Anatomy of a Deal

Let's say you're a three or four year old company that believes that it has a unique material, in addition to some weak "me too" products.  You license your cervical plate and biologics.  In order to execute something on a grand scale, you need to raise capital, let's say $30 million in private equity and a debt facility.You issue a new class of Preferred Stock to your new investors with post money valuation.  In addition, the investors receive warrants to purchase X amount of shares of Common Stock.   There most likely is a conversion clause, a qualified IPO, redemption, anti-dilution protection, voting rights, liquidation preference, first offer rights, realignment of the BOD, registration rights and a stockholders' agreement.  Once the minutiae is take care of, what's your next move?

Prior to closing the deal, you performed due diligence on multiple early growth stage companies with the intent of acquiring one of them.  In all likelihood, the candidates included Atlas, Choice, Custom, X-Spine and Life Spine.  The acquisition would not be predicated on quality of a specific portfolio, it would be centered around who can you buy for the least amount of cash up front, and back load the deal with stock so that in the event you can successfully take your company public, there would be a windfall, not only for yourself, but potentially for the seller.

So what was the deal?  Why did someone bite at the bait, while others cut and run?  Contingent upon how you structure the term sheet, it was a cash and stock deal.   The company that sold, took the bait for numerous reasons.  In all likelihood, U.S. Spine was financially distressed, incurring debt, generating mediocre sales, and understanding that in this climate, raising capital was next to impossible with a "me too" portfolio.   At best, the upfront payout was probably equivalent to sales, if not less, broken up into term payments.  It was a percentage of the cash offering with the stipulation to pay it out over a period of time.    The $30 million that was raised will probably be used to acquire another company,  reorganize the management team, and develop a larger manufacturing facility.  It also left a few dollars to buy salt and pepper shakers to spice up your spine.  TSB wants to know, who is the next acquisition target?

The People's Choice Awards Redux 2010

TSB has decided that its time for 2010 People's Choice Awards.  No fellow bloggers, TSB is not looking to upstage Robin Young's second annual spinelalapalooza in the happiest place on earth.  TSB wants to know what you, the people believe are the most innovative spine technologies of 2010.  Or, has there been any innovation?  In addition, we would like to announce new categories that have been added to this years ceremony.  Before we start, this years entertainment will be the Fergie (love that girl), will i am, Taboo and apl.de.ap., aka The Black Eyed Peas.  There'll be an open bar, only to be topped off with our first humanitarian award.  Unlike the V Brothers, that like to drink Cristal, TSB will be serving Billecart -Salmon Rose.   This year we will take this ceremony in a different direction,  not only are we interested in knowing what is the best technology, we are also looking for the worst.   A new category will be an award that goes out to the best CEO in the industry, and who is the worst to work for?  Your opinion counts.  Remember we're counting down the days to OTW's spinelalapalooza.

In retrospect, last years Spine Technology Awards lacked some real firepower.  Mike Sherman was the  only entertainment of the night. If anything, the party solidified whom Robin is indebted to.  Who will be this years casualty, next year?  Last year, Applied Spine Technologies received accolades for innovation, yet this year, it is a distant memory.    Who will be this years Matt Songer, submitting  numerous products that have been around for a few years?  How desperate will some people get?  Remember, just because you win, or are acknowledged, doesn't mean you'll survive.  If anything, this could be the kiss of death.   Will there even be a category for Dynamic Stabilization?  Will we hear a dissertation on the current state of affairs?   This is a golden opportunity for you, the people to determine what's new, what's true, and what can potentially make a difference in the clinical outcomes for the people.  TSB wants to know who is going, who is showing, and who can care less?

FDA and CMS: A Marriage Made In Heaven

Medicare reimbursement for medical devices can be a key component in their success in the marketplace.  On September 17th, the Association for the Advancement of Medical Instrumentation announced that the FDA and CMS are considering parallel reviews for medical devices.  By implementing a parallel review, this should reduce the time between the FDA marketing approval or clearance decision and CMS national coverage determination (NCD).

Many of our bloggers know that Medicare reimbursements for medical devices is a key component in market success.  Both agencies were quoted as saying that this overlapping process would be implemented when the product sponsor and both agencies agree to such a review.  Both agencies are seeking public comment until December 16th, 2010 about what products would be appropriate, what procedures should be developed, how a parallel review should be implemented, and any other potential issues or challenges related to this program.  Based on  your feedback, the agencies intend to implement a pilot program.  This is an opportunity to provide constructive feedback for the future approval process in spine.

