Let me count the ways. A quick analysis revealed that OT wasn't doing as good of a job with sales as predicted. If one looked at the revenue for the first six months in fiscal 2010, it was flat, if not losing a bit of ground compared to 2009. In addition, there were dissident investors building momentum when it came to the overall make-up of the board and the company's management team. One has to wonder if some of them were singing, "how long has this been going on?" In all likelihood, it was an opportunity to cash out while the going was good, or as good as it gets.
So why did MSD buy OT? As the bearer of the torch for BMP's, maybe MSD realized that not all surgeons will drink the BMP kool-aid regardless of the results, or the non-published results when it comes to Infuse. MSD really didn't have a great DBM, unless one considers Progenix a good product. In retrospect, Grafton was a pretty good product. One must admit, it was one of the first products to be widely accepted by orthopaedic surgeons during its heyday. Unfortunately for Osteotech, they really didn't have a defined strategy as to whom or what Osteotech would grow up to be. Remember the Mark Burrell fiasco when he came over from MSD after he lost his distributorship? He was going to bring them into the hardware market. That fizzled like a dud on the Fourth of July. OT also had trouble finding good people.
MSD has added a complimentary portfolio that will allow them to expand into trauma, oncology, joint replacement, and of course enhance its position in spine. With its marketing prowess, and feet on the street, MSD should be able to take advantage of this golden opportunity to increase their already stellar biologic sales by capitalizing on the relationships that OT brings to the table. Could this be a strategic move in anticipation of the FDA panels final approval or disapproval for Amplify. Only time will tell, TSB wants to know what our readers think?
MasterGraft is a ceramic (not a DBM), their DBM is Progenix
ReplyDeleteThanks for the correction.
ReplyDeleteThere was an article published on OTW related to who will control Osteotech, talk about being a bit behind the times.
ReplyDelete"portfolio that will allow them to expand into trauma, oncology, joint replacement, and of course enhance its position in spine."
ReplyDeleteCould they be looking now to buy a poor Biomet Spine and Trauma division? Or Zimmer?
You spelled the name of Marc Burel incorrectly. You are also incorrect that he 'lost' his distributorship. He told Danek to F-off... which is a reason to love the guy, if for nothing else. That takes some major sack to do that. Regarding the dud, that was a mishap of strategy in trying to deal with a FRENCH company. go figure. (Maybe they thought he was french?)
ReplyDeleteRegarding the purchase of OT by MSD. It seems this could be for resources. Plus, they have (from what I've heard) a really fantastic processing center.
I've also heard that despite all this bmp nonsense that big M is giving back that prodcut to the pharma company.
Start the back peddling ?!
Thank you again for this blog. I check this daily and try to look past all the people that flame this board. It is truly informative and hope that it continues in the future.
ReplyDeleteThis gives MSB a true bio option. They are very busy classifying the biologics industry into three categories, and this acquisition gives them the ability to be truly turn key.
ReplyDeleteThat being said...F 'em. Their reps don't care about the product and it will be easy to compete because of lack of interest from the field.
Oh and don't forget the Kyphon purchase...that was supposed to cause Armageddon as well!!!
I'm happy to propose some strategic reasons for the acquisition and everyone can vote on the most likely:
ReplyDelete1) Their spine sales force can't do any worse than OSTE's
2) Control the supply and get better margin vs RTIX for their structural interbody stuff
3) They are convinced that the future is procedure specific biologic products and techniques
4) Grafton, while stagnant for ~4 years is still better than Progenix, Optiform, Optifill, The Opti-Grab (that ended badly for those that remember)etc...
5) Their lawyers have some idle time and so acquiring an allograft company seems like a good idea
6) After KYPH, they want to show that they can integrate an acquisition without completely effing it up
7) They're excited about the market potential for acid degradation plastic filled with cadaver dust sold as a synthetic bone graft and
8) It's a cheap way to knock out an ineffective bue annoying competitor to InFuse!
....and #9, They finally decided to get away from the "questionable" donor base that RTI was almost literally digging up.
