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The 20th annual Musculoskeletal New Ventures Conference (MNVC) featured several startups that are working on innovative solutions to challenges in the spine market. Below, we have more color with three takeaways from the conference:
- companies see an opportunity to reduce healthcare costs by reducing costly fusion revision surgeries
- suitability for the ASC is also a key focus, given the acceleration of procedures toward that setting in recent years
- The largest orthopedic companies are shifting priorities for acquisition targets
Attacking the Problem of Failed Spinal Surgeries
Many of the spine startups presenting at MNVC are focused on reducing healthcare costs incurred by failed fusion procedures. According to Evoke Medical, re-operation rates for spinal fusion are 20% at the 11-year mark compared to 10% for knee and hip replacement. Spinal non-unions add an estimated $6 billion in healthcare costs every year.
Evoke Medical seeks to develop a unique human-powered smart implant. The device harvests its charge from the patient’s natural walking motion. That energy is used to power small pulses of DC electrical stimulation to enhance bone healing. The implant also acts as a load sensor to inform treatment decisions.
The company believes its product could diminish surgeon reliance on adjunct therapies. Evoke Medical COO and Co-Founder Leighton LaPierre said, “That entails new 3D-printed technology, biologics, stem cells, BMPs and external or implantable stimulators. All of these solutions have had their challenges. We’ve tried to put the proven electrical stimulation therapy at the site it is needed most in a form factor that the surgeon is used to.”
Other companies, like Empirical Spine, offer an alternative to fusion. The company’s LimiFlex Dynamic Sagittal Tether is a minimally invasive motion preservation device. According to our estimates, the motion preservation subsegment is an approximately $350 million opportunity.
Empirical Spine designed LimiFlex for patients receiving surgical decompression for lumbar degenerative spondylolisthesis with spinal stenosis. LimiFlex does not involve any screws or bone grafts and is designed to stabilize the spine without fusing it.
The device secured CE Mark approval in 2009 and totals over 2,000 implants in European patients. Empirical Spine began its premarket approval (PMA) submission in February 2021, won FDA Breakthrough Device Designation in April of that year, and had its PMA Module II accepted and closed in mid-2022. The company estimates that its initial indication represents a total addressable market of $1.1 billion.
Carlsmed is a company seeking to reduce healthcare costs through patient-specific surgical plans and devices. According to the company, 46% of adults with spinal deformity surgery have complications, and 26% require revision surgery. Only 51% of procedures achieve the pre-operative plan for alignment.
To address these problems, Carlsmed merged with spine imaging company Precisive Surgical in 2019 to develop a first-of-its-kind end-to-end personalized surgical workflow platform. The company’s aprevo interbody achieved FDA clearance and Breakthrough Device Designation in late 2020. The device received the third largest New Technology Add-On Payment ever.
The use of aprevo begins with CT and x-ray imaging to generate a surgical plan and patient-specific implants. The implants are 3D-printed, sterile packaged and sent to the hospital for surgery. Carlsmed aims to have aprevo be a patient’s last spine surgery ever.
ASCs Are the Technology Battleground
The acceleration of spine procedures into the ASC setting is a boon for spine startups that are focused on value and broad accessibility. According to executives from Accelus, 10% of spine procedures occurred in the ASC in 2018, which will grow to 30% by the mid-2020s.
Accelus came into being in July 2021 with the merger of Integrity Implants and Fusion Robotics. The company’s goal is to accelerate the adoption of minimally invasive surgery as the standard of care in spine. Earlier this year, the company announced the successful completion of the first surgery integrating its Remi Robotic Navigation, LineSider Spinal System and FlareHawk Expandable Interbody Fusion Device systems in one procedure.
Remi is ideally suited to the ASC with a small footprint, portability and 10-minute setup. It costs $350,000, or about one-third of the cost of a system from Medtronic or Globus Medical.
“The ASC market is going to drive efficiency and lower costs. If you can’t make it more efficient, it won’t be adopted. It’s got to be safe and efficacious because they’re risk-averse; they will not bring patients to the ASC that are complex, and it just can’t impact their time, or it won’t be accepted,” said Brad Clayton, co-founder of Fusion Robotics.
Accelus is finding success with its approach. The company placed 17 Remi robotic units in the last nine months and projects $2 million in pull-through implant sales in 2022. Accelus leadership is also considering the possibility of making Remi implant-agnostic.
Spinal Simplicity is another player leveraging the growing importance of ASCs. The company’s Minuteman MIS Fusion Plate is a posterior, non-pedicle supplemental fixation device used at a single level in the non-cervical spine (T1-S1). It is designed to treat lumbar spinal stenosis, degenerative disc disease and spondylolisthesis.