IPO, IPO, IPO

During the last six months rumors have been swirling on the Street that a few companies have been implementing strategies to position themselves for an attempt at an IPO.   The first company that comes to mind is Globus.  The Street is reporting that over the past six to nine months Globus has been cleaning house of its independent distribution model and hiring direct reps.  Not a surprise, considering that the Street really frowns upon independent distribution models for the obvious reasons, control and compensation.  In addition, before an IPO can occur, the banksters usually like this model in place.  But the question must be asked;  Is Globus such a hot commodity, and TSB means commodity?  From a revenue standpoint, yes.  From a technology standpoint, isn't this another "me too" company that has been genetically engineered to resemble its soul sister Synthes?    I mean let's be truthful, its not like Globus came up with original ideas when the powers to be started the company, which led to breaking one of the ten commandments, "thou shalt not steal?"  So the questions that must be asked of our bloggers, is how does another "me too" company grow its revenue as quickly as Globus did, and, do you see this company going public anytime soon?

The next company is Amedica.  TSB knows that many of you are tired of hearing about this company.  Yet, publicity can be a double edged sword, if you can't live up to the hype.  We all have seen a little hype come out of this industry.  By raising $30 million and acquiring US Spine, TSB finds it hard to believe that the shopping spree is over.  Let's look at the integration of both of these companies.  Seperately, both were nothing more than a carnival act, with a couple of carnival barkers.   Even with this acquisition, there are still gaps in this portfolio.  Neither company had its own cervical plate.  The Tether cervical plate is seven year old technology designed by Theken and owned by Integra.  In addition, there is no interspinous process device.  At best, this acquisition makes Amedica a "C" Level player.   So TSB can see a stock and cash deal in the making for some lucky company .  So the next question to our bloggers is; who will be that lucky company, and does anyone foresee this being announced at NASS, and is the game plan to take this company public in eighteen months.  You know want TSB says, SiN in spine may turn out to be their mortal sin.

The last company is Lanx.  Since last December, this company has been cleaning house of both regional manglers and independent distributors.  Why?  Because as in the aforementioned paragraph on Globus, the banksters do not like specific models that allow for people  to make a lot of money, unless it is themselves.   ROI is the most important aspect of any investment, so maybe, just maybe, the banksters will leave the rest of you some crumbs for your hard work.   In addition, with the amount of activity that Lance "Hot Pants" DeNardin has been generating (firing great managers to bring in his Medtronic friends) it seems that the wild wild west exists at the Medtronic of the Rockies.    So the question to our readers is; Does this company has the firepower to go public.

Now, what y'all wanna do?  Wanna be ballers, shot callers?
Brawlers  who be dippin' in the Benz with spoilers
On the low from the Jake in the Taurus
Tryin' to get my hands on some Grants, like Horace
Yeah livin' the raw deal, three course meals  Spaghetti, fettucini and veal
But still, everythings real in the field
And what you can't have now, leave in your will
But don't know me for tryin' to bury, Seven zeroes in Rio Dijanery
Ain't nobody's hero, but I wanna be heard, On you hot 9-7 everyday, that's my word
Swimmin' in women, wit they own condominiums, Five plus five who drives milleneums,
IT"S ALL ABOUT THE BENJAMINS...........................

The Playoffs Are Upon Us, Is Orthovita Set to Step Up to the Plate?

It has been a tough year for Orthovita.  First, there was an article that questioned the clinical efficacy of treating vertebral compression fractures, then the analysts' became disenchanted, and downgraded their stock, and then, their stock plummeted from an all time high of $6 per share to $1.99.  Lowell George and Little Feat once sang that "Time Loves a Hero."  Based on the most recent publication in the September 15th, 2010 issue of Spine, things seem to be looking up for "la Vita."  The completion of a multi-center trial that included 40 patients entitled, "Clinical Experience Using Cortoss for Treating Vertebral Compression Fractures" continues to lend substance and credibility to this technology.  This prospective trial assessed the feasibility and clinical outcomes of Cortoss using two different techniques of Vertebroplasty and Kyphoplasty.  Here are some of the findings;

• 40 patients were treated in two center
• Patients were followed up 24 months post-op
• Comparable pain relief and quality of life improvement were achieved with both vertebroplasty and kyphoplasty techniques with approximately 50% less volume required for vertebroplasty
• Cortoss trabecular interdigitation and bone bonding were observed in histology obtained 6 months following vertebral augmentation with kyphoplasty

The results of this study were the basis of Cortoss' clearance by the FDA.    As we gear up for the Fall Class, TSB can hear the echo of John Fogerty in the back ground singing, "put me in coach, I'm ready to play today."  TSB wants to know, how do you rate Cortoss?  Single, Double, Triple, Home Run, or Grand Slam?

