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Orthopedic and Dental Industry News Complete Archive »

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Musculoskeletal News Roundup 21-Aug-14

EARNINGS
Medtronic reported financial results for its fiscal 1Q:15. Total revenue was $4.3 billion in 1Q:15, beating consensus estimates by 1% and increasing 4% from $4.1 billion in 1Q:14. Gross margin for 1Q:15 decreased to 74.1%, from 75.0% in 1Q:14. The company's Core Spine and Interventional Spine segments grew by (2%) and 4% respectively, while BMP (Biologics), declined by 11%. The company's overall Spine segment declined by 3%. International revenue was $1.9 billion in 1Q:15, increasing 3% from $1.9 billion in 1Q:14. International revenue accounted for 45.4% of Medtronic's total revenue in 1Q:15, decreasing from 46.0% in 1Q:14. All growth rates are on a constant currency basis.

Orthofix International determined that certain entries in its previously restated filed financial statements were not properly accounted for under U.S. generally accepted accounting principles (GAAP). Specifically, the company has determined that its historical method of accounting for certain revenue adjustments (related to uncollectible patient co-pay and self-pay amounts) as bad debt expense rather than as contra-revenue was incorrect. As a result of the foregoing, Orthofix expects to reduce equally both its historical net sales and its sales and marketing expense by approximately $6 million, $9 million, $2 million and $3 million for the fiscal years ended December 31, 2011, 2012 and 2013 and the fiscal quarter ended March 31, 2014, respectively. Therefore, due to foregoing corrections, Orthofix will again restate its financial statements for the fiscal years ended December 31, 2011, 2012 and 2013 (including the quarterly periods therein) and the fiscal quarter ended March 31, 2014. The company intends to include restated financial statements for these periods in amendments its 2013 Form 10-K and 1Q:14 10-Q.

REGULATORY
According to new analysis provided by the Evaluate Group, the average premarket approval (PMA) review time in 2014 has been 18.4 months, twice as quick as the average time of 35.9 months in 2013. The Center for Devices and Radiological Health (CDRH) has awarded 17 PMAs in 1H:14, increasing 89% from the nine PMAs awarded in 1H:13.

Oxford Performance Materials (OPM) received 510(k) clearance from the FDA to market its OsteoFab Patient-Specific Facial Device, a 3-D printed facial polymeric implant that is custom-printed for each transplant patient using MRI or CT scan images. OPM prints the implants using its proprietary powder formulation, which are similar to bone and support bone attachment. Biomet will be the exclusive global distributor for the new implant.

PRODUCT INTRODUCTION & UPDATE
Aesculap Implant Systems launched its S4 Element minimally invasive surgical (MIS) system, a posterior lumbar pedicle screw fixation system which utilizes endoscope technology to gain direct visualization, providing the ability to confirm rod location and orientation. The system offers a rescue technique and instrumentation designed to help minimize risk of open conversion during a MIS percutaneous lumbar spinal fusion procedure, and reduces exposure to radiation.

CLINICAL
A team of researchers at Texas A&M University have developed a new shape-memory polymer (SMP) for craniomaxillofacial (head, face or jaw) reconstruction and filling of bone defects. The "self-fitting" material expands with warm salt water and molds to the precise shape of the bone defect without becoming brittle, and as its porous, acts like a scaffold, supporting the growth of new bone tissue. The research team created the new SMP by linking together molecules of poly(ε-caprolactone), an elastic, biodegradable substance, and coated it with polydopamine, a sticky material that helps lock the polymer into place by prompting the formation of a certain bone mineral. The researchers determined that an SMP utilizing a polydopamine coat, generated not only 5x more osteoblasts than those without a coating, but encouraged osteoblasts to produce greater quantities of runX2 and osteopontin, two proteins critical for new bone formation.

Ceterix Orthopaedics announced the results of a systematic literature review evaluating the success rate of repairing horizontal meniscus tears. The study, published online in the journal Arthroscopy, examined more than 16,000 articles and nine studies with evaluable data reporting results of horizontal cleavage tear repairs. A total of 98 repairs of horizontal tears were reported. Using reoperation as the criterion for treatment failure, 77 of the repairs were successful, resulting in an overall success rate of 78%, demonstrating that meniscus repair can be successful.

REIMBURSEMENT
SI-BONE announced that Priority Health, the third largest commercial insurer in Michigan, published an update to its Lumbar Fusion Medical Policy No. 91590-R4 providing positive coverage for SI-BONE's iFuse Implant System, a minimally invasive surgical (MIS) device indicated for fusion of the sacroiliac (SI) joint. The policy states that the fusion procedure, may now be considered medically necessary for members with SI joint disruptions and degenerative sacroiliitis.


Researchers Develop New Shape-memory Polymer for Craniomaxillofacial Reconstruction

A team of researchers at Texas A&M University have developed a new shape-memory polymer (SMP) for craniomaxillofacial (head, face or jaw) reconstruction and filling of bone defects.

