Back to the future: pioneers Spine-Tech is not prepared to rest on its laurels
This article was originally published in Clinica
Spine-Tech has quickly achieved dominance in the back pain market. Karen Riley, at the BancAmerica Robertson Stephens Medical conference, reports on where it could go from here.
Spine-Tech's pioneering line of minimally-invasive spinal implants has won unusually rapid acceptance since it was approved for US marketing in September 1996. In the past 12 months, the BAK interbody fusion cage for one and two level lumbar fusions has grown from zero to 20-25% market share, according to company president and CEO David Stassen. By the end of the year this could rise to 30%.
"Very few new technologies gain this acceptance in so short a period of time. And we don't see any end in sight," he told investors in New York this month.
. . . high growth
Spine-Tech was founded only six years ago. Mr Stassen, claims it is growing at a faster rate than other successful high growth companies, such as St Jude Medical, when they were at a similar stage of development.
The BAK-L implant is aimed at treating people with chronic localised back pain. Over five million individuals in the US alone are disabled by chronic back pain. Degenerative disc disease is the most common cause for the problem. Most are treated non-surgically with bed rest and anti-inflammatory drugs. But those with chronic localised pain may suffer from spinal instability, a condition that may be treated with a spinal fusion procedure. About 120,000 lumbar fusions were performed in the US in 1997, representing a $600 million market.
Before spinal cages there were two types of spinal fusion: non-instrument fusions involving bone grafts inserted in the intervertebral space, which are only 75% effective, and instrumented fusions including metal plates, rods and pedicle screws with an inconsistent success rate of 75% to 90%. Both procedures involve significant blood loss, prolonged recovery and complications in a third of all cases.
The Spine-Tech implant is a hollow, threaded titanium cylinder with numerous holes that allow for the in-growth of bone to contribute to permanent fixation. It is designed to provide mechanical fixation in line with the spinal axis, and also to provide a lattice for optimum bone growth. The collapsed disc is opened, spread out to its healthy state, the fusion cage is implanted and screwed in place. The implants are filled with autograft bone or bone substitute which fuses around the device.
The product has been approved for the lumbar fusion level using anterior, posterior and laparoscopic surgical approaches. Two cages are required for each level. The surgery takes little more than an hour compared with three to five hours for the pedicle screw, involves little blood loss, a short hospital stay and a faster recovery, with patients able to return to work in less than two weeks. In clinical trials, the fusion success rates after two years averaged 92%. The re-operation rate was 2% compared with up to 20% with instrumented fusions.
Wade King, an analyst with Robertson Stephens, estimates that Spine-Tech has captured half of the market for this new generation of spinal implants. US Surgical has the other half with its Ray Threaded Cage. But he says that to date, about two-thirds of Spine-Tech's implants have been used preferentially to traditional pedicle screws and plates.
Spine-Tech has an ambitious list of new products. Earlier this month, surgeons implanted the new BAK/Proximity system, a cylindrical device with its sides sculpted off for use in patients with smaller anatomy where it is difficult to implant two cages side by side. The Proximity has a double concave shape extending the implant surface area by about 50%. The new device is also much more porous, allowing more bone growth. "We are getting very substantial interest in this product," said Mr Stassen.
In October, the company acquired the technology rights to the Silhouette, a pedicle screw fixation device with a poly-axial joint that is more versatile than conventional pedicle screw fixation systems. The product, made by the privately-held company Spinal Innovations, should be introduced in the first quarter of 1998.
Spine-Tech is also moving ahead on its BAK-C system for cervical or neck fusions, with plans to submit a PMA supplement in the first quarter of 1998. In clinical trials of over 400 patients, the fusion rate was in the "high 90%" after one and two years, he said.
The company also has two corporate alliances with manufacturers specialising in bone growth factors, Orquest, a private start-up company based in Mountain View, California, and Sulzer Orthopedics Biologics, a subsidiary of Sulzer Medica.
Orquest and Spine-Tech have filed an Investigational Device Exemption to study the use of the BAK-L with Orquest's Healos, a bone graft substitute. The alliance with Sulzer involves the use of the BAK-L with Sulzer's Neo-Osteo, another bone-graft substitute that stimulates bone growth. An IDE for that will be filed in the first quarter of 1998.
Unlike its competitors, Spine-Tech supports a direct salesforce - it currently numbers 60 and the company hopes to add another 40 by the first half of next year. Spine-Tech also plans to move from distributors to direct sales in major international markets.
. . . biggest challenge
Part of Spine-Tech's marketing strategy is its strong surgeon training program. The company has taught 1,900 surgeons since the BAK-L was approved. One leading New York surgeon recently told Mr Stassen that before the BAK, he operated on only 3% to 5% of his patients. Now, he can operate on half of them and the biggest challenge was "where do I draw the line?"
Analyst Mr King reckons the annual US revenue opportunity for the BAK family of products exceeds $650 million. Revenues will total about $59 million this year, he estimates. Despite competition from US Surgical and the expected market entry of Sofamor Danek next year, Mr King says Spine-Tech should be able to turn its family of products into a profitable high-growth company with annual revenues well over $100 million by 1999.
* FDA panel rejects Sofamor Danek's Novus LC - page 17.