Other Articles

The Match Process…Part II: Interviews
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How a Recession Might Affect Orthopedics
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FDA Homes in on Postmarket Off-Label Marketing in Spine
By Walter Eisner
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Nucleus Replacement: Perspectives Regarding the Gap in the Continuum of Spine Care and Degenerative Disc Disease
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So You Want to Write or Edit a Textbook…
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Biggest Order Ever for a Stem Cell Product
By Robin Young
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Fallout From Arkansas
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Nailing the Rotator Cuff Market
By Dev Joshi
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Recruiting Residents: Formal Strategies and Gut Instincts
How to home in on the residents who will be most successful in your program? Read what the experts have to say. Sharing their wisdom and experience are Dr. Robert Pedowitz, Professor and Chair of the Department of Orthopedics and Sports Medicine at the University of South Florida, and Dr. Ken Yamaguchi, the Sam and Marilyn Fox Distinguished Professor of Orthopaedic Surgery at Washington University School of Medicine.

Stem Cells Beat HA for Knee Pain Relief—Updated Chondrogen™ Results
New one-year data shows that a single, direct injection of Mesenchemal Stem Cells (MSC) beats multiple injections of hyaluronic acid (HA). Beyond pain relieve, the study also delivered evidence that stem cells reduce subchrondral sclerosis and osteophyte formation in OA patients. The evidence FOR stem cells keeps piling up.

Mike Mahoney: A Steady Hand for DePuy
New DePuy Group Chairman Mike Mahoney has one goal: make DePuy the clear leader in orthopedics. How? OTW talked with Mahoney and DePuy Spine’s Gary Fischetti. Here’s what they had to say.

How to Get the Surgeon’s Attention
Understanding relationship dynamics and having the chutzpah to put your best creative foot forward can garner you real success as a sales rep. Find out how to bring inventiveness to the sales process so as to attract and retain the surgeon’s attention.

Death Spiral
Since January, ReGen Biologic's stock has fallen from $0.95 per share to $0.04 per share. The number of shares outstanding is up 45% in 9 months. In one case, the company paid a $24,000 vendor bill with 68,572 shares of stock. Still, a couple of particularly savvy orthopedics investors have bought roughly 7% of the stock. Can ReGen survive?

Diving in to the Future
Since 1996 total knee procedures have risen 77% to 455,000 annually. A study presented at AAOS estimates that by 2030 that number grows to 3.48 million knee replacements a year! If infection rates continue to rise at current rates, however, that future will not be nearly as rosy for either patients or industry. Read on.

Selling Yourself: Career Advancement for Sales Reps
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Mission Unaccomplished: Are the Wheels Coming Off at the FDA?
The FDA is no longer able to fulfill its mission and its wheels are coming off. So says the FDA’s own Science Board in a scathing report. We looked under the hood of the report and here’s what we found.

“Back” to the Future Part II: Technology and the Vertebral Compression Fracture Market
In Part I, our inquiring analyst, Matt Menze, highlighted opportunities for spinal implant manufacturers in the vertebral compression fracture (VCF) market. Now he tackles the thorny issue of new and emerging VCF technologies. What’s on the horizon? Read on.

Einstein said, “I never think of the future, it comes soon enough.” We respectfully disagree. We’re in the spine machine, and when it comes to figuring out the future, we really put our “backs” into it. In a previous article, we highlighted opportunities in the vertebral compression fracture (VCF) market from a diagnostic and clinical perspective. Now it’s time to see how technology is having an impact on VCF repair. With respect to medical device companies, we’ll see that they have been doing some time traveling of their own on the acquisition front. Finally, we’ll see how biomaterials such as Orthovita’s Cortoss® and an interesting idea from BioMimetic Therapeutics could impact VCF treatment in the future.

Battle of the Titans: Kyphoplasty Versus Vertebroplasty

Vertebroplasty and kyphoplasty: head to head and spine to spine! According to Orthopedic Network News (Vol. 17, October 2006), there were over 161,000 percutaneous vertebral augmentation procedures performed in 2006, up over 20% from 2005. Estimated VCF-related sales rose to $365 million in the U.S., up 25% from the prior year.

The procedures are similar and kyphoplasty has been referred to as “balloon-assisted vertebroplasty.” However, the procedures differ on a number of levels. Deformity correction is one such difference. Vertebroplasty is primarily a fixation procedure and involves the injection of what is considered high-pressure cement. Kyphoplasty is associated more with aiding in the correction of kyphotic deformity. According to the Spine Technology Handbook (2006), by Dr. Steven Kurtz and Dr. Avram Edidin, “vertebral body height restoration and/or improvements in angulation have been reported in multiple studies” with respect to kyphoplasty.

