Saturday, December 31, 2011

2012 New Years Day Readers Poll

Is Osseon the next company to fall? Word coming out of the New England area is that there is trouble in paradise, could this be the next company in financial trouble? Ultimatums are a terrible way to have a relationship, usually ends up in divorce court, and this ain't Judge Judy the Nudie that we are talking' 'bout. So, what's the buzz tell us what's a happening. Where's OTW when you need all that insight? TSB wants to know, and so does the market, do they have legs or are they running on borrowed time? Who's next?

Saturday, December 24, 2011

Merry Christmas to All

As the Silly Season is upon us, TSB would like to wish all our readers, including the Cheetah Nation, a peaceful and joyous holiday season.  Liberate yourselves from the insanity that you subject oneself to for at least a few days,  it will be therapeutic.  Hug your kids, love your significant others, and keep things in perspective.  Closing those PO's this week will only get you inches closer to $1 Billion, or your bonus.  Contrary to a minority opinion,  those that contribute to our blog love this industry, we even like Nuvasive, but when you're news, you're news.  If you learn anything this coming year, keep "Da Noise" that exists in this crazy industry to a minimum.  Some would call it balance.  Some should actually try it, it works. Whatever you believe, TSB knows that our blog provides a heuristic venue to explore and investigate the many recesses that exist in this crazy industry.

So in the spirit of the holiday season, and yes my judaic friends that does include hanukkah, last year you whined about us not giving you a shout out.  Have a healthy and happy 2012 (shhh! don't tell anyone that we're devout capitalists), and while we're at it, can someone remind the POTUS that the shamash is always the first candle lit, an amateur Jew at heart looking for votes.  Until then, Merry Christmas to one all, Ho! Ho! Ho! Santa's got to go, he's got to deliver toys for all his spine girls and boys.

Team TSB

Come Dasher, Come Dancer, Come Prancer, Come Vixen, Come Comet, Come Cupid, Donner and Blitzen, lastly Rudy we're on our way.

Tuesday, December 20, 2011

The Culture Club

As the year winds down, the "2011 Year in Review" has brought to light many of the problems that continue to exist in the spine.  What we have learned over the last few years is that our recidivistic nature supersedes our ability to execute. TSB loves to quote Einstein's definition of insanity for the obvious reasons. Management in spine companies are fused in a time warp.  They have forgotten where they came from and how they got there, regardless of what you believe, money and power can have a way of obfuscating reality. Dilution or is it delusion occurs. The eventual outcome is that many of these leaders forget what it took to get out of the box, or never understood what out of the box really meant. Considering that out of the box means moving in diverging directions which could potentially result in novel or innovative ideas, the fact remains that when you become the Street's bitch, you eventually lose the eye of the tiger or sometimes the eye of the cheetah. Shareholder value, that becomes your focus, don't believe TSB, just sit in on a Stryker or NuVasive call. Just look at Steve Jobs, love him or envy him, he was a visionary, an outlier, albeit in a completely different industry.  It was always about the product.  Yet, whatever the inevitable, some of us will leave the industry in a wooden box, while some will leave in a gilded box. The difference is that a gilded box influences others to believe that you were successful, because money is still perceived as a sign of success and power, sometimes even anointing one to sainthood.  Regardless, what the Street has predicted for our industry, many continue to live in the past.  What worked at Medtronic, J&J, Zimmer, Synthes, or Stryker in the roaring eighties and nineties has outlived its usefulness. The battlefield terrain has changed. The rules of engagement have change and the question remains do the generals have the ability to adapt and survive? Getting your testi's handed to you can be a humbling experience, just look at Nuvasive's recent demise in the stock market. How long does Alex and his minions plan on riding XLiF and neuro-monitoring? As one of our commentators suggested, the stock for this company is a highly manipulated stock. Isn't that a barometer of the lack of confidence that investors have in a company that once touted their innovation and responsiveness as cheetah like? How quickly Lukianov forgets, but then again, isn't some of this about smoke and mirrors? One can only ride the propaganda machine that your public relations company spits out on your behalf so long and then, it's game time. Yes, there are isolated exceptions, whereby some companies are showing growth. But in the larger picture, they are small companies generating growth by shear will, while some do it by buying business a la POD's and POC's. But, as far as the big boys go, or those that want to grow up, let TSB quote one of our favorite philosopher's Paulie "Walnuts" Gualtieri, "fuggedaboutit." Organic development is something the food industry has learned to capitalize on, the spine industry has lost focus and direction with how it arrived at this fork in the road, vis-a-vis INNOVATION and CAPITALIZATION, and we have no one to blame except ourselves. Where are the emerging technologies? The readers are correct when they poke fun at and criticize the industry leaders. Many can thumb their smug noses, but time eventually catches up with you, just take a visit to the graveyard of spine. Stability, not volatility and movement have reigned over the years, and then for some reason a school of thought emerged that if you are not growing by leaps and bounds, a sudden change in direction will solve your growth problems. It would be interesting to identify when this mercenary attitude become prevalent.  Just look at some of the companies within the industry, they are a revolving door. Are the expectations unrealistic?  You be the judge.

