A New Slant On Back Surgery 'May Be Just Scratching The Surface'
Friday May 23, 6:00 pm ET
Spine surgery can be a pain in the neck.
Doctors often make a big incision in the back or front and then cut through muscle, bone and tissue.
Patients stay in the hospital up to five days and take weeks or even months to recover.
NuVasive (NasdaqGS:NUVA - News) has found a better way.
The small medical device firm has developed a minimally invasive and faster approach from the side, with just two small cuts. There's less body disruption, and recovery time is shorter.
This "Extreme Lateral Interbody Fusion (XLIF)" method has opened the door to a growing medical-products business for NuVasive.
XLIF and related products are put to work mostly on lumbar fusions to treat common maladies such as degenerative disc disease.
A lot of lower-back pain stem from aging and obesity.
However else these two growing trends are viewed, they're a boon to the spine trade. A million people a year undergo spine surgery in the U.S.
Since NuVasive launched its lateral surgery program in 2003, revenue has grown from $23 million to last year's $154 million.
"We feel we're just scratching the surface," said chief executive Alex Lukianov.
He expects sales to grow at least 35% a year, passing the $200 million mark this year.
But the firm has yet to make a profit. "We've been building our infrastructure, building out our sales force," Lukianov said.
The payoff might finally be at hand. Analysts expect the firm to post its first profit in the third quarter and end the year with a meager 2 cents a share in earnings. But that's up from last year's 32-cent loss.
Analysts tracked by Thomson Reuters estimate NuVasive will earn 49 cents a share in 2009 and 86 cents in 2010.
"They have two ways to grow," said Ben Andrew, an analyst at William Blair, which has done investment banking work for NuVasive. "Increase the number of surgeons trained and get a bigger (product) share of a surgeon who has been trained."
NuVasive has trained more than 1,500 doctors at its operating rooms in San Diego. It trains about 100 surgeons a quarter.
Key to NuVasive's lateral method is its software-driven NeuroVision nerve avoidance system. Doctors had avoided side approaches before for fear of damaging nerves.
But with this system, they can detect and avoid nerves as they go through the nerve-rich psoas muscle in route to the spine.
NeuroVision itself doesn't take in much revenue. NuVasive gives the system to hospitals to spur XLIF adoption. It makes money on all the other products that are needed during the surgery.
That includes split-blade retractors, fusion devices, other throwaway items and, finally, implants.
NuVasive's revenue per procedure averages $12,000 to $14,000.
The line-up gets deeper in the third quarter when NuVasive buys the Osteocel biologics unit from Osiris Therapeutics (NasdaqGM:OSIR - News). The deal will add an adult stem-cell bone grafts to complement NuVasive's graft.
Lukianov says Osteocel will add about $2,000 to $3,000 in revenue per procedure.
NuVasive recently moved up the spine to the cervical, or neck area, with a new suite of products. And in late 2010, it hopes to get approval for a cervical disc replacement, NeoDisc, now in trials.
NuVasive isn't the only medical-device outfit to advance minimally invasive spine surgery. But it's virtually the only one with a viable lateral platform.
Others have tried side approaches. But they haven't had much success, observers say.
"The others are way behind NuVasive," said William Smith, chairman of neurosurgery at the University Medical Center in Las Vegas, who has performed the XLIF on more than 500 patients. "Some of the intellectual property NuVasive has makes it difficult to compete."
The field remains wide open for NuVasive. Most surgeons have not yet converted to any minimally invasive technique, let alone the lateral kind, Smith says.
NuVasive's share of the U.S. spine-surgery market is only about 4%. (Sales in Europe, while tiny, are just starting to ramp up a bit.) But in markets where its sales reps have worked longer, such as Miami, Chicago and Los Ang, its share is 10% to 15%, Lukianov says.
"That's the kind of share large companies like Stryker (NYSE:SYK - News) and Johnson & Johnson's (NYSE:JNJ - News) DePuy have," he said.
The spine market's biggest player is Medtronic's (NYSE:MDT - News) Sofamor Danek, which garners almost 50% of the worldwide spine market. The next largest, DePuy, has only 12%, followed by the Swiss firm Synthes, according to Merriman Curhan Ford.
"In recent years, these giants have had their market shares eroded by smaller, more specialized and more nimble companies like NuVasive," wrote Jose Haresco, a Merriman analyst.
NuVasive might still be small, but several execs have logged years with major spine-device firms. Lukianov was the former president of Sofamor Danek USA.
作者:admin@医学,生命科学 2010-09-27 11:49