Evolution of Spinal Disc Replacement and AxioMed’s Journey: An Industry Perspective
Learning From The Joint Replacement Market
We share the belief that the future of medical devices will have a large role for replacing diseased parts of the human anatomy with a functional part that is going to be equal or better in performance. It is our belief that it is more likely that you will be replacing human diseased parts with improved functioning parts. It is with this belief that joint replacement surgery to replace the hip joint, replace the knee joint and over time now replacing all joints of the body has been evolving from the early days of rudimentary solutions in which orthopedic surgeons would fuse the hip joint and fuse the knee joint because they did not have a solution yet to replace the joints. Once they invented the first solution to replace the joint, the joint replacement devices have been improving rapidly decade after decade both in design as well as in the materials. With the lessons learnt from each design, joint replacement has been moving towards materials that are going to closely mimic the natural human anatomy and we see these devices getting to that stage where they become smart devices that can be customized to a patient, provide real-time feedback, and adapt to the activities and demands for performance by these joint replacements.
Conceiving a Viscoelastic Disc and Acquisition of AxioMed
The KICVentures Group, as an investment firm made the decision to develop a total disc replacement to replace the human disc in the cervical, thoracic and lumbar spine. After making this strategic decision, we were fortunate to see an opportunity to acquire the AxioMed disc in 2014. The history of the AxioMed disc made it even more compelling for us to move quickly to acquire this technology at all costs. Dr. Fernstrom recognized that maintaining motion in the disc space and trying to restore the height of the disc made sense and so he would put a steel ball in the disc. Since that decision, there have been investments by surgeons in developing improved disc replacement solutions. Most notable is Dr. Art Steffee, who is the inventor of pedicle screw fixation for fusion in the United States. He also invented AcroFlex, the first disc replacement that closely mimicked the human spine because it was developed to have the elastomeric and viscoelastic features of the human disc. The AcroFlex disc consisted of 2 metal endplates and vulcanized rubber which meant that it performed as a load sharing device when placed in the disc space under compression in all types of motions. It also allowed Dr. Art Steffee to restore the disc height back to its normal height so he felt that replacing the disc should be done with a device that closely mimics the human disc. Dr. Art Steffee placed the AcroFlex discs in the human body and published results in some of his early cases that had some excellent results and some failures with poor results. At the same time, he also continued to invest in fusing the human spine with pedicle screws and plates that he invented that was generating significant revenues, which is the paradox that he faced. Dr. Art Steffee eventually sold his company AcroMed to DePuy for $325 million mostly based on the pedicle screw sales, but the AcroFlex disc was not considered a worthy investment by DePuy at the time. Depuy was later bought by Johnson & Johnson which neglected to pursue developing the AcroFlex disc, however the engineers who worked with Dr. Art Steffee decided to come together under the leadership of James Kuras to raise money and solve the problem that they saw with the AcroFlex disc which was mostly due to the poor material choice and poor bonding of that material to the metal plates. This team went out and engaged Dr. Edward Benzel, a neurosurgeon, and Dr. Isador Lieberman, an orthopedic spine surgeon, both were at the Cleveland Clinic at the time close to the engineers since Dr. Art Steffee’s company was also in Cleveland at that time. According to Dr. Lieberman, the AxioMed disc was born in his living room, and they set forth from there to develop the disc with a lot of fervor and commitment which began in 2001. They were able to raise approximately $70 million over the years from about 12 venture capitalists prior to the buyout by KICVentures Group.
Breakthrough Innovation in AxioMed Viscoelastic Disc Technology
They had made major accomplishments over the years. First, from an obscure publication, they were able to identify a way to bond metal to a viscoelastic material using micro etching Esmarch dressing concepts and certain acidic bonding process. This was a major discovery. They were also able to work with an American company to develop a unique and proprietary viscoelastic material made of silicone polycarbonate urethane copolymer. This combination produced viscoelastic properties that overlap with the normal disc and performs better. The bonding of this material to the metal endplate resulted in a disc that was stronger than the human disc and was almost indestructible. This disc performed ideally in restoring height and lordosis, allowing compression movement in all planes within the range of normal motion of the spine. They were able to develop a cervical disc and a lumbar disc. Both were tested extensively for biomechanics and biocompatibility which they passed. They were also tested for production of wear debris which is very important for any movable disc to pass. The history of wear debris goes back to extremity joint replacement in which the early joints would fail due to massive inflammatory reaction from macrophages consuming micro-debris and wear particles generated by rubbing these hip and knee joints.