Consolidation is not a thing of the past, it is the future.  No fellow readers the days of start-ups will not disappear.  But, it has become difficult to launch anything unless it is truly an emerging technology.  Many smaller companies are finding this out the hard way.  Access to capital as in the pre-2008 bubble burst is long gone, and with that, so are the excessive valuations. Not only are many of you attempting to figure out how to survive in the battlefield, you are also dealing with leaders that still want to fight in a conventional war.  In today's market place, the sales representative or manager that has the ability to preserve and sustain your customer loyalty and revenue is much more valuable, than the gunslinger that rides into town and promises you the world, for the obvious reasons. There are no magic bullets. In addition, they are a hired hand, until the next deal comes along regardless whether its a distributor or surgeon. The tenured sales rep or manager at your company knows what the challenges are that must be addressed in order to maintain your business, the question is does anyone on your executive management team listen and have the cojones to execute, or, does it fall on deaf ears?  Is your company listening and being responsive to your battlefield needs?  Do you have the ability to be pro-active rather than reactive?  But then this has been our point all along.  Are you better off than you were two years ago?  Maybe that's why we all laugh at the industry. How do you sell when you have no samples, no marketing collaterals, no bone models, an inadequate training program not just on the clinical issues, but on the environmental issues that you are challenged with on a day-to-day basis?  Think how absurd it is when company executives claim that they don't want to be like the company that they previously worked for, yet surround themselves with the same people that they worked with at that other company?  Create a new culture?  Highly unlikely.  More like an attempt to catch lightening in a bottle by copying that culture because you think you can do it better, and then one day you wake up and you realize that you are no different than the company that you claim you did not want to be like.  You've become the 4,000 pound Gorilla that has an inability to innovate because everything becomes an exercise in accounting, you need to have meetings because everyone needs to cover their ass or wants to be heard, so all that execution that you once told the market you were capable of doing better and faster has come down to a grinding halt.  The result is that you start losing customers.  You know the people that will only tolerate your BS to a point and then shut you down by moving to another company or product.  Surgeons are customers, and an unhappy customer means you're in trouble.  So as Jethro Tull once sang,

Happy and I'm smiling walk a mile to drink you water
You know I'd love to love you and above you there's no other
We'll go walking out while others shout of war's disaster
Oh, we won't give in let's go living in the past

Once I use to join in every boy and girl was my friend
Now there's revolution, but they don't know what their fighting
Let us close our eyes outside our lives go on much faster
Oh, we won't give in let's go living in the past

TSB wants to know what you think.

Tuesday, December 13, 2011

2011 - A Year to Lick Your Chops or Lick Your Wounds

Yes fellow Spineophiles, its that time again, when Santa comes down the chimney with echoes of "Ho, Ho, Ho, Santa's got to go, he's got to bring toys for l'il girls and l'il boys."  As we rapidly approach the end of another year in the wacky world of spine its time for TSB to look at the winners and losers for 2011.

January brought us a deep freeze, depending on where you were.  Though these companies were use to warmer climates, revelry played out for Cardo Medical and Facet Solutions.  Cardo couldn't get out of their own way, the blind leading the blind, attempting to capitalize on its acquisition of Vertebron, laid this dog to rest once and for all, while Facet Solutions was gobbled up by Globus Medical, aka, when will they go public, for pennies on the dollar.