The "self-fitting" material expands with warm salt water and molds to the precise shape of the bone defect without becoming brittle, and as its porous, acts like a scaffold, supporting the growth of new bone tissue.

Currently, the most common method for filling craniomaxillofacial bone defects is autografting, a process in which surgeons harvest bone from elsewhere in the body, such as the iliac crest, and then try to shape it to fit the bone defect. Autograft though, is a rigid material that is difficult to shape, and complications can arise at the harvesting site. Another approach is to utilize bone putty or cement to plug gaps, but these materials can become brittle when they harden, and lack pores, or small holes, that would encourage new osteoblasts (the cells that produce bone), to move in and rebuild the damaged tissue.

SMPs are materials whose geometry changes in response to heat, and upon reaching 140 degrees Fahrenheit, become soft and malleable. Therefore during surgery, a surgeon could warm an SMP to that temperature and fill in a defect with the softened material. As the SMP cools to body temperature, it resumes its stiff texture and "locks" into place.

The research team created the new SMP by linking together molecules of poly(ε-caprolactone), an elastic, biodegradable substance, and coated it with polydopamine, a sticky material that helps lock the polymer into place by prompting the formation of a certain bone mineral. The researchers determined that an SMP utilizing a polydopamine coat, generated not only 5x more osteoblasts than those without a coating, but encouraged osteoblasts to produce greater quantities of runX2 and osteopontin, two proteins critical for new bone formation.

The next step for this new SMP are preclinical studies to test its ability to heal craniomaxillofacial bone defects in animals.


Premarket Approvals Being Awarded Twice as Quickly This Year Compared to 2013

According to new analysis provided by the Evaluate Group, the average premarket approval (PMA) review time in 2014 has been 18.4 months, twice as quick as the average time of 35.9 months in 2013.

The Center for Devices and Radiological Health (CDRH) has awarded 17 PMAs in 1H:14, increasing 89% from the nine PMAs awarded in 1H:13. The shortest PMA review went to Medtronic for its CoreValve transcatheter aortic valve, which completed the PMA process after only 5.8 months.

This suggests that the regulatory authority's efforts to implement an expedited review process to bring new devices to market, is starting to have an effect.


Musculoskeletal News Roundup 14-Aug-14

aap Implantate AG reported financial results for 2Q:14. Excluding the divested assets of the non-core contract manufacturing subsidiary EMCM, total revenue for continuing operations was €8.1 million ($11.1 million) in 2Q:14, representing an increase of 23% compared to €6.6 million ($8.6 million) in 2Q:13. EBITDA was €1.5 million ($2.0 million) in 2Q:14, increasing from €0.2 million ($0.3 million) in 2Q:13. EBITDA margin was 18.5% in 2Q:14 increasing from 3.0% in 2Q:13. The company's Trauma segment grew 7% from 2Q:13 to €3.0 million ($4.1 million) in 2Q:14. The company anticipates sales to be in the range of €7.0 - €8.0 million and EBITDA to be in the range of €0.0 - €0.4 million in 3Q:14. All growth rates are on a reported basis.

Amedica Corporation reported financial results for 2Q:14. Total revenue was $5.8 million in 2Q:14, in-line with consensus estimates and representing a decrease of 4% compared to $6.1 million in 2Q:13. Adjusted EBITDA was ($2.7) million in 2Q:14, decreasing from ($1.9) million in 2Q:13. Gross margin for 2Q:14 increased to 72.5%, from 78.0% in 2Q:13. The company's proprietary silicon nitride ceramic product revenue was $2.5 million in 1Q:14, increasing 41% compared $1.8 million in 1Q:13. The company's silicon nitride ceramic revenue was $2.7 million in 2Q:14, increasing 51% from 2Q:13, primarily due to increased market adoption of the second generation Valeo spinal interbody devices and the company's focus on its core silicon nitride technology. All growth rates are on a reported basis.

Bacterin reported financial results for 2Q:14. Total revenue was $8.9 million in 2Q:14, beating consensus estimates by 1%, and representing an increase of 7% compared to $8.3 million in 2Q:13. EBITDA was ($0.8) million in 2Q:14, compared to ($1.4) million in 2Q:13. Gross margin for 2Q:14 increased to 63.0%, from 56.8% in 2Q:13. All growth rates are on a reported basis.

Tornier reported financial results for 2Q:14. Total revenue was $86.9 million in 2Q:14, beating consensus estimates by 9% and representing an increase of 10% compared to $78.1 million in 2Q:13. Adjusted EBITDA was $6.1 million in 2Q:14, decreasing 17% from $7.3 million in 2Q:13, reflecting the ongoing U.S. sales force transition, geographic expansion and the company's new product development activity. Adjusted EBITDA margin decreased to 7.0% in 2Q:14 from 9.4% in 1Q:13. Gross margin for 2Q:14 increased to 75.6%, from 71.4% in 2Q:13. The company's segments grew by: Upper Extremity +11%, Lower Extremity +4%, Sports Medicine & Biologics (6%) and Large Joints & Other +13% in 2Q:14 respectively. All growth rates, except for those that apply to EBITDA, are on a constant currency basis.