Kyphoplasty kits are sold at a significant premium to vertebroplasty kits. Wall Street analysts estimate that kyphoplasty kits are sold at $3,500 per level, while vertebroplasty kits cost $900 per level. The cement used in kyphoplasty is estimated at $120 per kit. Due to the similarities between the two procedures, it is important to provide justification for the premium price kyphoplasty commands.

Kyphon, recently purchased by Medtronic, claims that kyphoplasty is clinically superior to vertebroplasty. Cement leakage is seen in a small percentage of both procedures, although actual measurements of this have varied. Proponents of kyphoplasty claim that benefits include improved safety through less cement leakage, disc height restoration, and kyphosis reduction. The balloon tamp helps create the space in which the cement is injected. This allows for low-pressure injection.

Kyphoplasty is often performed in an inpatient setting, while vertebroplasty is more commonly done on an outpatient basis. Orthopedic surgeons usually perform kyphoplasty, while interventional radiologists commonly perform vertebroplasty. Chart 1 is based on PearlDiver data, which is representative of the 65 and under population in the U.S. Vertebroplasty procedures performed on the thoracic region by site of care are displayed. Close to 80% of vertebroplasty procedures are performed in an outpatient setting. Kyphoplasty is performed 52% of the time on an inpatient basis, far more than vertebroplasty. Vertebroplasty is performed 24% of the time on an inpatient basis.

Chart 1: Vertebroplasty (Thoracic Region) by Site of Care

Source: PearlDiver Patient Records Database (2004-2006)

Based on PearlDiver data, when vertebroplasty and kyphoplasty are performed on multiple levels, they are performed on an inpatient basis more often. Table 1 below compares single-level thoracic vertebral augmentation procedures with multilevel operations.

Table 1: Single Level Versus Multilevel Vertebral Augmentation Procedures

In the broader context, vertebral fracture repair is performed primarily on the elderly. Patients over 65 receive more than 80% of the kyphoplasty/vertebroplasty procedures. PearlDiver data, which is representative of the non-Medicare population, suggests that over 50% of vertebral augmentation procedures under the age of 65 take place in the 55–64 age range.

Kyphoplasty: Room to Grow in the VCF Market

There is ample room for growth in this relatively underpenetrated market. This growth potential is supported by Wall Street estimates. In 2006, there were 100,000 trauma-related VCFs, and kyphoplasty was used in 1,000 of them. Worldwide, over 100,000 kyphoplasties were performed in 2006.

Cancer is estimated to cause 105,000 VCFs annually in the U.S. Kyphoplasty was used to treat only 9,000 cancer-related VCFs in 2006. Starting in May 2007, Kyphon began sponsoring the CAFÉ (Cancer Patient Fracture Evaluation) study. According to ClinicalTrials.gov, “the primary objective of this study is to evaluate the safety and effectiveness of balloon kyphoplasty treatment for painful, acute, vertebral compression fractures (VCFs) as compared to standard non-surgical therapy in patients with cancer.” The outcomes of the study could further establish kyphoplasty as a treatment for VCFs due to cancer.

Strong demographics combined with a relatively underpenetrated market vouch for strong continued growth in percutaneous vertebral augmentation procedures. Wall Street estimates project a 24.2% CAGR through 2011 for stand-alone sales at Kyphon (acquired by Medtronic).

Banking on Future Growth in Vertebroplasty

It is estimated that there are nearly 60,000 vertebroplasty procedures performed in the U.S. each year. There has been activity with respect to vertebroplasty technology as well, and some conflicting acquisitions. It is interesting to note that despite all the accolades Kyphon has given to kyphoplasty, in December 2006 Kyphon added Disc-O-Tech’s Confidence Cement vertebroplasty system to its portfolio. It can be surmised that Kyphon believes there is a significant opportunity in vertebroplasty, and this market can co-exist with kyphoplasty as a lower priced alternative. Upon being acquired by Medtronic, Kyphon was ordered to divest itself of this technology. In November 2007, DePuy Spine, which has struggled as of late, snapped up the Disc-O-Tech technology. DePuy stated that the acquisition is a “significant growth opportunity.” This is further confirmation of the strong projected growth of the vertebroplasty market.