ReplyDeleteWyeth is taking back the sponge = Amplify a big push = Amplify too $$$= OT purchase to give themselves a mark up on autograft and fill gap
ReplyDeleteAnd when are people going to realize that you can call it "Super-Duper-Awesome-Magic-Fuckin A" Fuse......... and it is STILL JUST BONE CHIPS
I vote for #2 and #9!
ReplyDeleteI vote #4 just because of the "Jerk" reference. Opti-Grab. Classic!!!!
ReplyDeleteAlready a shareholder lawsuit out there. Dont know what the shareholders have to bitch about. MDT paid a 25% premium with declining revenues?
ReplyDeleteI just think about what this acquisition does in my territory. It takes Expanse et.al away from a dirtbag K2M distributor and gives it to the Medtronic Rep. Poetic Justice!
ReplyDeleteThis is a desperate move to hide the fact that BMP is going away. Nearly every surgeon I know that was once using BMP for interbody fusions (which, by the way, is off-label) has stopped. Three reasons cited: 1. Osteolysis (and, boy, I’ve seen some gruesome CTs), 2. Nerve root injury – several studies out showing that BMP causes nerve root injury, 3. Cost – BMP is 2x-5x more expensive than alternatives. Goodbye BMP (and MDT profit margins)…
ReplyDeletehealos fx
ReplyDeleteAs a Kyphon Rep I don't think #6 is even possible.
ReplyDeleteThe company was never the same after Burel et al. came on board. He destroyed Osteotech's franchise (DBM) by ignoring it and trying to direct the company into hardware with some moronic decisions. Plus, he got rid of all the company's quality sales people to replace them with his cronies. He was/is not a very intelligent guy and wasn't respected (but ridiculed and made fun of) inside the company. Unfortunately, the damage he did prevented the company from ever recovering their biologics leadership.
ReplyDeleteJust int'd who had posted Aug 17 at 9:12 PM. I too was there and couldn't agree with you more about Burel. Osteotech's decline started when they got rid of a very loyal sales force that believed in the company and believed in their science. Also, MM was right on he mark when he said the the company did not have a defined strategy of what they wanted the company to grow up to be. That was very frustrating.
Delete6:03 pm - Healos? what a joke! marketing, no science
ReplyDeleteAppears to be a logical buy. MDT's collagen product is decent, but they did not have a strong biologic offering. In Osteotech, they get one of the strong players in the DBM space and maybe more importantly, one of the leaders when it comes to studies backing up their science.
ReplyDeleteDBM's are yesterday's news. Nothing but an adequate extender, but with products like Actifuse and others now available, Grafton is a dinosaur.
ReplyDeleteAgree on DBMs. Actifuse however itself is a dinosaur among the synthetics. A block of insoluble HA with a homeopathic sprinkling of Si, which is irreversibly bound to the HA. Its permanent presence looks good on X-rays though, and gullible Americans fell in amazing numbers for the snow job because it was done with a British accent. Or was it the consulting agreements?
ReplyDeleteBiomaterials 2009 vol. 30 (32) pp. 6403-6:
Nowadays, the scientific community widely accepts the statement that silicon-substituted calcium phosphates have better biological properties compared to pure calcium phosphates. For example, a review published in this journal in 2007 started with the sentence ‘‘Silicon (Si) substitution in the crystal structures of calcium phosphate (CaP) ceramics such as hydroxyapatite (HA) and tricalcium phosphate (TCP) generates materials with superior biological performance to stoichiometric counterparts’’ [1]. A critical look at published articles demonstrates that this sentence is controversial and somehow misleading, because there is no experimental evidence that Si ions are released from Si-substituted calcium phosphates at therapeutic concentrations, and because there is no study linking the improved biological performance of Si-substituted calcium phosphates to Si release. The aim of this article is to explain this statement in more details.
You obviously compete with Actiufse. The surgeons in my area have used it for going on 5 years - their patients are doing great, and the surgeons absolutely love it. It this point it must be a lot more than them "falling for" the X-rays.
ReplyDeleteRead the paper. Don't take my word for it. (I don't have a British accent)
ReplyDeleteYeah, because a paper proves everything...
ReplyDeleteEurodog - Correct! Actifuse and any HA-type product always looks amazing on films. For that matter Pro Osteon looks good on X-ray & who thinks that is a good product?