The company says that the Minuteman is equivalent to four pedicle screws and two rods. The procedure is safe, quick and results in about 5cc of blood loss, or about the amount contained in a bottle cap.
Spinal Simplicity Co-Found and CEO Todd Moseley said, “The current landscape in spine is dominated by the open surgical technique. That keeps the patient in the operating room for two to four hours. They could be in the hospital for two to six days. We can replicate the strength of the four screws and two rods and do it without cutting any muscle. We can turn it into an outpatient procedure.”
The company’s growth is split between interventional pain and spine. Moseley said he’d like to balance more toward spine. Spinal Simplicity is also working on indications for cervical, as well as foot and ankle.
Spine Startups Must Respond to Shifting Acquisition Criteria
Startups seeking a profitable acquisition by a major company are facing a more challenging environment in 2022. Some investors have retreated, and the frozen IPO market reduced the leverage enjoyed by startups in 2021 during M&A negotiations. Additionally, the acquisition appetites of the largest companies are shifting away from bolt-on product line extensions.
Medtronic executives Skip Kiil, Kip Roberts and Carlton Weatherby attended MNVC to provide a perspective from a large strategic company. In a fireside chat, Kiil and Roberts said that company valuations are still too high, and pre-clinical companies are very risky acquisition targets. Large companies want to see a clear commercial pathway and not rely on a “cascade of miracles.”
Skip Kiil said he’s looking for lateral think that makes “one plus one equal four” and revealed that a disproportionate amount of Medtronic’s R&D is focused on digital. Medtronic is moving away from its preference for small, tuck-in acquisitions in favor of acquiring platform technologies. Carlton Weatherby referenced the acquisition of Medicrea for its data collection and analysis potential across Medtronic’s portfolio.
According to Weatherby, Medtronic is doing more structured deals, like distribution agreements and joint ventures with incremental steps toward acquisition. He said, “They allow us to reduce the risk over time. They have evidence of progress along the way. Milestones allow us to validate our investment thesis.”
With the M&A and IPO markets disrupted due to economic uncertainty, it could be a while before some of these startups can take their next strategic step. Overall, major orthopedic companies remain highly acquisitive, and we expect to see some of these startups successfully exit when the market stabilizes.
The 20th annual Musculoskeletal New Ventures Conference (MNVC) featured several startups that are working on innovative solutions to challenges in the spine market. Below, we have more color with three takeaways from the conference:
companies see an opportunity to reduce healthcare costs by reducing costly fusion revision surgeries
...
The 20th annual Musculoskeletal New Ventures Conference (MNVC) featured several startups that are working on innovative solutions to challenges in the spine market. Below, we have more color with three takeaways from the conference:
- companies see an opportunity to reduce healthcare costs by reducing costly fusion revision surgeries
- suitability for the ASC is also a key focus, given the acceleration of procedures toward that setting in recent years
- The largest orthopedic companies are shifting priorities for acquisition targets
Attacking the Problem of Failed Spinal Surgeries
Many of the spine startups presenting at MNVC are focused on reducing healthcare costs incurred by failed fusion procedures. According to Evoke Medical, re-operation rates for spinal fusion are 20% at the 11-year mark compared to 10% for knee and hip replacement. Spinal non-unions add an estimated $6 billion in healthcare costs every year.
Evoke Medical seeks to develop a unique human-powered smart implant. The device harvests its charge from the patient’s natural walking motion. That energy is used to power small pulses of DC electrical stimulation to enhance bone healing. The implant also acts as a load sensor to inform treatment decisions.
The company believes its product could diminish surgeon reliance on adjunct therapies. Evoke Medical COO and Co-Founder Leighton LaPierre said, “That entails new 3D-printed technology, biologics, stem cells, BMPs and external or implantable stimulators. All of these solutions have had their challenges. We’ve tried to put the proven electrical stimulation therapy at the site it is needed most in a form factor that the surgeon is used to.”
Other companies, like Empirical Spine, offer an alternative to fusion. The company’s LimiFlex Dynamic Sagittal Tether is a minimally invasive motion preservation device. According to our estimates, the motion preservation subsegment is an approximately $350 million opportunity.
Empirical Spine designed LimiFlex for patients receiving surgical decompression for lumbar degenerative spondylolisthesis with spinal stenosis. LimiFlex does not involve any screws or bone grafts and is designed to stabilize the spine without fusing it.
The device secured CE Mark approval in 2009 and totals over 2,000 implants in European patients. Empirical Spine began its premarket approval (PMA) submission in February 2021, won FDA Breakthrough Device Designation in April of that year, and had its PMA Module II accepted and closed in mid-2022. The company estimates that its initial indication represents a total addressable market of $1.1 billion.