Friday Morning Roundup

On Friday, September 10th, TSB posted a blog entitled, "Blue Velvets of the Spine Industry."  Since that date, there has been much activity in the spine industry.  Applied Spine (AST) employed an agent (Gerbsman Partners) to sell the company, US Spine was acquired by Amedica, and it is painfully obvious that Disc Motion is on life support.   As the 25th Annual North American Spine Society trade show approaches, it will be interesting to witness what other acquisitions or announcements await us.  Word on the Street is that the potential of another acquisition is imminent, if the provisions of the deal can be hammered out prior to NASS.  Based on what TSB has heard, the deal will probably hinge on a stock/cash transaction, backloaded so if there is a future IPO the sellers will benefit from a public offering.

On a much lighter note, let's not spend so much time critiquing one another's grammar in the comments section.  Rather than having intelligent dialogue on a topic that needs some serious attention, the clinical efficacy of SiN, we are being distracted by each others pettiness.  Considering many of you are college educated, TSB would hope that y'all learned the three "R's," reading, riting, and rithmetic.

So in closing, Friday morning's question is posed to our fellow bloggers by one of our readers;  Are surgeon/distributor/company relationships on the decline?  Does loyalty even exist anymore?

Amen Amedica

The recent acquisition of US Spine by Amedica has raised a few eyebrows to say the least. Rather than be so critical of this move, let's look at the synergies that do and don't exist. Amedica is a company that has positioned itself as developing a new platform in spine and reconstructive surgery with SiN. Silicon Nitride has been around since 1857, when it was first produced by Deville and Wohler ( you have to love the French). It has been used in turbines, car engines and cutting tools. Let's give Amedica the benefit of the doubt that there definitely are inherent and unique qualities in SiN. But the $30 million dollar question is, does this material have the potential to obsolete PEEK? The only way Amedica can substantiate this would be to utilize some of that money to produce a study comparing the clinical efficacy of SiN to PEEK. As TSB has stated before, don't give us the marketing pitch, don't talk about whether you can MRI or shoot CT's, give us the documentation that substantiates that this material improves clinical outcomes, and will improve the patient's quality of life.

The next question that must be answered is whether this is another material breakthrough that is more scientific marketing than substance? Is this really a game changer? Will the market see a company that will expand the use of SiN into coated ceramic pedicle screws? Based on Amedica's press release, the company makes it sound as though they are a bigger player in the spine market than they really are. If this acquisition positions them as a well balanced company, what were they really buying. Another pedicle screw? The opportunity to eliminate their licensing distribution agreement with Integra/Theken Spine for the Tether plate? The facet gun? Could that market be smaller than all the looney toon analysts' predict? Where is the leading edge technology for spine in this acquisition? Even if Amedica can develop a disc out of SiN, what effect will that have on an already cluttered artificial disc market. Will they tout that their disc will be the 5th or 6th generation disc?

In all likelihood, this acquisition was made to position themselves for an IPO, whenever this dogged economy gets back on its feet. This company has talked about IPO since last summer. Based on this acquisition, there isn't enough firepower in the current portfolio to position this for a sale to a legacy company. If anything, the potential of utilizing SiN in total joint implants is where the goose with the golden egg really lies. In closing, if Amedica really wants some credibility, why don't they disclose all the surgeons that are consultants and/or investors in this company? TSB believes that SiN can be a game breaker in recon, but spine? In addition, how much more will they drive up the cost of interbody devices, when there is an all out war in the marketplace surrounding the ASP of this product segment? TSB wants to know what you think.

Is There Anything New and Innovative In Spine?

With the impending Second Annual Spine Technology Awards, its that time again. Albeit, this venue is a step down from San Francisco. There'll be no red carpets. No Hollywood Starlets, it seems Lindsay Lohan will be unavailable by this Friday. TSB wants to know what our readers think is a new and innovative technology? Is there anything new and worthwhile to spend another few hours commiserating with some of the high powered rollers in the industry? Will there be a new emcee, or will we hear the same old same old. For these prices, the least Robin could do is perform a soft shoe. Will Robin kiss Hansen's ring? Genuflect when Hochshuler (aka Hyman Roth) enters the room? Tell us for the 99th time about his good friend Tony V? Who knows maybe Nucky Thompson will make a guest appearance. At least if Nucky appears, he could address the audience like we are all at a temperance meeting. Log on to the OTW website and get your tickets while the last. And remember what Nucky said, "never let the truth get in the way of a good story." TSB wants to know who's in and who's out?