ReplyDeleteDepends on what a paper actually states. That's why you should read it. I didn't ask you to use blind faith, I merely pointed you to scientific information that once you read it you're likely to find credible and well considered. (that of course assumes you have the intellectual capabilities to make such judgments; your responses point to a closed mind and a tight relationship with Actifuse) And I love your statement "their patients are doing great", that's true science for you! Do you actually see and talk to their patients?
ReplyDeleteOn another note, Bill P maintains a buy rating and a high target on RTIX despite the news. Thoughts? Seems to me like it's akin to being dumped by Donald Trump and still expecting to win the Miss USA title. I like Bill, but he may be a little optimistic on this one.
ReplyDelete"I merely pointed you to scientific information that once you read it you're likely to find credible and well considered. "
ReplyDeletehahaha, love it.
Perhaps its time to share this blog with Ben Goldacre..
http://www.badscience.net/
Actually, I do believe a panel of several surgeons' actual clinical results are more "scientific" than this "paper" you continue to reference. As a potential patient, I'd prefer a surgeon implant something in me that he knows actually works, than something a scientist posits. Good luck convincing many that a random paper usurps clinical results.
ReplyDeleteI'm not trying to convince anyone, it's a free country. Calling the paper random shows me that you indeed have not read it, or did not understand it. Please point me to this "panel of several surgeons actual clinical results", it should make for fascinating reading. In my now 30 years of clinical experience I've come to thoroughly distrust the conclusions of such panels, especially on your side of the pond where surgeons who do not have some form of relationship with a commercial entity have become a very rare breed indeed.
ReplyDeleteOuch, the Hound from Europe doth makes a good point regarding the mercenary nature of many US surgeons.
ReplyDeleteAt the end of the day a ceramic is a ceramic with no biological function. Good luck fusing!
ReplyDeleteAnonymous 3:37PM --- HERE HERE! Everytime I hear osteopromotive, stimulative, accelerative, etc. I want to puke
ReplyDeleteMusculoskeletal Man continues to trash people, companies and products, yet he won't show his own resume and background to all that read this blog. Don't get me wrong, the spine industry needs critics, but I hardly think the creator of this blog is qualified to trash anyone and everyone in the spine market. If he was, he would show his face. As an example, this post started out about a MDT acquisition but ended up trashing someone who had nothing to do with the acquisition, Marc Burel. This happens all the time on this blog, yet Musculoskeletal Man is afraid for us to see who he really is and what his industry background is and his qualifications as an expert and judge of others. What would we think if him if we knew what his background was? I am guessing not much! Last week, when I challenged him on the fact that he acts as a judge of all others, often mis-states facts and hides behind an alias, he promptly erased my post. He can shit on anyone and everyone but erases the evidence of those that challenge him back. Obviously the guy can dish it out, but cannot take it.
ReplyDeleteHow spineless can you be MM? I know, you think you are the Robinhood of the spine industry, yet you are afraid to come out of your hole.
Genius:
ReplyDeleteWhat's the matter, you have a "little woody" for this blog. Your posts were deleted because you are the same person that cuts and pastes the same non-sense over and over. Do you actually understand what you read? Whoever trashed Marc Burel? An observation is an observation, obviously validated by another of our readers. Were you at Osteotech when he was there? Do TSB and the other readers a favor, DON'T READ THE BLOG and stop whining. I can't help you if your panties are in a knot. If you're so concerned about TSB's identity, why do you post as anonymous? No one is losing sleep over your stupidity.
5:08pm - spoken like a true Anonymous. Have you heard the one about the pot calling the kettle anonymous?
ReplyDeleteAnonymous 5:08
ReplyDeleteDo me a favor, Don't read the Blog! Believe me when I say that TSB will not lose any sleep over you not following the blog.
no favors for you, buddy.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteTSB never brought up Burel, someone else did. I was there with Roger Stikeleather (who cashed out of OSTE @ $40/share). He abdicated the VP throne to Burel who wanting to get back at SDG..did try to compete with hardware. Stupid in hindsight, and I thought stupid at the time
ReplyDeleteMaybe here is reason # 10:
ReplyDeleteMedicare committee to weigh benefits of Medtronic product
JANET MOORE, Star Tribune
Next month, a little-known government committee will discuss whether Medicare has enough medical evidence to continue paying for a popular bone-growth product used in back surgery.