Drawbacks of Current Disc Designs
We see similar problems with the current generation of discs that are all ‘ball-and-socket’ discs designed to mimic hip and knee replacements and are metal-on-metal discs or articulating polyurethane or other material discs that with movement over time tend to produce microscopic wear debris consumed by macrophages resulting in massive inflammation which destroys the bone by a process called osteolysis. We see this with the M6 disc which is an embroidered material hand-woven around a multi-piece disc with some viscoelastic properties. Any mistakes in the hand-woven material become amplified in poor long-term performance of the disc. This disc also produces a substantial amount of wear debris and tends to be destroyed within the body over years as documented and published in papers. The M6 disc achieved US FDA clearance in the cervical spine and was bought by Orthofix. At this point, we see no evidence of changes in that disc from the failing materials.
AxioMed’s Lumbar Disc US Clinical Trial
AxioMed began its lumbar disc IDE trial in 2008 in the United States with over 200 patients receiving the AxioMed disc and an additional 200 patients for the control arm which was against the Prodisc. The Prodisc is one of the most studied disc replacements in the world with the most cases and experience. This was a wise decision in the IDE to chose to compare the AxioMed Disc against another total disc versus against fusion. The Prodisc had achieved its US FDA clearance by comparing performance to fusion which it was demonstrated equivalence to lumbar fusion. AxioMed began its lumbar US IDE vs. Prodisc but also began selling both the lumbar disc and the cervical disc outside the United States in markets where AxioMed could commercialize using its European CE Mark. Most of the AxioMed discs were being implanted in the UK, Germany, Switzerland and generated over $1 million in revenues.
AxioMed Acquisition and Operational Turnaround
In 2014, the venture capital funds withdrew their ongoing support for the AxioMed disc, both cervical and lumbar, which caused the company to default on its bank loans and venture debts and led to severe financial distress and an auctioning of all assets. The KICVentures Group proceeded to acquire all the assets of AxioMed Spine Corporation in a leveraged buyout under the newly formed Axiomed LLC which included both the Manufacturing and Engineering Operations under the same roof. The purchase of all assets included the AxioMed cleanroom manufacturing facility and equipment, all associated intellectual property, and inventory which at the time was being used both in the United States for the Lumbar IDE and commercial sales in Europe. Our immediate task was to complete the lumbar IDE study with 13 clinical sites in the United States that were owed substantial debts and disgruntled. The KICVentures Group had to use its own capital and raise additional capital from private investors and debtors to get the IDE trial completed in 2015. We then spent the next few years gathering, organizing, and processing the clinical data from all the sites.
We also had to move the manufacturing cleanroom facility from Cleveland to Boston where KICVentures Group was headquartered and had a strategic relationship with M&K Engineering that provided dedicated lease space for the AxioMed Manufacturing part of our business. We raised additional capital from private investors of around $15 million to restart and recertify the manufacturing cleanroom, re-validate all machinery and processes and successfully produce and test the cervical disc to its original quality standards. We took the cervical disc through the regulatory processes to get our European CE mark recertified. We did not test the lumbar disc because of the greater demand for the cervical disc outside the United States and our focus on getting the lumbar US IDE trial completed and mission to get it FDA cleared for the US market. We planned to resume manufacturing the lumbar disc once we had FDA clearance for the United States.
We also turned our attention to continue commercialization of the cervical and lumbar disc outside the United States based on the inventory on hand. We went into Australia and achieved certification of the cervical and lumbar disc and identified a local distributor and prominent surgeon experts in disc replacement. These surgeons used the existing inventory of both cervical and lumbar discs that now have 5-year follow-up clinical data on these surgeries in Australia with no reported failures and excellent patient outcomes that has gained their unwavering support for the AxioMed disc over all the competitors throughout Australia. We also engaged a distribution partner in Japan but did not complete the certification process to begin selling discs in Japan as COVID-19 pandemic disrupted that process and the progress we were making.
Final FDA Submission and Getting the Disc Back on Market
We are now at the verge of submitting the third and final module of the US Lumbar IDE to the FDA for clearance in the United States and looking to raise $2 million dedicated to begin manufacturing the cervical and lumbar discs. Manufacturing lumbar discs will be a requirement to get the final FDA clearance which we expect in 9-12 months to begin commercializing the lumbar disc in the United States among many of our key opinion leaders with the first being, Dr. Erik Spayde, a Harvard-trained orthopedic spine surgeon in California. We would begin selling the cervical disc under the CE Mark outside the United States beginning with Australia and the Caribbean. Of note, Dr. Kingsley R. Chin, also a Harvard-trained orthopedic spine surgeon, is currently acting CEO of both AxioMed and the KICVentures Group has done many cervical surgeries in his home country of Jamaica including a 4-level AxioMed cervical disc in a doctor who he has followed along with the other AxioMed patients for over 5 years with excellent results. Of note, Dr. Chin has also published greater than 2-year clinical results of over 48 cervical disc patients in Europe and he is now compiling greater than 5-year clinical data for publication. In addition, we are also planning to publish the over 5-year clinical results in Australia and separately the clinical results from Jamaica. We will also have all the clinical data from the lumbar IDE trial in table form and expect to start publishing this data immediately.
