven consecutive years of greater than 10 percent sales growth. That’s what you can do with launching new products and growing the products you have. The earnings growth is now going in the last couple of years.
MPO: A key to your strategy of identifying and moving forcefully to penetrate small markets is your access to customers via a strong direct sales force. What was the genesis of your decision to go the direct sales route rather than with a distributor model?
Root: You have to have at least 60 people to cover the U.S. geographically. We’re up at 87, so we have pretty good geographic coverage of everywhere in the U.S. That’s the legacy of the Duett. We knew we needed to have a nationwide sales force, so we created that, and then when we looked at the question
of what we had to leverage off of for the second chapter of our story, it was not the technology as much as it was the distribution network. Once we had that,wemade sure we quickly developed the products that could go to the same call points with that sales force. Once we got the distribution, what we
needed to do was go find the small products
MPO: Besides revenues, you have touted the direct sales approach as a means of generating ideas for new products.
Root: They are the eyes and ears, dealing with the doctors, and the doctors have ideas—if not what the next new device should be, at least what you ought to do to improve the procedures right now.
MPO: Do you do in-house product development, or are you relying on the physician-innovator?
Root: Both of those are important for us: either generate ideas inside, or if they have ideas that are generated by physicians and brought to us. The idea can be as simple as a napkin. The idea for the Pronto extraction catheter was written on a napkin I still have in my desk drawer. We took it back from
there and started creating the product. Other times, there are complete products that we add through acquisitions. Some of these physicians have actually developed the products and started their own little companies to get it started, and then we take it over from there.
MPO: You recently acquired a package of vascular access products from Escalon that seem a good fit with your product portfolio.What kind of criteria do you apply when you’re looking at acquisitions?
Root: We’re looking at acquiring products, not projects; we have plenty of ideas and projects in here. Take the Smartneedle product line from Escalon. It was a single product in a company that tried to create a sales force just for that, and the economics just don’t work for a $4 million revenue product to have a direct sales force in the U.S. For us, it’s the same exact call point, the same physicians we already are calling on, it’s a product they know well and doesn’t require a lot of up-front training, and it fits nicely in our bag. That’s almost the perfect acquisition for our size right now.
MPO: Is the need for more clinical data more daunting to you now in terms of any new products that you might look to develop, or does it cause you to just look for existing products that are out there?
Root: For acquisitions, we certainly want to look at existing products. Some of the partnerships that we have had have been for projects where we have had to get the U.S. clinicals or U.S. regulatory work done. We have done a couple of PMAs (premarket approval applications), so it’s not like we don’t have the ability to do that. But you have to be realistic and realize the FDA is not going to get easier on approvals. That makes you step back and look and say, “How long is it going to take and how expensive is it going to be before that product is ready to come to market?”
—Jim Stommen, contributing writer