So Who's the Next to Fall?

On September 10th, 2010, TSB published a post entitled, "The Blue Velvets of the Spine Industry." One week later, on September 17th, news hit the street that Applied Spine had retained Gerbsman Partners to solicit interest for the acquisition of all, or substantially all of AST's assets. During the past few weeks, TSB had received a few e-mails from undisclosed sources stating that some employees at AST had already placed their resumes on the street. In addition, to AST, we now hear from a former employee at DMT that this venture is in dire need of capital. With a Clinical Advisory Board made up of fifteen, count that, fifteen of the most prominent names in spine, and a leading PhD, one must wonder if there's trouble in Margaritaville? Supposedly, this operation has already burned through a few million. Anyone not affiliated with this venture must wonder, why a company that has an advisory board made up of the who's who in spine cannot raise the necessary capital to keep this boat afloat? So TSB must ask our readers, if this device is that innovative, why aren't some of these surgeons putting their own money where their mouths are? Have you ever look at this device? One has to wonder, can you insert this device at L5-S1?

On a lighter note, as NASS approaches like a speeding bullet, OTW will be holding its second annual Spine Technology Awards. Where's the entertainment? Oh, TSB forgot, Robin is the entertainment. So the question to our readers is, who will Robin Young be touting this year and whose stock will he be pumping up? Even Mad Money Cramer would be a welcomed sight. Will there be a retrospective on some of the companies that no longer exist? TSB wants to know?

Sunday Morning Op-Ed Piece

On Friday afternoon, TSB posted a blog about the Jon Stewart and Stephen Colbert parody on the recently held Glen Beck Rally in Washington D.C. Not to anyone's surprise, let alone TSB's, the response that we received was indicative of the class warfare and greed that not only exists today within our country, but also within the industry. As TSB has written in the past, desperate times call for desperate measures. Not only is societal hierarchy changing the country, it has changed our industry. These observations are not based on TSB's beliefs, unlike conservative or liberal talking heads, I have no illusions about where this blog stands in the bigger picture. My concerns lies in the numerous e-mails and conversations that we have with the many people that we communicate with, that are crying out, that like this country, we restore some sanity back to an industry that was once respected, and today is frowned upon. If you don't believe TSB, just look at the industry's latest victim, Applied Spine. So why has this occurred? Let's count the ways.

People talk about how the industry has become "cut throat." The fact is that there is no loyalty either by the corporations that run this industry, nor, the gunslingers that have created a wild, wild, west environment culminating in a now or never mentality. This has been a work in progress. A balance within boundaries is vital to anyone's existence. TSB presumes that non of you that are parents allow your children to run wild, or, that you just don't give them everything that they want. But then, maybe some of you do. Yet, somewhere along the way, everything became short-term. This isn't just TSB's opinion, this is yours, the readers, and the hard working people of this industry. As more companies became entrenched with outside investors, execution, revenue, and profits became short-term concepts. Face it, people that deal in money, have a difficult time grasping time when you can measure and execute a financial transaction in hundreds of seconds. The more promises that are made to the Street, or to PE's, the greater the pressure to produce for R&D, the sales managers, and salespeople, regardless whether these forecasts had any substance behind them to begin with. Just look at the collateral damage, Pegasus, Inion, IST, Archus, etc... Today, the legacy companies are grinding their teeth. Not only are early-growth stage companies taking advantage of this environment, but physicians are branching out into an area that will be legally tested sooner rather than later. The by product is a pre-apocalyptic environment that includes discounted pricing, fly-by night me-too products, physician owned-distributorships, physician owned companies, products that are looking for a clinical indication, illegal consultancies, and an outright attack on sales people by physicians, and vice versa. Even as the Street has lowered guidance for the industry, there are still many companies that have not gotten out of the double digit growth mentality, but they're getting there.

So whether you like Jon Stewart or not, whether you believe in what Glen Beck is selling you, take it down a notch and restore some sanity to your lives. Don't be so angry at the world, you work in an industry that affords you the opportunity to make a great living regardless whether you are making the incision, or selling the product. Take some of that negative energy and turn it into something positive this week and you'll be a happier person. And if you should decide to vote for a candidate that has partaken in Satanic rituals, that is your right as a law abiding American citizen. Don't take yourself so seriously, because in the end, we're nothing more than another brick in the wall, if you weren't, you would be providing solutions to the bigger problem at hand. So today, thank whomever is your god that you're healthy, stop grinding your teeth, smile and have a great day, life is good.

