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Alphatec Holdings, Inc., the parent company of Alphatec Spine, Inc., a leading medical technology company involved in the design, development, manufacturing and marketing of products for the surgical treatment of spine disorders, with a focus on treating conditions affecting the aging spine, announced today that the first surgery with the OsseoFix(tm) Spinal Fracture Reduction System was performed on July 21, 2008 at the Bogen Centre in Germany. The surgery was performed by Rudolph Bertagnoli, M.D., Chief of Spine, St. Elizabeth Klinikum, Straubing, Germany, and a world-renowned spine surgeon.
"The patient was suffering from an acute osteoporotic T-12 compression fracture. The OsseoFix system was easy to use. The surgery went smoothly and I was able to regain considerable vertebral height and restabilize the vertebra in the patient. Following the surgery, the patient has minimal pain and has not required external support or bracing," said Dr. Bertagnoli.
Dr. Bertagnoli is the lead investigator in a 30-patient study of the OsseoFix that is being conducted by Alphatec in Germany. Following each OsseoFix procedure, each patient will be evaluated at appropriate post-operative time intervals to determine their level of pain relief and vertebral stability. After the completion of the study, the study results will be submitted for publication in a peer-reviewed spine surgery journal.
"The first OsseoFix surgery is another milestone that reflects Alphatec's dedication to improving the quality of life of older patients and treating the aging spine," said Dirk Kuyper, Alphatec's President and Chief Executive Officer. "Once cleared by the FDA, the OsseoFix Spinal Fracture Reduction System will be a valuable addition to Alphatec's product portfolio. We are pleased to offer spine surgeons increased options for treating patients with debilitating spine deformities, such as vertebral compression fractures. We expect OsseoFix to receive FDA clearance and be launched in the U.S. by late 2008."
Alphatec submitted pre-market notification to the FDA for a 510(k) clearance for OsseoFix in June 2008.
About Vertebral Compression Fractures and the OsseoFix Spinal Fracture Reduction System
According to the National Osteoporosis Foundation there were 700,000 osteoporotic vertebral compression fractures in the U.S., of which only one-third are estimated to be diagnosed. Common causes of vertebral compression fractures include osteoporosis, trauma, or a pre-existing disease at the fracture site.
Currently, the two most common procedures used to treat vertebral compression fractures are kyphoplasty and vertebroplasty. A kyphoplasty procedure involves injecting a balloon through a catheter into the damaged vertebra, inflating the balloon to restore height, and reinforcing the resultant space made by the balloon with bone cement. A vertebroplasty procedure involves injecting bone cement directly into the compressed vertebral body under high pressure, with the goal of stabilizing the fracture. Alphatec Spine designed and developed OsseoFix to expand the market for surgical solutions for vertebral compression fractures, with what it believes to be an improvement over the most common procedures being used today. OsseoFix is designed to allow for improved fracture reduction and designed to use less cement during a surgical procedure, both of which Alphatec believes reduces the risk of cement extravasation, reduces surgical complications and increases clinical efficacy.
About Alphatec Spine
Alphatec Spine, Inc. is a wholly owned subsidiary of Alphatec Holdings, Inc. (Nasdaq:ATEC). Alphatec Spine is a medical device company involved in the design, development, manufacturing and marketing of products for the surgical treatment of spine disorders, primarily focused on treating conditions related to the aging spine. The company's mission is to combine world-class customer service with innovative, surgeon-driven design that will help improve the aging patient's quality of life. The company is poised to achieve its goal through new solutions for patients with osteoporosis and other aging spine deformities, improved minimally invasive products and techniques and integrated biologics solutions. In addition to its U.S. operations, Alphatec Spine also markets its spine products in Europe. In Asia, the company markets a broad line of spine and orthopedic products through its subsidiary, Alphatec Pacific, Inc. For more information, please visit http://www.alphatecspine.com
Forward Looking Statements
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include, but are not limited to: Alphatec's ability to accelerate new product momentum, bring to market differentiated products and commercialize its product pipeline. Alphatec cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the following: the growth rate of the spine market related to aging and elderly patients, uncertainty of success in developing new products or products currently in Alphatec's pipeline, including the launch of OsseoFix by late 2008, including those products that are intended to treat disorders prevalent in aging patients such as OsseoFix, failure to achieve acceptance of Alphatec's products, including OsseoFix, by the surgeon community, failure to obtain FDA clearance or approval for new products, including OsseoFix by late 2008, Alphatec's ability to compete with other competing products and with emerging new technologies, product liability exposure, patent infringement claims and claims related to Alphatec's intellectual property. Please refer to the risks detailed from time to time in Alphatec's SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Alphatec disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.
