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$1 Million per Day in InFuse BY EDITOR, MARCH 29, 2004

We think it's true. Of course, Medtronic isn't saying anything outside of its well crafted public comments, but our informal content analysis of surgeon and sales commentary have us betting that Sofamor Danek has, indeed, crossed the $1 million per day sales level. There are three important reasons why we think so.

1. Off-Label usage. It is extensive. Use of BMP posteriorly and for posterior interbody purposes is off label. Using it with cadaver graft or combined with iliac crest graft is all off label. But surgeons are learning how to use InFuse® in order to minimize its elution rates and maximize, therefore, its therapeutic value. And the techniques are coming from surgical experience. To paraphrase one surgeon's comments, 'I soak BMP for at least 1.5 hours in its collagen sponge carrier before I implant it'the longer BMP soaks the more absorbed it becomes in the sponge' and the slower the BMP elution rate. This surgeon claims to have seen patients fuse in about half the time than with autograft. Other surgeons are finding good results using BMP with a cadaver graft and iliac crest bone graft, also off-label. Other surgeons are using resorbable cement restrictors, instead of the LT cage, trimming the excess sponge material, sealing any holes with bone wax to, in effect, also control InFuse's® elution rate. Bottom line: surgeons are figuring out how get the most bang for the buck of InFuse®.
2. Overgrowth of bone is not a problem. This was the biggest fear with InFuse® (or any growth factor). Since growth factor proteins can demonstrably grow bone where there is no bone, the biggest fear was that InFuse® would leak and form bone near the nerves, in the foramen. isn't happening. And, as noted above, surgeons are developing surgical techniques to ensure it won't happen.
3. Cost savings. It has been said that 4% of the spinal implant patients account for 75% of the cost of caring for back pain. Increasingly, surgeons and their hospital accountants are willing to accept higher direct costs (like the cost for InFuse®) in exchange for fewer hospital days, less physical therapy and faster, more certain healing. Most importantly, some surgeons are reporting that their incidence rates of failed back surgery are markedly reduced. This is significant. If supported with data and further study, this could represent a significant drop in multiple diagnostic work ups, revision spine surgeries and the social costs of long-term disability and unemployment.

Clearly, at this rate, InFuse® sales for 2004 could reach or exceed $200 million. The value of this technology to Sofamor Danek now clears, we'd estimate, $1 billion.