Restore Sanity or Keep Fear Alive You Make the Choice

To Our Fellow Bloggers :

Now is the time to stand up and let your voices be heard. It will bring back the old days at Cal Berkeley or Columbia when people had the gumption to challenge authority and demand that there be some accountability by those that were in power. Well, fellow readers the time has come. On October 30th, Jon Stewart and Stephen Colbert will simultaneously hold rallies in the shadows of the Washington Monument. The Stewart rally is called "The Rally to Restore Sanity," while the Colbert rally is called "The March to Keep Fear Alive." So as Stephen loves to call out every night TSB implores our readers, Nation, its time for the 70-80% of us that have to work for a living and bring some sanity to this world to unite. Book your hotel rooms and make your travel arrangement as soon as possible. TSB will be on site with a live feed. As Howard Beale once screamed in network, now is the time for you to be heard, I'm mad as hell and I'm not going to take it any more. See you there.

God Save Dynamic Stabilization, Is This Technology on Life Support?

The Sex Pistols once wrote a song entitled, God Save The Queen. By the looks of the latest news, we can rename it God Save The Dynamic Stabilization Market. Based on the latest news release it seems that Applied Spine has retained Gerbsman Partners to solicit interest for the acquisition of all, or substantially all of AST's assets. A private based company with origins in New Haven, Connecticut, AST was going to set the standard for dynamic stabilization. The company had been financed with $47 million over three venture rounds. Just like General Custard at the Battle of Little Bighorn , AST views itself as the "last man standing."

Considering that AST has no fusion labeling and no 510(k) it views itself as the first to market with this device in the United States. Hopefully the investors at Oxford, Bioventures, Interwest, DeNovo, Growth Capital and MB Ventures have all learned a lesson about rolling the dice on a technology that had greater odds than Seabiscuit. Just like Seabiscuit, the Stabilimaxx is tired and sore. If anyone is interested in buying this technology and continuing to develop it, it will take a Tom Smith like trainer to reign in the lack of continuity that this company has experienced. From the beginning, this company was doomed. Tom Woods as CEO, the legendary JP Timms as its VP of R&D. Craig Corrance was hired to do whatever it is that he does to get this to the market. Unfortunately, all other so called dynamic stabilization devices are caught under the FDA's 522 order, which gives the FDA the authority to require a manufacturer to conduct post-market surveillance of a Class II or Class III device that meets their criteria.

In addition to all of these challenges, AST has had to deal with a few failures which originally surfaced during the 2008 NASS meeting in Toronto. Maybe the VC's need to learn to talk to some of the real people in the trenches in this industry. The financial analysts and soothsayers that have permeated this industry have done more harm than good. As far back as 2006, there were engineers that had looked at this product that said, "Panjabi or No Panjabi, this product is never going to get to the market." Looks like Gerbsman and Partners is looking for someone to buy the scalp of AST. Is the Dynamic Stabilization Market dead in the water? TSB wants to know what our readers think?

Friday Morning Question for Our Readers

Last night while reading comments on the USS/Amedica (sounds like a battleship) merger, TSB observed a pattern in the spine industry. Whenever a start up or early growth stage company seems to flounder, the blame is immediately deflected on the sales people, or distributors that sell the product. During my tenure in spine and god only knows that I have sat next to a few King Solomon's in my life, never once have I heard an egotistical CEO or Senior Executive Manager admit that maybe they came up with the wrong strategy or platform to execute their business plan.

Example #1: "the problem with USS has always been the agents that sell for them." Has anyone ever wondered that maybe the problem with USS was not the agents but the people that managed and ran the company? How do you recruit a Tier 1 distributor with an incomplete portfolio? Which leads to the next example.

Example #2: "the gun is great, but the rep/Dr must understand how (and I will clean up the grammar) it should be used and when it should be used." So as the inventor of the product, and the company that is distributing the product, isn't the onus on your shoulders to create a comprehensive educational/clinical platform (has anyone learned anything from Synthes or NuVasive) so that the distributor and/or the surgeon can understand how to effectively sell or use your products?