PRODUCT INTRODUCTION & UPDATE
Blue Belt Technologies announced on August 5th that Dr. Jose Bossolo performed the 500th Navio assisted partial knee replacement surgery, worldwide, at Valley Baptist Medical Center. Valley Baptist is a general care facility in Brownsville, Texas and is part of Tenet Healthcare. The Navio Surgical System is the next generation of robotics-assisted technology for partial knee replacement surgery which Dr. Bossolo uses to create and execute a customized surgical plan for each patient. Valley Baptist Medical Center began offering Navio assisted surgery to their patients in October of 2013. The new technology has brought patients to Dr. Bossolo from all over the country seeking out advanced techniques to treat their knee pain.

Exactech announced the first implantation of its Alteon Tapered Wedge Femoral Stem. The stem incorporates specific features designed to achieve axial and rotational mechanical stability between the lateral and medial cortices of the femoral canal. The company anticipates a full U.S. launch to take place in 1Q:15.

Smith & Nephew unveiled a new hospital-focused sales model that will offer two of the company's primary hip and knee implants through multiyear contracts at an approximate discounted rate of one-third. The new system is called Syncera, and Smith & Nephew anticipates the two products offered under it, Genesis II Knee, and the combination of the Synergy hip stem and reflection cap, are suitable for roughly 80% of all hip and knee procedures undertaken in the United States. Along with reconstructive implants, the delivery program will also provide basic technical support in the operating room and supplemental technology to help streamline customer's supply chain and logistics. Management believes this type of model can lead to more attractive economics for patients, payers and providers as it offers automatic ordering and product replenishment, point-of-care automated tools, comprehensive pre-launch training and support, and access to technical and live account support when needed. Syncera is projected to generate overall cost savings of 40-50% for participating customers.

LEGAL
A Federal appeals court upheld the dismissal of a qui tam lawsuit claiming DJO, I-Flow, Orthofix and Stryker had participated in illegal off-label marketing of certain pain pumps. The suit was filed in 2011 and accused the companies of explicitly marketing the devices for use in articulating joints, despite a lack of FDA clearance for the application.

CLINICAL
Advanced Biologics announced a new OsteoAMP study to be published in the Journal of Spine, entitled, "Clinical Validation of Allogeneic Morphogenetic Protein: Donor Intervariability, Terminal Irradiation and Age of Product is not Clinically Relevant". In the study, analysis was completed looking at the effects of different variables between allograft donors that were used to process the company's allograft-derived growth factor, OsteoAMP, which was subsequently implanted in patients undergoing spinal fusion procedures. According to the company, the study demonstrated that time to fusion had no correlation to the age of the donor, product or sterilization.

Cellular Biomedicine Group announced the final patient was treated in a Phase IIb trial to further evaluate the safety and efficacy of its ReJoin product, a proprietary adipose-derived mesenchymal precursor cell (haMPC)-based therapy for Knee Osteoarthritis (KOA). The trial's results will be made available by early 1Q:15.

COLLABORATION
MedCom Advisors entered an agreement with OsteoMed regarding the co-marketing of the PrimaLOK SP Interspinous Fusion System and the Development the MI-Port Fusion Procedure. Under the terms of the agreement, MedCom will provide training and protocol development for the use of the PrimaLOK SP in MIS fusion procedures.

APPOINTMENTS
SpineFrontier appointed of John Miller as Vice President of Sales. Prior to SpineFrontier, Mr. Miller served as Sales Director Baxano Surgical.


Smith & Nephew Unveils New Discounted, Hospital-focused Sales Model

Smith & Nephew unveiled a new hospital-focused sales model that will offer two of the company's primary hip and knee implants through multiyear contracts at an approximate discounted rate of one-third.

The new system is called Syncera, and Smith & Nephew anticipates the two products offered under it, Genesis II Knee, and the combination of the Synergy hip stem and reflection cap, are suitable for roughly 80% of all hip and knee procedures undertaken in the United States.

Along with reconstructive implants, the delivery program will also provide basic technical support in the operating room and supplemental technology to help streamline customer's supply chain and logistics. Management believes this type of model can lead to more attractive economics for patients, payers and providers as it offers automatic ordering and product replenishment, point-of-care automated tools, comprehensive pre-launch training and support, and access to technical and live account support when needed. Syncera is projected to generate overall cost savings of 40-50% for participating customers.

Orthopedic sales and accounts historically have been focused at the surgeon level, but with this new delivery model, Smith & Nephew is aiming to fulfil the needs of customers searching for a different value proposition, the 5-10% of U.S. hospitals that cannot afford the company's full-service offering.

Management expects Syncera to initially result in dilution, but ultimately the idea is to maintain its present-day margins by reducing product prices concurrently with lower Selling, General & Administrative (SG&A) operating expenses resulting from less intensive marketing and individualized training efforts as this type of program strips away some of the traditional costs, such as sending a company technician to attend procedures.

So far Smith & Nephew has received positive feedback from customers on Syncera and expects to start shipping the first product under the new system shortly.

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