The outcome of the Medicare Evidence Development and Coverage Advisory Committee (MedCAC) in Baltimore on Sept. 22 could have a huge impact on Medtronic Inc.'s $3.5 billion spine business, according to Wells Fargo Securities analyst Larry Biegelsen. The Fridley-based medical technology company is the leading maker of a bone-growth product called Infuse, and a similar one called Amplify that's not yet approved by U.S. regulators.
Both products are used in spine fusion surgery, a procedure that involves permanently connecting bones in the spine in an effort to eliminate back pain. Last year, doctors performed 445,300 spine fusion surgeries on patients, according to the Millennium Research Group.
While MedCAC's role is advisory, it will ultimately recommend to the Centers for Medicare & Medicaid Services (CMS) whether there's enough scientific evidence to justify Medicare reimbursement for Infuse and for a competing product made by the Michigan-based orthopedics firm Stryker.
The mere fact that a MedCAC meeting has been convened should raise some concern among investors, Biegelsen wrote in a July 28 note.
MedCAC committees are generally composed of 13 to 15 experts, including those representing consumers and industry. "It is a panel of experts that advises [CMS] on the quantity and quality of evidence" regarding a technology, said CMS spokesman Donald McLeod.
Currently, there is no national policy decision on Medicare reimbursement of products like Medtronic's Infuse. But up until recently, coverage of spine fusion surgery hasn't been an issue for most patients, whether the money was coming from the nation's health plan for the elderly or from private insurers.
In the past year, however, several private insurers have pushed back on payment for spine fusion surgery as questions surfaced in the medical community about its effectiveness, as well as the cost of the procedure, which can be $25,000 to $80,000 or more.
Infuse had been a wildly successful product for Medtronic since its approval by the Food and Drug Administration in 2002 for use in the lower back, although sales have slowed in the past two years. It has also been approved for some dental uses, and for treatment in the lower leg. Currently the U.S. spine device market is valued at more than $4 billion, according to Millennium Research Group.
But CMS estimates roughly 85 percent of Infuse is used off-label -- in ways not approved by federal regulators but still legal for doctors searching for alternative ways to treat patients. In 2008, the FDA warned doctors about using Infuse off-label in the neck after receiving reports of serious complications in some patients.
Last month, an FDA advisory panel recommended approval of the Medtronic product Amplify, which uses a different surgical approach than its predecessor for patients suffering degenerative disc disease. While the FDA often follows the advice of its advisory panels to approve a product, that's not always the case.
The FDA panel vote wasn't exactly a slam-dunk for Medtronic. When considering safety, the vote was nine in favor, four against and one abstention. On effectiveness, the vote was 10 in favor, three against and one abstention. And on the issue of whether the benefits of Amplify outweigh its risks, the vote was six in favor, five against and three abstentions.
Last year, Medtronic reported about $868 million in biologics revenue, which includes Infuse sales. If approved by the FDA, Biegelsen predicts sales of both Infuse and Amplify of approximately $866 million in fiscal 2011, and $900 million in fiscal 2014.
(there's a little more, got cut off)
1:57 - Are you stating that Infuse is bone dust? That makes zero sense... Do some research before you post such nonsense... and BMP is not going anywhere. Will indications be narrowed and usage be tightened up? Most likely.
ReplyDeleteAnd I have seen some horrific revision cases involving some patients who have had actifuse "fusions." It is nothing more than a ceramic with a sham of a marketing spin.
4.47, you are dead on with your assessment of Actifuse. I don't think 1:57 meant Infuse; I interpreted the "Super-Duper-Awesome-Magic-Fuckin A" Fuse to mean Osteotech's Magnifuse, which indeed are nothing but bone chips in a bag.
ReplyDeleteSpeaking of deals, I understand Amedica's $40 million deal to acquire a spine company is history... The target didn't pass the due diligence test. Apparently, Amedica has moved on and is focused on another company.