This news release was distributed by PrimeNewswire, www.primenewswire.com
SOURCE: Alphatec Holdings, Inc.
Integra LifeSciences this morning announced plans to acquire the Theken family of businesses - Theken Spine, Theken Disc and Therics - for $75.0 million (a 2.2x revenue multiple) plus up to $125.0 million in future performance-based payments. This acquisition represents a significant effort by Integra to strengthen its spine business; it currently offers a wide range of biologics, including the Mozaik products, but no metal devices.
Integra was clearly willing to pay for this shift in strategy. Though Theken's product line is largely undifferentiated, with earnouts factored in the Integra deal represents a 5.9x multiple. For purposes of comparison, Synthes' recent acquisition of N Spine, which included a differentiated dynamic stabilization device, represented what we estimate to be about a 7.5x multiple. In 2006, Kyphon bought St. Francis, maker of the X-Stop, at a 14.5x multiple. That the Theken portfolio was able to command such a high multiple speaks to the health of the spine space and the high demand for companies with scale in this market.
CMS proposed a national non-coverage decision for intradiscal electrothermic therapy (IDET), saying there is insufficient evidence that the procedure improves outcomes in the Medicare population.
IDET is a minimally-invasive treatment for low back pain where a catheter and a heating element are inserted into the disc annulus, and the catheter is heated. While the precise mechanism of action in this type of heat therapy has not yet been identified, it has been suggested in research that the treatment may damage pain receptors such that the patient's capacity to feel discogenic pain is reduced, and it may also stiffen the annular tissue such that any small tears are sealed. Smith & Nephew is one of the companies who market an IDET system.
The agency will accept comments for 30 days, at which point they will issue a final decision.
Zimmer's announced yesterday that they would voluntarily suspend sales of the Durom Acetabular Component in the U.S. while they update the labeling and conduct further surgeon training on the product. As a result, the company is lowering full-year revenue guidance to 8.5% to 9% (4.5% to 5% constant currency) growth over the prior year from 10% to 11% (6% to 7% constant currency.) Zimmer is projecting a loss of $20 to $30 million in hip sales attributable to the Durom, but the lowered guidance also reflects weakness in U.S. Dental and "slower than anticipated" adoption rates on certain new products.
Zimmer is not the only company facing issues with their hip business. Last week Stryker reported 7% growth in hip (2% constant currency), trailing every other recon division by a wide margin. Sales were likely impacted by the Trident recall in January, though the company has historically struggled with hip; one of the the company's big hopes for revitalizing the business, the Cormet resurfacing product, debuted to disappointing sales. Whether these hip concerns at Zimmer and Stryker mean a boost for Wright Medical and Smith & Nephew will be seen in coming quarters.
Still, it wasn't a bad quarter for Zimmer. The company reported revenues of $1.08 billion, beating estimates by $0.01 billion, and earnings were in line with estimates. Knee, extremity and spine all reported double-digit revenue growth rates. There is some analyst consensus that trading in the wake of the Durom announcement will represent a low for the company's stock and it will turn around from there, so despite current investor caution, Zimmer could be primed for a rebound.
ArthroCare's stock was off almost 40% in midday training following an announcement this morning that the company would restate financials from 2006, 2007 and 1Q:08. The restatement stems from a number of issues, including how revenue from DiscoCare was classified, raised by the company's Audit Committee and will result in "material reductions in operating income and net income" for the affected periods.
The company expects a non-cash reduction in revenue of $4 to $7 million in 2006, $20 to $25 million in 2007 and $2 to $5 million in 1Q:08. ArthroCare did not discuss the extent to which this would affect company's profitability, though a $37 million reduction in revenue could, on a percentage basis, translate to a significant impact on their income statement.
Over the past eight months, ArthroCare's stock has declined in the face of very public accusations regarding their spine business and relationship with DiscoCare (even the New York Post got involved, though their story was eventually retracted.) This morning's announcement raises further questions about the company's business practices and internal controls, and today's drop in the stock price to a multi-year low seems to show that investors are intolerant of these latest blows to the company's credibility, especially since analysts and management have debated these accounting issues openly for months.
Posted Jul 21, 2008 by Hal Brigham
A study published in the July 14, 2008 issue of Archives of Internal Medicine contends that hip and knee arthroplasty surgeries may be more beneficial to elderly patients than once believed. The study reports that surgery is not only more effective in alleviating pain than alternative treatments, but it also does not pose a significantly higher level of risk for elderly patients.