Carlsmed is a company seeking to reduce healthcare costs through patient-specific surgical plans and devices. According to the company, 46% of adults with spinal deformity surgery have complications, and 26% require revision surgery. Only 51% of procedures achieve the pre-operative plan for alignment.
To address these problems, Carlsmed merged with spine imaging company Precisive Surgical in 2019 to develop a first-of-its-kind end-to-end personalized surgical workflow platform. The company’s aprevo interbody achieved FDA clearance and Breakthrough Device Designation in late 2020. The device received the third largest New Technology Add-On Payment ever.
The use of aprevo begins with CT and x-ray imaging to generate a surgical plan and patient-specific implants. The implants are 3D-printed, sterile packaged and sent to the hospital for surgery. Carlsmed aims to have aprevo be a patient’s last spine surgery ever.
ASCs Are the Technology Battleground
The acceleration of spine procedures into the ASC setting is a boon for spine startups that are focused on value and broad accessibility. According to executives from Accelus, 10% of spine procedures occurred in the ASC in 2018, which will grow to 30% by the mid-2020s.
Accelus came into being in July 2021 with the merger of Integrity Implants and Fusion Robotics. The company’s goal is to accelerate the adoption of minimally invasive surgery as the standard of care in spine. Earlier this year, the company announced the successful completion of the first surgery integrating its Remi Robotic Navigation, LineSider Spinal System and FlareHawk Expandable Interbody Fusion Device systems in one procedure.
Remi is ideally suited to the ASC with a small footprint, portability and 10-minute setup. It costs $350,000, or about one-third of the cost of a system from Medtronic or Globus Medical.
“The ASC market is going to drive efficiency and lower costs. If you can’t make it more efficient, it won’t be adopted. It’s got to be safe and efficacious because they’re risk-averse; they will not bring patients to the ASC that are complex, and it just can’t impact their time, or it won’t be accepted,” said Brad Clayton, co-founder of Fusion Robotics.
Accelus is finding success with its approach. The company placed 17 Remi robotic units in the last nine months and projects $2 million in pull-through implant sales in 2022. Accelus leadership is also considering the possibility of making Remi implant-agnostic.
Spinal Simplicity is another player leveraging the growing importance of ASCs. The company’s Minuteman MIS Fusion Plate is a posterior, non-pedicle supplemental fixation device used at a single level in the non-cervical spine (T1-S1). It is designed to treat lumbar spinal stenosis, degenerative disc disease and spondylolisthesis.
The company says that the Minuteman is equivalent to four pedicle screws and two rods. The procedure is safe, quick and results in about 5cc of blood loss, or about the amount contained in a bottle cap.
Spinal Simplicity Co-Found and CEO Todd Moseley said, “The current landscape in spine is dominated by the open surgical technique. That keeps the patient in the operating room for two to four hours. They could be in the hospital for two to six days. We can replicate the strength of the four screws and two rods and do it without cutting any muscle. We can turn it into an outpatient procedure.”
The company’s growth is split between interventional pain and spine. Moseley said he’d like to balance more toward spine. Spinal Simplicity is also working on indications for cervical, as well as foot and ankle.
Spine Startups Must Respond to Shifting Acquisition Criteria
Startups seeking a profitable acquisition by a major company are facing a more challenging environment in 2022. Some investors have retreated, and the frozen IPO market reduced the leverage enjoyed by startups in 2021 during M&A negotiations. Additionally, the acquisition appetites of the largest companies are shifting away from bolt-on product line extensions.
Medtronic executives Skip Kiil, Kip Roberts and Carlton Weatherby attended MNVC to provide a perspective from a large strategic company. In a fireside chat, Kiil and Roberts said that company valuations are still too high, and pre-clinical companies are very risky acquisition targets. Large companies want to see a clear commercial pathway and not rely on a “cascade of miracles.”
Skip Kiil said he’s looking for lateral think that makes “one plus one equal four” and revealed that a disproportionate amount of Medtronic’s R&D is focused on digital. Medtronic is moving away from its preference for small, tuck-in acquisitions in favor of acquiring platform technologies. Carlton Weatherby referenced the acquisition of Medicrea for its data collection and analysis potential across Medtronic’s portfolio.
According to Weatherby, Medtronic is doing more structured deals, like distribution agreements and joint ventures with incremental steps toward acquisition. He said, “They allow us to reduce the risk over time. They have evidence of progress along the way. Milestones allow us to validate our investment thesis.”
With the M&A and IPO markets disrupted due to economic uncertainty, it could be a while before some of these startups can take their next strategic step. Overall, major orthopedic companies remain highly acquisitive, and we expect to see some of these startups successfully exit when the market stabilizes.
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Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