ReplyDeleteAgreed. TSB has also heard that the deal for US Spine had fallen through. Understandably, the individual that was a major equity holder, a commercial real estate developer out of the St. Louis area, was probably delusional regarding the expected multiple. Look at Medtronic's deal for Osteotech, it was a bargain. If it was US Spine, that would have been a multiple of at least 5-7X. In today's economy and the current state of healthcare in the US, that would be delusional. TSB's question to our readers is why a spine company, if Amedica's material has more usefulness in the recon market? Now they could go back and reassess their options with patience and a clear mind (hopefully). Let's face facts, there are no 5 to 7X multiples on "me too" hardware companies, at least anymore.
ReplyDeleteAny news on VertiFlex??
ReplyDeleteI am new to this blog. Interesting commentary. I am not one to bash products, however when a company's marketing department over or under states product information that can and does negatively affect patient outcomes I feel it neccesary to speak up. Actifuse is one of these products. I have witnessed multiple removals of Actifuse well over 2 plus years post-op. Absolutely no remodelling or dissolution occured to the Actifuse material in those cases. This outcome should not surprise anyone who has experience with the base material used in Actifuse. It takes multiple years to dissipate in the human body. This information is not relayed to surgeons, nor is a realistic view of the effectiveness of the Si utilized in Actifuse. I have watched multiple reps with Si CaP products tell their surgeon that their product is basically osteoinductive. That is not only untrue, but extremely misleading and will negatively affect patient outcomes. For these reasons, I feel it's important to call this product out.
ReplyDeleteAs far as the Medtronic's interest in Osteotech. It's a great move for Osteotech. Medtronic on the other hand, is buying a company that has been mismanaged for a number of years and is far from it's glory days. Maybe Medtronic's deep pockets can solve OT's debt issues, revenue degredation and sagging product portfolio. However, I just don't see this deal as a quick turn around for Medtronic. Many of the quality people as another person pointed out have probably already left giving Medtronic very little to work with besides a name, a few contracts, few patents and an aging product portfolio. Seems like an uphill battle to me.
We have all seen our share of fusion failures. Vitoss is renowned for it and InFuse has had its share of catastrophes. Some patients simply don't heal.
ReplyDeleteLast poster, you're dead-on. For those who are claiming that a product doesn't work because they have seen a revision where it didn't perform as intended... you are foolish. Each patient heals differently and some don't heal at all. 10 patients may experience complete resorption of the graft at one year and two might not. Does this mean that the product doesn’t work? No, and anyone who uses that as their basis of logic doesn’t understand how bone healing works. No offense, but no one wants a lesson from an idiot.
ReplyDeleteIf there was one product that worked perfectly all of the time, we wouldn't have 90+ synthetics on the market. Stick with the published clinical/scientific data... your observations from the field are no better than the marketing spin you are criticizing.
Interesting how contradictory the comments become on this subject:
ReplyDelete"Actually, I do believe a panel of several surgeons' actual clinical results are more "scientific" than this "paper" you continue to reference"
"Stick with the published clinical/scientific data... your observations from the field are no better than the marketing spin you are criticizing"
And nobody, except Eurodog, actually cites some papers. That is probably because with the exception of autograft, allograft chips, Infuse, OP-1, Vitoss and some Grafton there exist no clinical papers beyond a few consultant written case histories for any of those 90+ synthetics and DBMs. And 12:33 is right, HA is insoluble, and replacing a few Ca ions with Si ones is not going to change that.
When are they going to pull it from teh Osteotech distributors? The hospitals in my area had no idea. I ran into one of the Osteotech reps and I don't even think she knew:(
ReplyDeleteI AM READING THESE COMMENTS AS A LAY PERSON WHO HAS HAD FAMILY MEMBERS IMPAIRED BY THESE PRACTICES ALLEGEDLY BEING eluded TO, LIKE THE QUESTIONABLE "DONOR"BASE AND "OSTEOLYSIS" DAMAGE. Do any of you feel any responsibility for hurting your fellow mankind and if you do,will any of you stand against these corporate practices and supply the proof of the foul play necessary to stop the inhumanity of it? Do you know what it is like to be told you cannot give blood for the rest of your life due to the exposure of third world protozoa that is showing in your blood when you know there is no way you could have gotten it. The only thing you did was trust a surgeon to operate on your spine!
ReplyDelete