New Medical Technologies at Startups, September 2014

Below is a list of new technologies under development at medtech startups recently identified and included in the Medtech Startups Database:

  • Robotics for ophthalmic surgery.
  • Dynamic force generation for bone repair.
  • Neursurgical brain simulation system.
  • Orthopedic technologies including pedicle screw that does not require a guide wire.
  • Synthetic bone graft materials.
  • Minimally invasive mitral valve replacement.

For a historical listing of the technologies under development at medtech startups, see link.

Sealants, Glues, Hemostats, Anti-Adhesion: An Evolved Market

In a forthcoming report on advanced technologies associated with the acute phase of wound management — specifically, hemostasis, closure and sealing — MedMarket Diligence will be revealing the state of the art and the industry for fibrin and other surgical sealants; cyanoacrylate and other synthetic and naturally-occurring high strength glues; a wide range of products providing hemostasis; products that prevent the formation of post-surgical adhesions; and the increasingly varied types of physical wound closure, including sutures, staples, clips, tapes, and other mechanical wound closure types.

Our analysis in 2012 illustrated the scope and depth to which these advanced wound closure products had penetrated the realm of many areas of clinical practice that, up to a scan decade ago, had been dominated for a millennia by simple physical methods to manage acute wounds — sutures and tapes. Below is an illustration of the size and growth in e sales of these products, showing that the advanced products are being adopted at accelerated rates, yet a sizable volume of wound closure remains in the hands of very traditional closure (sutures/staples).

Size and Growth of Surgical Securement Product Segments Worldwide 2010-2019

Source: “Worldwide Surgical Sealants, Glues, Wound Closure and Anti-Adhesion Markets, 2008-2015.”  Published by MedMarket Diligence, LLC. See updated Report S192.

Of course, the field of sutures and staples is not exactly stagnant, devoid of innovation. Sutures, staples and clips innovation have been driven by the commensurate innovation in surgical technique. Traditional surgery via laparotomy has long since been revolutionized by laparoscopy, and endoscopic procedures in general have become the standard for minimizing surgical trauma and faster recovery. The endoscopic format has demanded new suturing and stapling technologies, and industry stalwarts like Ethicon, Covidien and others have been happy to provide the solutions.  And even more recently, natural orifice transluminal endoscopic surgery (NOTES) procedures are pushing the minimally invasive principle to a greater extreme.

The Staying Power of Spine Surgery Markets

While medtech over the past five years has seen continued pressure on prices, increased oversight on physician-manufacturer relationships, reduced med/surg procedure volumes, continued regulatory challenges and the real or perceived negative impacts of the Affordable Care Act, the business of spine surgical technologies remains one of the most steadfast oases of innovation and price stability.

The continued growth of spine surgery owes itself to a number of key drivers:

  • The ageing population worldwide
  • Increasing incidence of obesity
  • A growing middle class in developing countries, with the ability to pay out of pocket for spine surgery
  • Improving worldwide economy
  • Technological device enhancements, leading to improved surgical results
  • Developments in minimally invasive spine surgery (MISS) devices driving a strong increase in MISS, with its numerous advantages
  • In the US, improvements in reimbursement as clinical trials demonstrate the efficacy of treatments using the devices
  • US healthcare reform leading to medical insurance coverage for more people, allowing those suffering from intractable back pain to receive surgical treatment

(The last, of course, is debatable, since medical device manufacturers are not yet convinced that a 3.2% excise tax is supported by the anticipated boost in patient population. The jury is still out on this and, in any case, prospects for the 3.2% tax being repealed are slim, despite repeated efforts.)

Consequently, the worldwide aggregate spine surgery market has a 2012 to 2020 compound growth rate of 7.7%, with individual segments within it growing at a low of 2.3% to a high of 35.0%.

It is also worth noting that we have identified seven (7) new medtech startups (McGinley Orthopaedic Innovations, KB Medical, Trice Orthopedics, Tyber Medical, Direct Spinal Therapeutics, NLT Spine, Osseus Fusion Systems) in spine surgery that have been founded in the past three years alone.

Below is illustrated the spine surgery markets in the Americas and Europe for 2012-2020.

Screen Shot 2014-05-28 at 10.33.52 AMScreen Shot 2014-05-28 at 10.34.10 AM

Source: MedMarket Diligence, LLC; Report #M520, “Worldwide Spine Surgery: Products, Technologies, Markets and Opportunities 2010-2020″.

Growth versus volume in medtech

One of the more interesting aspects of well-established markets that have significant volume in medical technology product sales is that the revenue and the caseload are sufficient to drive fairly a continuous range of technologies that will meet patient demand. As a result, there tends to be a continuum between high-volume, low-growth and low-volume high-growth. This significance should be apparent to active or potential market participants.

