Thinking about Life Sciences: Tech Convergence a Key Theme at Orthope... http://blog.aesisgroup.com//2007/04/03/tech-convergence-a-key-theme-at-...

Thinking about Life Sciences

http://blog.aesisgroup.com

Tuesday, April 04, 2006

Tech Convergence a Key Theme at Orthopedics Conference in Chicago

You know the world is changing when you attend an orthopedic investor conference and feel like you’re more
in the realm of biotechnology.
The Rise of Technology Convergence (Combination Medical Products) in Orthopedics
“Technology convergence” – or the combination of biotech, pharmaceuticals and devices in various forms
– was clearly a key theme at the recent Small-Cap Orthopedics Conference in Chicago, which was put on
by equity analyst William Plovanic and his team at First Albany Capital (Plovanic is now at Canaccord
Adams). Another term for these convergent medical technologies (CMT) is bio-device combinations,
which include drug-device combinations, implantable drug-delivery systems, medical nanotechnology and
a host of other futuristic systems. All in all, the conference featured 30 company presentations along with
plenary sessions by orthopedic surgeons to provide insights into the future of orthopedics.
Professor Gunnar Andersson, chairman of orthopedic surgery at Rush-Presbyterian-St. Luke’s Medical
Center, discussed trends in spinal surgery. He pointed out how the recent resolution of patent disputes
(mostly surrounding pedicle screw technology) has unleashed new innovation. As a result, newer
indications (such as facet joint and cervical spine surgery) are experiencing an influx of orthopedic device
innovations.
The most important trend, however, has been toward ensuring greater mobility among patients that would
have otherwise received mobility-restrictive spinal fusion surgery. While the evidence supporting mobility-
preserving approaches is not yet out (long-term data spanning five to 10 years is required), the current
trends strongly support further development of the artificial disc and related technologies.
In line with the trend toward convergent technologies, however, a number of potentially “disruptive”
spine-based technologies are in the area of orthobiologics, which are under continuous development along
with their various delivery mechanisms. Dr. Brian Cole, associate professor of orthopedics at Rush and
team physician for a number of Chicago-based professional sports teams, discussed trends in cartilage
repair in an area that looks less like classical orthopedics than space-age biotechnology. Future possibilities
relating to stem cell transplantation were also addressed.
Key Companies
Of the 30 companies presenting, nearly half featured this rapidly growing area of convergent medical
technologies. These companies included CeraPedics, Confluent Surgical, FzioMed, IsoTis LifeCell,
OrthoLogic, Orthovita, OsteoBiologics (now acquired by Smith + Nephew, Pegasus Biologics and
TissueLink Medical. Of this group, there were several companies (listed below) that especially embodied
this trend toward convergence:

1. Cerapedics has developed a novel growth factor product based on the small peptide P-15™,
which mimics the cell-binding domain of Type-I collagen (the primary organic component of
autograft bone).
2. Confluent Surgical has applied its proprietary in-situ polymerized biomaterials to numerous

1 of 2 11/17/2008 12:56 AM
Thinking about Life Sciences: Tech Convergence a Key Theme at Orthope... http://blog.aesisgroup.com//2007/04/03/tech-convergence-a-key-theme-at-...

surgical applications including adhesion prevention, tissue sealing, tissue hemostasis and drug
delivery.
3. Pegasus Biologics uses biotechnologies to manufacture and sterilize bioimplants for use in
soft tissue reinforcement specifically for orthopedics, sports medicine, neurosurgical and
spine applications.
4. TissueLink Medical has developed a radio-frequency technology for tissue closure allowing
surgeons to simplify complex surgical tasks and improve clinical outcomes for patients.
While not convergent in the sense of biotech and devices, TissueLink represents a new trend
toward integrating various electromagnetic radiative systems as part of medical and surgical
devices. Technology convergence takes on many forms.
Implications of Technology Convergence
Medical technology convergence has a number of implications in terms of pesonalzied medicine,
regulatory reform, different sales & marketing models and changing reimbursement paradigms.
Personalized Medicine: What about the significance of these convergent technologies with respect to the
larger scheme of things? Personalized medicine, for example, has been a buzzword in the medical field for
the past decade. The vision that seems to be evolving is that a combination of pharmaceuticals (including
biotechnology) and surgical devices represents one major manifestation of this important trend. In a
sense, this is just a natural progression of the concept of surgery already being a highly personalized form
of therapeutic intervention. For example, an implanted smart device that delivers a certain amount of drug
specific to the individual patient’s requirements is about as “personalized” as personalized medicine can
be.
Regulatory Approval: As technology further breaks down sector boundaries, there are additional
implications for other constituencies in the health-care world. These include FDA reform which is a
bureaucracy already stressed by multiple controversies (Vioxx, Guidant, etc.) that’s only beginning to
address the additional challenges of technology convergence and personalized medicine.
Sales & Marketing: Also, traditional “silos” have facilitated and defined sales, marketing and distribution
efforts. There are “drug reps” and “device reps” and we know their respective places. Drug reps scour the
private offices while device reps make their presence known in the operating room. Where should “drug-
device combination reps” (if they indeed should exist) plant themselves? Instead of the “rep model,” will
there be innovations in sales, marketing and distribution to complement the blurring of technology
boundaries?
Reimbursment: What also was made clear during the conference was the increasing disconnect between
approval and reimbursement. In the past, FDA approval was pretty much equivalent to achieving
Medicare and private payer reimbursement. This equation is no longer necessarily true. How this will
impact innovation or even spur innovation is an open question.
Ogan Gurel, MD MPhil
gurel@aesisgroup.com
http://blog.aesisgroup.com/

Convergent Medical Technology Personalized Medicine Personalised medicine FDA reform orthopedics Aesis Research Group Ogan Gurel MD

2 of 2 11/17/2008 12:56 AM