NASS Conference Report

Conference coverage is core to our research function, and John McCormick was at NASS this week to check out the latest in spine. His observations are below.

The spinal implant market remains attractive despite its maturity because opportunities remain for companies to innovate and take share through differentiation and thus surpass market growth.  In the past, innovation was about new implants, but today share gains are about procedural enhancements that reduce risk and improve outcomes.

This year’s North American Spine Society (NASS) meeting certainly clarified the point.  The principal focus at the conference was robotics due, in large part, to Medtronic having only just announced its plans to acquire Mazor, the Israeli spine robot pioneer, for $1.6 billion which is a valuation of over 17x revenues.

That drew attention to what companies are offering in terms of procedural enhancements:

• The Globus booth attracted onlookers with its ExcelsiusGPS robot launched a year ago. Globus management expects this to eventually aid pull-through revenues in its core implant business.
• Earlier this year, our own Alphatec acquired SafeOp which is a disruptive neuromonitoring technology designed to prevent the intraoperative risk of nerve injury with a powerful automated assessment capability that eliminates subjectivity and uncertainty in the operating room. This, in our view, represents a significant improvement for procedural safety and thus surgical outcomes especially for lateral spine.
• Zimmer Biomet had its Rosa large joint robot on display, but it has not yet been approved and time will tell if it is applicable to spine.
• NuVasive telegraphed that its 2019 capital equipment offering called PULSE will offer enhanced operating room workflow.
• No news from Stryker on whether its large joint robot MAKO can be applied to spine. The main focus was on how the company is going to integrate its recent $1.2 billion K2M acquisition which offers differentiation only with deformity implants.  Only time will tell if the implant differentiation is enough to override any potential dis-synergies due to product overlap.

Our booth-by-booth floor tour did not impress us much with any kind of real differentiation with respect to implants.  There were countless mom-and-pop companies who have jumped on various band wagons such as 3-D printing, implant surfacing materials, sacro-iliac bone fusion and expandable cages over the last several years.

That said, we were pleased to see Alphatec achieve a long-awaited FDA 510k clearance for its differentiated OsseoScrew, a next-generation expandable pedicle screw system, which addresses unmet clinical needs in spine, notably in elderly patients with advanced stage tumors or poor bone quality.