This continuum can be represented in two noteworthy ways, each of which illustrates the inverse relationship between the size of a market segment and its growth. For example, one of the most well established medtech markets is traditional bandages and dressings in wound management. These are simple to manufacturer, applicable to a wide range of wound types, require little clinician knowledge to use and, therefore, widely used throughout the world. They represent very large volume, in the $billions worldwide. At the other end of this spectrum are emerging technologies such as the use of growth factors in wound management. They have a large, as yet untapped potential, so their anticipated growth is high, while their current volume still remains very low, at least by comparison to traditional wound dressings.

Here is how these two technologies appear at the ends of the spectrum in wound management, between which are large numbers of different wound management technologies.
20140523-114241-42161375.jpg
Source: MedMarket Diligence, LLC; Report #S249.

The second way this can be represented is the relative share of the market represented by each as they change over time given their differing sales growth rates. Below is an illustration of the net change in share of the total market for wound management products by each product type. Again, there is a noticeable continuum.

20140523-114506-42306054.jpg

Source: MedMarket Diligence, LLC; Report #S249.

The amount of medtech funded is often less than half the story

In tracking venture capital or other money flowing into “medtech”, I am frequently struck by how often the numbers that are presented as evidence tell only part of the picture, like one of the several blindfolded men touching different parts of an elephant tasked with identifying what it is they are touching.

Recent results from Pricewaterhouse Coopers on Q1 2014 venture capital paints a picture illustrating an 11% increase from Q1 2013 to Q2 2014 in total funding for “medical device” companies, with a drop in the number of deals, from 29 to 25.

There are two problems with this, the first being that the fundings data so presented is only looking at “medical device” companies, the second being that we have no evidence on the number of companies seeking funding in either year.

First, talking about medical devices in 2014 is a lot like talking about horses in 1910.  Neither one tells the whole story of the markets in which they very clearly compete. Second, while the amount of money actually funded by VC in 2014 versus 2013 is obviously important (especially to the recipients), the number and size of the deals rejected in both years is also rather important as well (especially to the non-recipients).

So, what should be presented differently? Well, tracking the “medical device” industry is just not relevant anymore (I’ve already argued this ad nauseum), since medical devices don’t just compete with medical devices anymore — for clinical applications or venture funding. In my opinion, the tracking of funding should first look at funding in, say, coronary artery disease treatment (i.e., “disease state”), then consider the share of that funding that is going toward this or that therapeutic option. As for the amount funded, would it not be meaningful to all involved to track the amount of actual versus proposed funding, especially if the proposed funding was limited to actual deals that were ultimately accepted or rejected?

Below is the amount of funding in “medtech”* by month from January 1, 2009, to May 21, 2014, presented both as an annual overlay to reflect seasonality and as a continuum, with a linear trendline.

Screen Shot 2014-05-21 at 1.02.36 PM

 

 

Screen Shot 2014-05-21 at 1.12.37 PM

Source: MedMarket Diligence, LLC

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*What is “medtech”?: We view medical technology (medtech) as principally medical devices and equipment, but also all technologies that are directly competitive with or complementary to technologies represented by therapeutic or diagnostic medical devices/equipment.

Note: Historic coverage of “medtech” has been limited to medical devices, supplies and equipment. We feel that such a limited definition poorly reflects the true nature of the markets that once were limited to such products. In reality, assessing the markets and competition for medical devices by ONLY considering other medical devices would result in gross underestimations of both competition and market potential. Moreover, this is reflected in both the nature of medical devices, which may be hybrid device/bio/pharm products or products that may not be “devices” at all, especially in the typical definitions defined by material type and function, but that compete head-on with devices.

 

Where will medicine be 20 years from now?

My answer (edited) from this question on Quora.

I can speculate on this from the perspective of clinical practice and medical technology, but it should be first noted that another, important determinant of “where medicine will be” is the set of dynamics and forces behind healthcare delivery systems, including primarily the payment method, especially regarding reimbursement. It is clear that some form of reform in healthcare will result in a consolidation of the infrastructure paying for and managing patient populations. The infrastructure is bloated and expensive, unnecessarily adding to costs that neither the federal government nor individuals can sustain. This is not to say that I predict movement to a single payer system — that is just one perceived solution to the problem. There are far too many costs in healthcare that offer no benefits in terms of quality; indeed, such costs are a true impediment to quality. Funds that go to infrastructure (insurance companies and other intermediaries and the demands they put on healthcare delivery work directly against quality of care. So, whether it is Obamacare, a single payer system, state administered healthcare (exchanges) or some other as-yet-unidentified form, there will be change in how healthcare is delivered from a cost/management perspective.