A total of 174 men and women age 65 and older participated in the study, which monitored osteoarthritis symptoms and functional status of patients over the course of one year. During that period, 29% of the subjects underwent hip or knee arthroplasty surgeries. While full recovery took up to several weeks, the authors noted that patients who had undergone the joint replacement surgery "experienced excellent long-term outcomes." Most importantly, the study reveals that recovery times for patients between the ages of 65 and 74 compared to those 75 or older were in fact very similar.
This study uncovers some of the driving factors behind a recent trend in modern medicine: an increase in surgical procedures, for everything from hip and knee replacements and revisions to cardiac implants, being performed on the very elderly.
With 70% of Americans over the age of 70 exhibiting evidence of osteoarthritis on x-rays and the elderly population increasing, this study foreshadows what could be a considerable increase in the number of hip and knee arthoplasties performed in the U.S. in the coming years.
Earnings
Biomet reported FQ4:08 revenues of $635.6 million, an increase of 16% (10% constant currency) over the year-ago period. Sales increased 10% in the U.S and 24% (11% constant currency) OUS. Recon sales increased 17% worldwide (12% constant currency) to $473.4 million. Among segments, knee increased 17% worldwide (12% constant currency) and 13% in the U.S., with sales drivers including the Oxford Partial Knee System and the Vanguard Complete Knee System. Hip sales increased 15% worldwide (8% constant currency) and 3% in the U.S., driven by the M2a-Magnum Acetabular System and the Taperloc Hip Stem, as well as sales of the ReCap Total Resurfacing System and the Exceed ABT Acetabular System in Europe. Fixation sales increased 12% worldwide (9% constant currency) and 8% in the U.S. Spinal product sales increased 3% worldwide (1% constant currency) and 9% in the U.S., which the company attributed to spinal stimulation sales growth. Dental sales increased 23% (16% constant currency).
Johnson & Johnson reported 2Q:08 revenues of $16.5 billion, beating estimates of $16.0 billion and representing a 9% increase over the year-ago period. Net earnings were $3.3 billion, or $1.17 per share, in 2Q:08, beating estimates of $1.12. DePuy reported $1.29 billion in sales, up 9% operationally over 2Q:07. On the conference call, the division reported the following growth rates among segments (all operational growth): hips increased 14% worldwide, 4% in the U.S. and 14% OUS. Knees increased 6%, 4% in the U.S. and 8% OUS. Spine increased 4% worldwide, was flat in the U.S. and up 14% OUS. Mitek, the sports medicine divison, reported 15% operational growth over the year-ago period.
Medicrea reported 1H:08 revenue of EUR 4.6 million ($7.3 million), an increase of 48% (55% constant currency) over the year-ago period. U.S. revenues increased 110% for the period.
Stryker reported 2Q:08 revenue of $1.71 billion, in line with estimates and representing a 17% increase (13% constant currency) over 2Q:07. Net earnings were up 27% to $305.8 million, or $0.73 per share, beating estimates by a penny. Sales of orthopedic implants were up 15% (9% constant currency) to $1.02 billion in 2Q:08. Among segments, hip was up 7% (2% constant currency); knee was up 18% (13% constant currency); trauma was up 22% (13% constant currency) and spine was up 21% (17% constant currency.)
Funding
Spineology Inc. closed on $7.5 million financing led by Oakridge Financial, among other investors. Proceeds will be used to fund additional commercialization, product development and clinical research.
Vertos Medical, Inc. has closed a $12.0 million Series C round led by CHL Medical Partners and Foundation Medical Partners, who were joined by previous investors Aweida Venture Partners and DFJ Mercury. Funds will be used to "expand the Vertos product portfolio" and support the launch of the Minimally Invasive Lumbar Decompression (MILD) system. The company describes the MILD procedure, as "a simple, percutaneous, fluoroscopically guided treatment" for lumbar stenosis.
Regulatory
Fziomed received a 5-2 "not approvable" decision from an FDA panel regarding its Oxiplex S/P PMA application. The panel found that the company's data did not definitively show product efficacy. The Oxiplex/SP Gel is an adhesion barrier designed to reduce pain following lumbar spinal surgery.
Zimmer is recalling an instrument used in the implantation of its NexGen Knee System. The company says alternative instrumentation is available, and sales should not be materially impacted.