Bone Cement and Orthovita

Both vertebroplasty and kyphoplasty involve the percutaneous injection of bone cement. According to the Spine Technology Handbook, the ideal bone filler should have the following characteristics:

1. Be easy to deliver without leaks
   
   
2. Be adequately radiopaque
   
   
3. Become rapidly load bearing
   
   
4. Make excellent contact with the host bone
   
   
5. Contain no toxins and remain biocompatible long term

Currently, polymethyl methacrylate (PMMA) is commonly used as a bone void filler. PMMA fillers have been cleared for use in both vertebroplasty and kyphoplasty. However, there are several concerns with respect to PMMA. These include exotherm, long-term stability, and potential for adjacent-level fracture. Adjacent-level fracture becomes a greater concern when dealing with osteoporotic bone. But help could be on the way.

Orthovita may have the answer in Cortoss. Cortoss appears to meet more of the criteria for the “ideal” bone cement than other products, and it is a composite acrylic bone cement. According to the company’s website, Cortoss has mechanical strength that is comparable to human cortical bone for immediate load bearing. Second, via a two-stage fixation process, the cement effectively bonds to bone. The cement also displays good radiopacity and low exotherm. There is also no monomer release. Orthovita is currently used in Europe. Wall Street estimates that approval in the United States could occur in 3Q2008. If Cortoss is approved, Orthovita could be well positioned for strong revenue growth driven by increasing market share in the bone cement market.

Companies Embracing the Opportunity

Tickets are on sale for a ride on the spine machine. Here are a few passengers that are planning to ride first class to the VCF repair market:

• Medtronic (MDT): The most obvious and the 800-pound guerilla of spine! Medtronic can just “buy” innovation. It did—to the tune of $3.9 billion with its acquisition of Kyphon. Wall Street estimates that there will be close to 200,000 kyphoplasty procedures performed annually worldwide by 2010.
  
  
• Alphatec Holdings, Inc. (ATEC): The company recently licensed the “V-Stent” from Stout Medical Group LP. This is a unique technology for percutaneous vertebroplasty.
  
  
• ArthroCare (ARTC): ArthroCare acquired Parallax® in 2004. The Parallax line of vertebroplasty products has been a boon for the company. The Parallax line includes delivery systems and patented acrylic bone cement.
  
  
• DePuy (JNJ): Stumbling DePuy Spine is moving fast to regain traction and maintain its near 20% market share in spine. With what should be over $850 million in spine revenues in 2007, the company is looking to enter the VCF market with its acquisition of Disc-O-Tech’s VCF assets.
  
  
• Orthovita, Inc. (VITA): Orthovita could come out strong as a premier provider of bone cement used in VCF treatments. Cortoss is the key.
  
  
• Stryker Corp. (SYK): Stryker vertebroplasty products feature bone cement mixing systems. These products include the PCD™ (Precision Cement Delivery System) and the Advanced Cement Mixing System.
  
  
• Biomet (private): Biomet likes vertebroplasty as well, and it currently has the CDV™ system (Controlled Delivery for Vertebroplasty).
  
  
• Cardinal Health (CAH): The Vertebrex™ system focuses on cement control. The product features a newly designed cement tube that reduces the risk of trailing cement behind when the injection is complete.
  
  
• BioMimetic Therapeutics, Inc. (BMTI): BioMimetic is attempting to address an interesting niche in the VCF market. As mentioned previously, a concern regarding adjacent-level fracture after vertebral augmentation procedures remains. According to the company’s conference call, it is seeking to use GEM OS2® to help protect adjacent-level vertebrae. This product would be injected prophylactically on adjacent-level vertebrae after a VCF procedure. Adjacent-level vertebral fractures are also concerns with respect to artificial disc replacement and fusion. The future may hold opportunity for BioMimetic in adjacent-level treatments following VCF procedures.
  
  
• Spineology (private): The Optimesh® system sold by Spineology can aid in keeping bone graft in place. However, the product is not to be used for vertebral stabilization or support. According to the company’s website, “OptiMesh is intended to maintain the relative position of bone graft material (such as autograft or allograft) within a vertebral body defect (e.g., tumor) that does not impact the stability of the vertebral body and does not include the vertebral endplates.”

VCF: A Solid Market Supported by Proven Technology

There is opportunity in VCF technology. By adding vertebroplasty and kyphoplasty delivery systems and bone cements to product portfolios, medical device companies are gaining exposure to a high-growth market supported by strong demographics. Companies with percutaneous technologies should continue to succeed in the space. Corporate interest in the VCF market can be seen in a healthy acquisition environment and continued investment in new technologies such as bone cements and biological solutions. Perhaps VCF should stand for “Very Compelling Future.”