From the clinical practice and technology side, there will be enormous changes to healthcare. Here are examples of what I see from tracking trends in clinical practice and medical technology development:

  • Cancer 5 year survival rates will, for many cancers, be well over 90%. Cancer will largely be transformed in most cases to chronic disease that can be effectively managed by surgery, immunology, chemotherapy and other interventions.
  • Diabetes Type 1 (juvenile onset) will be managed in most patients by an “artificial pancreas”, a closed loop glucometer and insulin pump that will self-regulate blood glucose levels. OR, stem cell or other cell therapies may well achieve success in restoring normal insulin production and glucose metabolism in Type 1 patients. The odds are better that a practical, affordable artificial pancreas will developed than stem or other cell therapy, but both technologies are moving aggressively and will gain dramatic successes within 20 years.
  • Diabetes Type 2 (adult onset) will be a significant problem governed by different dynamics than Type 1. A large body of evidence will exist that shows dramatically reduced incidence of Type 2 associated with obesity management (gastric bypass, satiety drugs, etc.) that will mitigate the growing prevalence of Type 2, but research into pharmacologic or other therapies may at best achieve only modest advances. The problem will reside in the complexity of different Type 2 manifestation, the late onset of the condition in patients who are resistant to the necessary changes in lifestyle and the global epidemic that will challenge dissemination of new technologies and clinical practices to third world populations.
  • Cell therapy and tissue engineering will offer an enormous number of solutions for conditions currently treated inadequately, if at all. Below is an illustration of the range of applications currently available or in development, a list that will expand (along with successes in each) over the next 20 years.
  • Gene therapy will be an option for a majority of genetically-based diseases (especially inherited diseases) and will offer clinical options for non-inherited conditions. Advances in the analysis of inheritance and expression of genes will also enable advanced interventions to either ameliorate or actually preempt the onset of genetic disease.
  • Drug development will be dramatically more sophisticated, reducing the development time and cost while resulting in drugs that are far more clinically effective (and less prone to side effects). This arises from drug candidates being evaluated via distributed processing systems (or quantum computer systems) that can predict efficacy and side effect without need of expensive and exhaustive animal or human testing.
  • Most surgical procedures will achieve the ability to be virtually non-invasive. Natural orifice translumenal endoscopic surgery will enable highly sophisticated surgery without ever making an abdominal or other (external) incision. Technologies like “gamma knife” and similar will have the ability to destroy tumors or ablate pathological tissue via completely external, energy-based systems.
  • Information technology will radically improve patient management. Very sophisticated electronic patient records will dramatically improve patient care via reduction of contraindications, predictive systems to proactively manage disease and disease risk, and greatly improve the decision-making of physicians tasked with diagnosing and treating patients.
  • Systems biology will underlie the biology of most future medical advances in the next 20 years. Systems biology is a discipline focused on an integrated understanding of cell biology, physiology, genetics, chemistry, and a wide range of other individual medical and scientific disciplines. It represents an implicit recognition of an organism as an embodiment of multiple, interdependent organ systems and its processes, such that both pathology and wellness are understood from the perspective of the sum total of both the problem and the impact of possible solutions.


There will be many more unforeseen medical advances achieved within 20 years, many arising from research that may not even be imagined yet. However, the above advances are based on actual research and/or the advances that have already arisen from that research.

Tissue Engineering and Cell Therapy Market Outlook

The market for tissue engineering and cell therapy products is set to grow to nearly $32 billion by 2018. This figure includes bioengineered products that are themselves cells or are actively stimulating cell growth or regeneration, products that often represent a combination of biotechnology, medical device and pharmaceutical technologies. The largest segment in the overall market for regenerative medicine technologies and products comprises orthopedic applications. Other key sectors are cardiac and vascular disease, neurological diseases, diabetes, inflammatory diseases and dental decay and injury.

An overview (map) of the spectrum of clinical applications in tissue engineering and cell therapy is shown below:

Source: Report #S520

Cell therapy is defined as a process whereby new cells are introduced into tissue as a method of treating disease; the process may or may not include gene therapy. Forms of cell therapy can include: transplantation of autologous (from the patient) or allogeneic (from a donor) stem cells , transplantation of mature, functional cells, application of modified human cells used to produce a needed substance, xenotransplantation of non-human cells used to produce a needed substance, and transplantation of transdifferentiated cells derived from the patient’s differentiated cells.

Once considered a segment of biomaterial technologies, tissue engineering has evolved into its own category and now comprises a combination of cells, engineering and suitable biochemical and physiochemical factors to improve or replace biological functions. These include ways to repair or replace human tissue with applications in nearly every medical specialty. Regenerative medicine is often synonymous with tissue engineering but usually focuses on the use of stem cells.

Tissue engineering and cell therapy may be considered comprised of bioengineered products that are themselves cells or are actively stimulating cell growth or regeneration. These often comprise a combination of biotechnology, medical device and pharmaceutical technologies.

