NASS: An Analyst’s Key Takeaways

Last week’s 28th annual meeting of the North American Spine Society (NASS) in New Orleans, La., was, as always, a flood of useful and important information—new product introductions, partnerships formed, buyouts announces, private companies going public, clinical data. Unfortunately, one of the things the meeting wasn’t flooded with was people. The traffic on the exhibit floor seemed slower than years past and the conference sessions didn’t seem nearly as crowded.

William Plovanic, industry analyst with investment bank Canaccord Genuity, noted a few key important technology trends from the NASS meeting.

Growth in the cervical disc market was one of the primary trends highlighted.

Cervical discs are early in their adoption curve but “barriers remain,” Plovanic noted. Plovanic and his colleagues estimate the U.S. cervical market at $66 million in 2013, up from approximately $60 million in 2012. He ranks Johnson & Johnson’s DePuy Synthes Spine with lion’s share of the market having approximately $50 million in sales. Medtronic Inc. follows behind with approximately $9 million, and Globus Medical Inc. and NuVasive Inc. will report around $3 million each. The newly publicly traded LDR will report roughly $1 million this year due to the recent approvals and commercialization.

In Europe, Canaccord Genuity analysts predict the market will be approximately $60 million in 2013, with DePuy Synthes and Medtronic sharing approximately 60 percent of the market, but companies such as Spinal Kinetics carving about 15-20 percent of the European market and others grabbing the remaining balance.

Longer term, Plovanic and crew are betting that the U.S. cervical disc market opportunity could range from $450 million to $720 million in the next 5 to 10 years.

“Our expectation is based on a penetration rate of 25-40 percent of the existing cervical procedural market of approximately 300,000 [annually], with an average utilization of 1.5 discs per procedure,” he wrote. “We base our assumption on many different data points, but would highlight a paper published by the Hospital for Special Surgery in New York, N.Y., that looked at inclusion/exclusion criteria for cervical disc clinical trials and believed that 40 percent of cervical fusions performed by the institution would meet the criteria for a cervical disc. We believe the current penetration rate for cervical discs is approximately 25 percent in Europe. We would note that socialized medicine, a more conservative physician group and a significant difference in implant costs for discs vs. fusion are responsible for what we believe to be an underpenetrated market. In the U.S., we would also note that two-level procedures are more common than they are in Europe, further bolstering U.S. numbers to our expectation range.”

Plovanic also noted that reimbursement, both for the physician and the hospital, has been a barrier to adoption for cervical discs. He expects these payment “challenges” to be addressed within the next 12-24 months.

“As is normal with any newer technology, establishing reimbursement for cervical discs has been a challenge,” he wrote. “At this point, Blue Cross Blue Shield Companies (BCBS) is the only major payer with a non-coverage decision (NCD), but also note that several payers do not have specific coverage policies either. This is important as BCBS covers nearly 100 million Americans, or approximate one-third of the U.S. population. In addition to BCBS, a few other payers do not have an official coverage policy for cervical discs, and those that do name the coverage by product. Therefore, we believe it will be like trench warfare gaining coverage over the next few years.”

BCBS Technology Evaluation Center’s last assessment committee review of cervical disc technologies was in late 2011, and it typically reviews data every two years, according to Plovanic.

“Given the amount and quality of data available, we would expect BCBS to reverse its NCD and cover cervical discs … It is this data that we believe will drive a change to BCBS coverage policy, as well as other payers that have not endorsed the technology,” he wrote.

Expandable interbody cages also are growing segment of the market.

“It has been said that imitation is the sincerest form of flattery. Since the success of Globus’ Caliber and Rise expandable interbody cages, a few companies have begun to introduce their own version of an expandable cage,” according to Plovanic. “The most interesting we saw were SpineWave’s StaXx (which has been available for some time), Co-Align’s AccuLif, and Interventional Spine’s OptiCage.”

The Canaccord Genuity team predicts $80 million in annual sales, and expect the sector to “experience good growth and eventually increased competition in the years to come.”

And the battle rages on about Medtronic’s InFuse bone graft.

“The battle rages on the podium and in the O.R.,” according to Plovanic. “The controversies surrounding InFuse were front and center at this year’s NASS conference, including a full symposium on the findings of the YODA (Yale University Open Data) Project.”

In June 2013, the Annals of Internal Medicine published the results of the Yale University Open Data Project, which was a review of InFuse’s clinical data. The primary takeaway from the YODA project was that adverse events were under-reported while at the same time positive clinical outcomes were over-reported.

During NASS, the symposium “A Retrospective on BMP-2 Research: Lessons from the YODA Project” included a full review of the clinical data, findings of the YODA project, and points to consider for future clinical trials.

The panel came down hard on InFuse, noting that any clinical use should be carefully evaluated against the potential for adverse events, which included potential links to cancer, and that patients should be specifically educated about the risk profile and given the option whether or not to use the product, Plovanic reported.

“We would note that the issues highlighted by the presenters were noted to be prevalent throughout scientific studies by other attendees,” he wrote. “There will be less, not more use of InFuse in the future, which will likely benefit companies with both allograft (with or without stem cells) and synthetic bone grafting products.”

Medtronic, Inc. provided a grant to Yale University to apply the YODA Project model in practice for the first time. Yale led independent, systematic reviews of the entire body of scientific evidence regarding the safety and effectiveness of Medtronic’s recombinant bone morphogenetic protein-2 (rhBMP-2) InFuse product. The reviews were conducted independently by two academic teams with full access to all of Medtronic’s clinical trial, post-marketing and safety data about rhBMP-2. In addition, the grant supported the dissemination of all Medtronic clinical research data on rhBMP-2 to external investigators.

YODA’s two independent groups found that “rhBMP-2 provided little or no benefit compared to bone graft and may be associated with more harms, possibly including cancer…”

The groups also found that the Medtronic-associated authors “misrepresented” efficacy and underreported complications “for both on-label and off-label indications” and “selected analyses and results that favored rhBMP-2” compared with iliac crest bone graft (from a patient’s own bone) for lumbar spine fusion. Iliac crest bone graft is often done in orthopedic surgery for a variety of conditions. The iliac crest on the pelvis currently is the most common donor site for obtaining autogenous bone graft.