EP Vantage interview – St. Jude treads softly with Spinal Modulation deal
Belgium's Spinal Modulation counts Johnson & Johnson and Medtronic among its investors, but it is another of the big shots that has signalled willingness to buy. St. Jude Medical has spent $40m for distribution rights to Axium, Spinal Modulation’s painkilling technology, and also has an option to acquire the company for a further $300m.
“We’re complimentary to what they’re doing,” Spinal Modulation’s Dan Brounstein tells EP Vantage. “They have the traditional spinal cord stimulation, which does well with failed back surgery patients, and with our system now they’re covering other areas in post-surgery neuropathic pain.”
Beyond back pain
The Axium system, already CE marked and sold in Europe, differs from standard spinal cord stimulation (SCS) devices by targeting the dorsal root ganglion, a nodule that branches off the spine. Unlike traditional SCS devices – including St. Jude’s in-house technologies – which are largely focused on back pain, Axium can reach areas like the lower leg, foot and groin.
“With typical spinal cord stimulation the focus has been on failed back surgery,” Mr Brounstein, Spinal Modulation’s vice-president of market development, says. “There are about a million failed back surgeries in the US each year, and 30-40% of those patients will have chronic pain after surgery.
“That’s the only good area that traditional spinal cord stimulation treats. You’re looking at one procedure, and that’s what [SCS developers] have focused on for 30 or 40 years. There are these other huge opportunities in other areas, and that’s where the Axium product fits in.”
The Axium system is indicated for failed back surgery, but may also be used in complex regional pain syndrome, localised pain mainly in the extremities occurring after a trauma, as well as pain resulting from abdominal surgery, such as C-sections, inguinal hernia surgeries or appendectomies. Intriguingly, it may also be used to help treat phantom pain – that associated with a missing or amputated limb.
It is less prone to side effects, such as nerve stimulation in inappropriate areas, than standard technologies, Mr Brounstein says. “The big three companies – St. Jude, Medtronic and Boston Scientific – are all looking at how to resolve these problems in different ways, but really no one else has come up with a great solution and that’s why we’ve been focusing on this area. It’s hard to compete against the big guys if you’re going after what they’re doing well.”
Try before you buy
Distribution deals of this type are, like licensing agreements, relatively rare in the medtech sphere; it is more common that the larger firm simply buys the tech’s originator. In taking this route St. Jude is displaying caution. It will now put its marketing might behind the Axium and its performance on the European market will be a factor in St. Jude’s decision on whether to pull the trigger on the buyout.
The Axium is Spinal Modulation’s only product, so acquiring the firm would not net St. Jude any other technology. But naturally neither company will be content with the European market, and Spinal Modulation is to begin a US trial this year. Mr Brounstein says the study will last around a year, so results should be available towards the end of 2014. If they are encouraging for US approval, the buyout becomes more likely.
Mr Brounstein also hints that there is potential for combining Spinal Modulation’s technology with St. Jude’s, creating “something that covers the body from head to toe, limb to limb, every bit”. Such an arrangement would require more than a distribution agreement.
There is certainly room to expand. According to St. Jude, the worldwide chronic pain neuromodulation market is worth around $1.5bn, but Mr Brounstein points out that there is far more potential.
“Worldwide, 60,000 spinal cord stimulators are implanted every year. If you look at that number versus how many patients have had back surgery that failed – there are 400,000 a year – so just in the failed back space, it’s about 4% penetrated. When you look at peripheral plus surgical neuropathic pain, it’s 1% penetrated. There are a million patients out there that have no other options.”
Worldwide sales for St Jude's spinal cord stimulation devices were $387m in 2012 but are set to grow to $531m in 2018, according to consensus data from EvaluateMedTech. So far, Axium has been “doing well” on the European market, Mr Brounstein says, and its sales will surely increase when St. Jude puts its shoulder to the wheel. The question now is whether the system will perform well enough, both in trials and on the market, to justify a $300m takeover.
|First Approved PMAs for spinal cord stimulators|
|Device name||Company||PMA number||Date|
|Precision spinal cord stimulation system||Boston Scientific||P030017||27/04/2004|
|Genesis and Eon family neurostimulation systems||St. Jude Medical||P010032||21/11/2001|
|Itrel totally implantable spinal cord stimulation system||Medtronic||P840001||30/11/1984|
|Cordis programmable neural stimulator models 900a||Johnson & Johnson||P800040||14/04/1981|
All data sourced to EvaluateMedTech