Those comments are a blatant indictment on the incompetence of the people that ran this company. Wasn't Paul Sendro the savior based on his experience with Blackstone and his bio as a USS Board of Director? I guess he learned at Vertebron and USS that you can't make Beef Wellington out of bullshit. But then, would we expect otherwise, considering that we have become a society that shuns accountability, while applauding and rewarding bad behavior (the Christian coalition should love that statement)? One has to wonder, what is a company the size of USS up to when they had fifteen surgeons on their Medical Advisory Board? Just because you have come up with a new pedicle screw design another piece of plastic, or a facet gun doesn't mean your product is an outlier. Nor, does it mean the market for that product is as big as you believe. Many people genuinely feel that just because they invented a product (me too no less), that their baby is beautiful. Unfortunately, the reality is that your baby is just another average child, with average performance grades and SAT scores. Maybe some of these people should get off their fat asses and go out and travel with their distributors, get into surgery and learn something, and listen to the diverse clinical opinions and financial challenges that exist today. How quickly many of us forget that if you started in this business in the 80's and 90's there weren't as many company's and equivalent products that have glutted the market. Until management understands that people are not a commodity, but an asset, and that loyalty means not firing someone that was 100% of quota over the past two years to bring in your friends will this industry ever change.

So TSB wants to know is it US or THEM?

U.S. Spine and Amedica - A White Wedding

Hey little sister what have you done

Hey little sister who's the only one

Hey little sister who's your superman

Hey little sister who's the one you want

Hey little sister shot gun

It's a nice day to start again, It's a nice day for a white wedding, It's a nice day to start againnnnnnnnnnnnnnnnnnnnnnnnn.

Yes fellow readers by the looks of things it may finally be true, U.S. Spine and Amedica are on the verge of merging, or will this be an acquisition. Why? I guess that $30 million that Amedica raised must be burning a whole in its pocket. But at a bargain basement price, how can one pass on this opportunity. TSB wants to know what our readers think?

Has NuVa Caught The Recession Flu?

It seems like chicken soup, nor even red beet borscht is going to help NuVasive's projections for fiscal 2010 . Today, the Wall Street Journal reported that Alex Lukianov has notified the Street that NuVa intends on cutting its forecast for sales growth and reductions to its top line 2010 guidance. Of course since there is no rhyme or reason to the market, NuVa's stock jumped 5% and closed at $33.13 per share. Tomorrow morning may be the time to sell off some of this stock, its hard to image that it will not take a hit when the market opens. TSB must admit, a little humble pie will go a long way for some of the people at NuVa. Seems like XLIF's shoulders have gotten tired of carrying the rest of the portfolio. I guess the Bear will have to limit himself to only one bottle of the 1998 Petrus.

The Thrilla in Manilla - Is Centinel Spine on The Ropes

This time there may be no Ferdinand Marcos around to divert attention from the financial turmoil that one of spine's self-endorsed up and coming companies could be experiencing. There may not be a reprieve. Where's Muhammed Ali when you need someone to perform the rope-a-dope? It seems that word on the Street is that Centinel Spine has been swinging away and hitting nothing but air. Could Centinel be experiencing a liquidity crisis? Could this crisis be a by product of legal pressures from the Paradigm BioDevices lawsuit, in addition to a supposedly huge decrease in revenue attributed to legitimate competition from companies with a comprehensive portfolio? If there is any truth to the word that employees have been asked to take a pass on their compensation for a couple of months, the question must be asked, whom is managing the money? Could the foxes be guarding the hen house?

Maybe some employees will come to their senses that they don't want to work for the man anymore. Why would anyone in their right mind need to put themselves in a position of vulnerability? Being someone else's employee is essentially putting oneself at the mercy of someone else's whim. Many times people that actually run companies don't get it. Many times TSB has posted that companies just don't get it. Values of candor, informality and innovation must be essential ingredients in today's workplace. People in any organization need to feel as though they have a say regardless of their rank. If there's any truth to this story, it will be interesting to see what the fall out will be. TSB wants to know what our readers have heard on the street?

Looks like we won't be drinking Cristal and smoking Cohiba's this year.

The Blue Velvets of the Spine Industry

It's a sunny, woodsy day in the spine world, so get those chainsaws out. This is Muscoloskeletal Man the musical voice of TSB. At the sound of the falling company, it's 9:30. There's a whole lotta wood out there, so let's get going. Where's Frank Booth when you need him? Unfortunately, he passed on to the afterlife.