Researchers have been examining tissue engineering and cell therapy for roughly 30 years. While some products in some specialties (such as wound care) have reached market, many others are still in research and development stages. In recent years, large pharmaceutical and medical device companies have provided funding for smaller biotech companies in the hopes that some of these products and therapies will achieve a highly profitable, commercial status. In addition, some companies have been acquired by larger medical device and pharmaceutical companies looking to bring these technologies under their corporate umbrellas. Many of the remaining smaller companies received millions of privately funded dollars per year in research and development. In many cases it takes at least ten years to bring a product to the point where human clinical trials may be conducted. Because of the large amounts of capital to achieve this, several companies have presented promising technologies only to close their doors and/or sell the technology to a larger company due to lack of funds.

The goal of stem cell research is to develop therapies to treat human disease through methods other than medication. Key aspects of this research are to examine basic mechanisms of the cell cycle (including the expression of genes during the formation of embryos) as well as specialization and differentiation into human tissue, how and when the differentiation takes place and how differentiated cells may be coaxed to differentiate into a specific type of cell. In the differentiation process, stem cells are signaled to become a specific, specialized type of cell when internal signals controlled by a cell’s genes are interspersed across long strands of DNA and carry coded instructions for all the structures and functions of a cell. In addition, cell differentiation may be caused externally by use of chemicals secreted by other cells, physical contact with neighboring cells and certain molecules in the microenvironment.

The end goal of stem cell research is to develop therapies that will allow the repair or reversal of diseases that previously were largely untreatable or incurable.. These therapies include treatment of neurological conditions such as Alzheimer’s and Parkinson’s, repair or replacement of damaged organs such as the heart or liver, the growth of implants from autologous cells, and even regeneration of lost digits or limbs.

In a developing human embryo, a specific layer of cells normally become precursor cells to cells found only in the central nervous system or the digestive system or the skin, depending on the cell layer and the elements of the embryo that direct cell differentiation. Once differentiated, many of these cells can only become one kind of cell. However, researchers have discovered that adult body cells exist that are either stem cells or can be coaxed to become stem cells that have the ability to become virtually any type of human cell, thus paving the way to engineer adult stem cell that can bring about repair or regeneration of tissues or the reversal of previously incurable diseases.

Another unique characteristic of stem cells is that they are capable of self-division and self-renewal over long periods of time. Unlike muscle, blood or nerve cells, stem cells can proliferate many times. When exposed to ideal conditions in the laboratory, a relatively small sample of stem cells can eventually yield millions of cells.

There are five primary types of stem cells: totipotent early embryonic cells (which can differentiate into any kind of human cell); pluripotent blastocyst embryonic stem cells, which are found in an embryo seven days after fertilization and can become almost any kind of cell in the body; fetal stem cells, which appear after the eighth week of development; multipotent umbilical cord stem cells, which can only differentiate into a limited number of cell types; and unspecialized adult stem cells, which exist in already developed tissue (commonly nerves, blood, skin, bone and muscle) of any person after birth.

tissue-cell-2012-2018

Source: MedMarket Diligence, LLC; Report #S520, “Tissue Engineering & Cell Therapy Worldwide 2009-2018.”

Developmental Timescales

Tissue engineering and cellular therapy products take years of research and many millions of dollars (averaging about $300 million, according to some reports) before they make it over the hurdles of clinical trials and into actual market launch. More than one small biotech company has burned through its money too quickly and been unable to attract enough investment to keep the doors open. The large pharmaceutical and medical device companies are watching development carefully, and have frequently made deals or entered into alliances with the biotechs, but they have learned to be cautious about footing the bill for development of a product that, in the end, may never sell.

For many of the products in development, product launch is likely to occur within five years. Exceptions include skin and certain bone and cartilage products, which are already on the market. Other products are likely to appear on the European market before launch in the United States, due to the presence of (so far) less stringent product review and approval laws in the European Union.

Even when the products are launched, take-up will be far from 100% of all patients with that particular condition. Initially, tissue engineering and cell therapy products will go to patients suffering from cancers and other life-threatening conditions, who, for example, are unable to wait any longer for a donor organ. Patients who seem to be near the end of their natural lives likely will not receive these treatments. Insurance coverage will certainly play a key role as well in the decision about who receives which treatments and when. But most importantly, physicians will be selecting who among their patients will be treated; the physicians learn about the treatments by using them, by observing the patient’s reactions, and by discussing their experiences with colleagues. In other words, the application of tissue engineering and cellular therapy will progress in a manner similar to the introduction of any new technology: through generally conservative usage by skilled, highly trained physicians dedicated to providing their patients with the best possible treatment without causing them additional harm.

 

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