Positioning for Exit Strategy
So as of today, the KICVentures Group continues to fully own the AxioMed disc platform, all its intellectual property and the manufacturing facility. AxioMed would like to spin out its manufacturing facility as a separate entity joint venture inviting strategic manufacturing partners and investors that can scale the manufacturing facilities with AxioMed being a customer and an equity owner. We would also like to raise money to build out the sales and marketing aspects of AxioMed beginning with a strong CEO with public experience and build an experienced team with the immediate goal of positioning AxioMed for a target IPO within 12-18 months on the small cap NASDAQ exchange. We believe that the AxioMed platform is a powerful enabling technology and will be highly competitive against traditional spinal fusion where the large companies have been focusing their investments to grow. We have learned from the process by which extremity joint replacement evolved over time and we see a similar process here in spine surgery where we have begun with fusing the spine to early generation disc replacement that were poorly designed, prone to failure, producing wear debris to the M6 disc which had viscoelastic disc properties, but was still an early generation design, and the AcroFlex disc which was the early concept of the revolutionized next-gen AxioMed viscoelastic disc.
New Indications and Clinical Study Pipeline
The AxioMed viscoelastic disc is positioned to begin commercialization after FDA clearance in 2023 immediately after which we will pursue a lateral lumbar approach version of the current anterior lumbar disc which will allow us to percutaneously replace the discs at L4-5 and L3-4 and above through a lateral incision which is a popular approach to fusing the spine with a lateral interbody device. We will also begin the cervical US IDE studies to seek indications and FDA clearance for 1-level disc replacement, 2-level disc replacement and 3-level disc replacement which would make AxioMed the first company to have both, a 3-level as well as an indication to place the disc adjacent to a fusion. We will do this in stages beginning with the 1-level cervical disc replacement US trial which will cost us about $6 million to complete and get the disc to market in about 3 years. While the disc may be used for multiple level applications (off-label), we would immediately want to raise capital and start the 2-level and 3 -level cervical disc trials concurrently and pursue the hybrid indication adjacent to a fusion. The complete AxioMed platform of the cervical disc for multiple level, adjacent to fusion, the lateral lumbar disc and the anterior lumbar disc will be powerful for solving most degenerative disc disease treated today where fusion is currently the gold standard.
Challenging the ‘Fusion’ Status Quo
We know fusion is very difficult to achieve and even when you achieve fusion those patients don’t always do well. It has many complications and poor outcomes. Only in the very best hands do patients get good results from fusions, but so far, it’s the best solution we have for degenerative spine disease. There is a tremendous amount of confusion around which fusion technique is best and it’s also very expensive with the introduction of even more expensive technology such as robotics, navigation, and imaging to help the doctors place more fusion devices especially pedicle screws. AxioMed has the potential to be recognized as a revolutionary solution to replace fusion in most patients worldwide and restore natural spine motion. AxioMed has other benefits in being a simple procedure, same universal technique, easy to learn and is reproducible whereas fusions are surgeon dependent, with many different techniques to achieve fusion with varied levels of success. Axiomed discs are sterile packed which help with inventory traceability, reduce shrinkage and reduce burden on supply chains globally.
Summary of Next Steps
We would like to position AxioMed for a successful IPO under the leadership of a strong CEO with public experience that can lead the fund-raising efforts and have the support of key opinion leaders like Dr. Erik Spayde, Dr. Kingsley Chin and others on the clinical aspects of the business. We would also like to find a strategic manufacturing partner for the AxioMed manufacturing business and expand outside the United States in select growth markets early on such as Australia, Japan, India, Caribbean and Latin America.
The authors views are a perspective only, and not to be held responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this article is provided "as is” and intended to be used for educational and informational purposes only. Past performance does not guarantee future results and none of the statements in this article are meant to provide any financial, investment, tax, or legal advice that should be independently verified
Authors
Aditya Humad is the Co-Founder & CFO of the KICVentures Group, and previously on Wall Street as an investment banker at JPMorgan Healthcare M&A. He studied Bioengineering at the University of Pennsylvania and Finance at the Wharton School of Business.
Dr. Kingsley R. Chin MBA is a board-certified Professor of Orthopedic Spine Surgery and honors graduate of Harvard Medical School and the Harvard Combined Orthopedic Residency Program. He did his spine fellowship with Dr. Henry H Bohlman. He was Chief of Spine Surgery at the University of Pennsylvania.
Dr. Jason A. Seale MBA is a medical doctor and entrepreneur. He is the clinical director at the LES Clinic.