Based on many rumors that have been circulating via e-mail, it seems that this may be the beginning of the end, or the last NASS for a few surrealistic companies that seem to be circling the drain. It seems that many start-up/early- growth stage companies are on a respirator ready for someone without enough of nerve to pull the plug on their suffering. So here are a list patients;

Applied Spine Technology: Posterior Dynamic Stabilization System, must we say anymore. How long can you keep riding Panjabi, at this point he may need back surgery.

Disc Motion Technology: Posterior Dynamic Stabilization System with Posterior Lumbar Disc, how much longer do you want to prolong the suffering? Get off the Amyl Nitrate.

U. S. Spine: I'm through attempting to make sense of anything that goes on at this company. Last time I saw Sendro and Blake they were Dancing with the Stars.

Impliant: I guess if someone could keep pouring money into this venture, it may have another six months. Hopefully if you resect enough of the posterior spine you will eventually eliminate pain.

Spine Wave: With any luck they may make it into 2011. The way these guys pay themselves, its a wonder there's any money left over for R&D. Crappy pedicle screw.

Eden Spine: Another Dynamic Stabilization System, no need to say anymore. In addition, we hear that an integral partner in bringing revenue is no longer at the Garden of Eden.

Yes fellow shoppers, there are deals to be had. It will depend on whether some of these people are willing to swallow their pride and ego's. The euphoric effect has had to wear off for many of these companies, its time to get back to reality, TSB wants to know what its readers think?

Will You Boycott Nass

Since Kanye West isn't available to upstage NASS' mantra that " their multidisciplinary history and ability to unite around core values (what's that) represent their greatest strength," TSB must ask our readers, isn't it time NASS gave something back to the people that have subsidized this five day bacchanalian orgy that is supposedly touted as a medical education meeting for spine specialists? This meeting has averaged 3,500 attendees annually over the last six years. What is entertaining to the naked eyes is that 97% of NASS attendees claim that they attend the technical exhibits. Unless you work for one of the superpowers of spine, outside of the first day, most days look like a post apocalyptic world where surgeons search for water to hydrate themselves from the night before.

NASS claims in their prospectus that 74% of attendees have the ability to authorize, specify or recommend products and services for purchase. Where? At a physician owned hospital? For a physician owned distributorship? Most attendees are not interested in seeing another commodity product. They are either selling their medical background to the highest bidder, or sponging off of some local rep so that they can pay for their lap dance at either Baby Dolls, the Diamond Club, Rachel's, Crystal Cabaret or the Doll House. What is it about tits and steak that attracts surgeons? You would think they never got any at home. Yet, the funniest commentary is that NASS actually propagandize that its attendees say that seeing a product or service at the technical exhibit is influential in decision making.

How ridiculous is it that NASS has the audacity to charge what it does, when it has been extorting money from vendors for the last twenty-five years? TSB has had the luxury of attending other industry related trade shows, never have I seen badges cost as much as they do at NASS. I guess someone has to subsidize Dr. Famous having a great time while they bitch and moan like little girls about how much money we make. You know maybe if they think that we make so much money, maybe they should pay us to listen to their insanity. TSB wants to know what our readers think? Yeah or Nay to this meeting this year?

Weekend Op-Ed Piece

As the U.S. economy continues to struggle, the spine industry approaches the homestretch of fiscal 2010. In retrospect, 2010 may become known as the year of living dangerously. With much skepticism regarding the industry's overall health, one must ask the question, will the industry ever return to its old form, or, is the industry looking for that new technology or indication that will allow it to re-define who it is?

Regardless that a few companies have exhibited growth with existing platforms, success of a few may not be a viable prognosis for the many. Market trends that were once believed to be temporary, or cyclical in reacting to the economy, have become a permanent fixture within the industry. The longer these trends persist, inevitably they become the norm. So what are these trends and how will they affect the industry's future. As delivery of healthcare in the U.S. becomes financially prohibitive for the masses, as profit margins re-align themselves, as the insurance industry continues to looks for creative ways in managing risk, the industry will not be able to afford utilizing the same formula it has for the last decade. The margins in medical devices has been the envy of other industries . Though the industry is experiencing a re-alignment, the margins will still be good if not great compared to others. Unfortunately, as margins decrease, the industry as a whole will have to re-define its business model, in many respects those strategies are beginning to take place in many mid-cap companies that are looking at a direct sales force instead of independent distributors, in addition to decreasing commissions even more so than ever. So what are these trends and how will they affect us?