Product Introduction and Update
Interventional Spine has trained more than 400 physicians on its PERCUTANEOUS spine therapy technologies since the line's launch in 2006. 150 physicians have completed the training in the past six months.
NovaBone Products released NovaBone Putty, a new formulation of the calcium-phosphate silicate bone graft substitute. CEO Art Wotiz says the putty "handles more easily" than earlier formulations and "is the only bone graft substitute that has been proven to signal, recruit, proliferate and differentiate osteoblasts."
Tornier has announced that 100,000 Aequalis Shoulders have now been implanted around the world. First launched in Europe in 1994, the Aequalis Shoulder is a complete shoulder arthroplasty system indicated for use in patients with severe osteoarthritis or who have experienced severe trauma.
VG Innovations, LLC launched VerteLoc, its minimally invasive spine stabilization system. The company says the system is "designed to address minor spinal instabilities by effectively stabilizing the spinal facets." The first Verteloc procedure was performed in May.
Reimbursement
Congress this week passed legislation blocking the 10.6% cut to physician Medicare payments, overriding a presidential veto of the bill.
Miscellaneous
U.S. News and World Report named the top ortho hospitals in the country, placing New York's Hospital for Special Surgery, which has the most discharges of any orthopedic hospital, a large nursing staff and advanced technologies, at the top. Other criteria included mortality rate, the extent of patient services and whether the facility had a trauma center. In addition to HSS, the Mayo Clinic, the Cleveland Clinic and Massachusetts General Hospital were among the top 10.
On Tuesday, we attended the FDA's Orthopaedic & Rehabilitative Devices Panel, Oxiplex/SP was voted "Not Approvable" by a 5-2 vote, based largely on the sponsoring company's inability to definitively demonstrate product effectiveness. The two dissenters would have voted it "Approvable with Conditions".
Oxiplex is the lead product from FzioMed, a San Luis Obispo, CA-based biomaterials company. Oxiplex is used to prevent adhesions (peridural fibrosis), and is currently distributed by J&J and Medtronic outside of the US--it has been used in 100,000 surgeries to date. There is currently no FDA-approved product to treat spinal adhesions, though there are adhesion barriers that are approved for general surgery and ob-gyn indications. Oxiplex's indication would have been as a surgical adjuvant during posterior lumbar decompression surgery to improve patient outcomes by reducing post-operative pain. The pivotal study's primary efficacy endpoint was improvement in leg pain, as measured by the Lumbar Surgery Outcomes Questionnaire (LSOQ). Of note, the pilot study mentioned "reduction of adhesions" as the indication, but this was removed for the pivotal study.
FzioMed's presentation focused on a complicated "multivariate longitudinal” statistical analysis of the change in leg pain from baseline to six months by GEE (Generalized Estimating Equations)" which included ten covariates and five treatment-by-covariate two-way interactions. Their analysis showed that, in patients with more severe back pain before surgery, there was a statistically significant reduction in leg pain in the Oxiplex group.
The FDA's presentation focused on a series of simpler analyses, none of which demonstrated statistically significant reduction in pain scores. FDA's dataset was also different from FzioMed's because FDA included patients with results "out of window" for 6 month follow up (e.g. a patient who didn't visit their surgeon at 6 months after surgery, but 12 months after).
The panel sided with FDA and believed FzioMed's statistical method to be exploratory or post-hoc data mining. As one surgeon-panelist said, "I see complex data manipulation that I don't understand, and that worries me." Even the biostatisticians on the panel were skeptical of the validity of the analysis. The panel was able to unanimously concluded that Oxiplex:
-Was safe
-Addressed a significant clinical need
-Might be effective
-Did not prove effectiveness in its trial results
Disagreement surfaced over whether the product should be approved. Two panelists believed that the prospect of a potentially effective, positively harmless, product to treat an important problem with no other solution warranted approval.
Although many comments and questions from the panelists and FDA could have been judged as statistical nitpicking, the most interesting issue to arise was the fact that nobody, not even the company, had any clue as to how or why Oxiplex worked. FzioMed had a couple of unexplored hypotheses, but nothing else. Although concerning on its own, this also seriously undermined FzioMed's position regarding subgroup analysis, because if there is no understanding of the mechanism of action, there's no reason to trust post hoc analysis suggesting the product is more effective in a subgroup.
In the highly likely event FDA follows the panel's recommendation, it appears FzioMed will have to decide if it is interested in conducting a new clinical trial to prove efficacy in the subgroup of patients with worse baseline pain.