Unemployment: As unemployment yo-yo's at the current level, consumers are re-evaluating their personal healthcare needs. Depending on one's current state, this could be a positive or negative view. As higher deductibles are passed onto consumers by their employers and the insurance industry, consumers will become much more conservative in their utilization of healthcare, of course, unless there is an emergency, or, they have extinguished a conservative modality of treatment, meaning they just have not gone to see a physician. Consumers have already expressed concern that if they take time off for surgery, they may not have a job when they return, thus avoiding the risk for unemployment. The cost of COBRA is a tremendous financial onus for the unemployed. As COBRA coverage expires, medical markets experience a decline in revenue. Desperate times, may call for desperate measures. As government continues to focus on the escalating cost of delivering healthcare, consumers are beginning to exhibit fiscal constraint not only in the way they manage their finances, but also in the way that they are managing themselves. Special interest groups complain about big government, yet, if the government did not step in during the last few years the financial ramifications for the industry could have been much worse than they were. Single digit growth and describing the market as flat, has become the industry's new mantra.

Pricing: Hospitals and purchasing organizations are placing tremendous pressure on the medical device industry to discount its pricing. The genie was out of the bottle a long time ago, and the industry has no one else to blame except itself. As hospital margins decline, companies are already succumbing to the demands for lower pricing in order to preserve current market share. Thin is in, and single digit growth may be with the industry for years to come. The strong will survive, the weak shall perish. A greater onus will be placed on the industry to figure out how to manufacture products in a cheaper, faster, more efficient way, without compromising quality than already exists. This will mean exporting manufacturing and more jobs overseas, or potentially looking for new frontiers. It could be India, China, or Indonesia. In many respects, maybe these countries will become better at making implants that the U.S. and beat us at our own game. In addition, premium pricing will be predicated on new and innovative technologies that truly affect clinical outcomes. The days of developing a product first, and then looking for a clinical indication are gone, witnessed by the current state. Pricing and profit will be a temporary windfall. The industry cannot continue charging a premium in a commoditized market? Until there is contraction in the number of existing spine companies selling "me too" products, a saturated market will not be able to sustain itself in this economy. If the reader does not believe this, just look back historically at other industries. Today, many of the smaller companies survive by becoming involved with physician owned distributors, physician investors, or physician owned hospitals, but even those business models are under tremendous scrutiny. As more and more physician practices become integrated with hospitals, or are owners of a hospital, or they own physician owned distributorships, the incentive is and will be to drive down pricing. This will affect the industry's ability to charge a premium for its products considering that it is estimated that 20-25% of a hospitals budget is dedicated to the purchase of medical devices.

The Gipper once said, tighten your belts because the industry is in for a bit of a ride. Trying to make sense of it all, I can see that at times it makes no sense at all. So remember the lyrics from Stealers Wheel, "clowns to the left of me, jokers to the right, here I am stuck in the middle with you. TSB wants to know what our readers think?

Dog Daze Afternoon

Considering that these are the dog daze of summer, there has been much underground chatter heard on the street. For starters, TSB has heard that there has been some internal movement at ATEC. Difficult to tell whether it was an internal cleanse, or just someone's take on the situation. Not only is ATEC facing Class Action Lawsuits, but the FDA has been crawling around their orifice, or was that office.

A source confirmed today that Amedica has definitely dropped its pursuit in acquiring U.S. Spine as a result of too much baggage, in terms of debt. The asking price was probably totally unrealistic. I guess this opens up the potential for another early-growth stage company to enter the "I want to be acquired" race. TSB envisions a company that generates an estimated $8-$10 million in revenue, being offered 1.5X for their company. $12 - $15 million dollars sounds right. You know what Steve Miller sang, "take the money and run." TSB wonders whom our readers think would be a viable acquisition? If I were Amedica I would continue to focus on the recon market with their self=proclaimed super duper material, and sell off whatever they have in their spine portfolio.

Seems like there are some companies that are hanging on a shoes string. Applied Spine may be in some trouble along with anyone else looking to bring a dynamic stabilization system to the market. What ever happened to Eden Spine? Are they generating any revenue? Lastly, TSB finds it interesting that Stem Cells seem to be the topic du jour, most days on the OTW website, You know what they say about those financial people, they sure know how to be market makers, even if there is more fiction than truth. Is NuVasive heading for another bout with the insurance industry regarding XLIF? TSB's been watching that stock, and maybe there is some truth to the scuttlebutt on the Street.

As we approach the Labor Day Weekend, remember to fire up the Barbie, crack open a cold one and sing in unison, make the world go away. TSB wants to know what our readers think?