February had Nuvasive cautioning analysts' that the winds of change were coming, inevitably experiencing a smack down by the marketplace and the Street.  Even Bill Walton wasn't capable of posting up Lukianov considering that even with XliF, Walton is running on bad wheels.  Thank goodness that Memphis is winning at the box office, considering that the stock has been a chihuahua lately, hey Yoquero where's the chalupa? Can I hear $11 dollars?  By the way, for all of those drinking the kool-aid, it is purple isn't it, spare us the complaints of NuVa bashing, it is what it is, a one trick pony, is all that horse can do, it's a one trick only, it's the principal source of their revenue.

March came in like a lion when DMT better known as "no motion" experienced a capital crunch, along with Applied Spine being sold to Rachiotek for pennies on the dollar.  Love Panjabi, but his advisors and investors should've been fired a long time ago. It was during the Ides that the first shot was really fired at INFUSE putting the holy grail of biologics under the electron microscope.  March entered riding the lion, but left like a lamb.

April brought us headline news with Dr. Makker and Sundaresan making the cover of various media outlets with questionable practices, while  Zimmer and Wright Medical made their own news announcing the hiring of Paul Graveline and the resignation of Gary Henley as CEO, but the big story in spine was the pending acquisition of Synthes by J&J.  Will the arbeitsgemeinschaft osteosynthes fragen ever be the same?  Synthes was always more Armani than Brooks Brothers, at least during yesteryear, today, they should fit in well considering that the company was and is run by a pharma dweeb who looks at salespeople as a necessary evil.

May had Larry Biegelsen, a Wells Fargo analyst touting that the acquisition of Synthes by J&J could benefit Zimmer, well Larry, don't want to disappoint you, but we're still waiting, and waiting, and waiting. Medtronic announced and initiated layoffs, while John Viscogliosi hit the road entering Centinel Spine in every Bar-B-Que contest East of the Mississippi. Wasn't he running a spine company?  The NJ State Board of Medical Examiners levied civil penalties against Drs. Errico, Balderston and Goldstein for failing to disclose to their institution their financial interest in ProDisc using the widely held Jon Corzine defense, it was merely an oversight.  But the big story in May was the resurgence and advocacy of POD's.  It's truly a shame that surgeons can't earn a living being surgeons, they now insist on being salesmen, c'est la vie.  The silicon chip inside Tony Koblish's head finally switched to overload and Orthovita was sold to Stryker for $316 mil in cash. You know what Henry Butler of The Three Kings sang, "let the good times roll." It
was in May that we poked fun at our favorite whipping boys, the stock analysts' of the device world. Where are those smart guys?  As ATEC stock continues to plummet it's awfully quiet on the home front. In May we announced 20% is a thing of the past, unless you're a POD, and everyone was tightening their belts leading to a year of fiscal austerity in spine.

June had TSB announcing the departure of Mike Mogul from Stryker, and a Federal Appeals Court overruled that the trial judge from the First District Court in Boston had applied the False Claims Act and Anti-Kickback Statute too strictly in the Whistleblower case against Blackstone.  Poor Orthofix, talk about being kicked in the nuts,  they like paying their executives wonderful bonuses, maybe its time they settle this suit and move on to better things, just like Medtronic did this week.  Ortho-fix should just clean up that dog of a spine division formerly known as Blackstone, SUCKERS!!!! Norian was sold to Kensey Nash and TSB announced that there would definitely be jail time after the verdict in the Trial of the West Chester Four.  The Guyer Family experienced their own loss when Jeff Guyer passed away in June.  Hopefully, the Guyer's will have a peaceful holiday season. POD's and attacks on sales people become the topic du jour and Ortho-fix announced the resignation of Alan Milanazzo whereby TSB provided the play by play of that stellar career.

July brought us the Spirit of Edgar Dawson and the ghost of Marshall Urist and many of our readers responded with passion regarding BMP's.  Synthes and Globus entered into the ring for another suit. Could this have been Wyss' parting shot at David Paul?  The FDA issued a warning label to AlphaWreck for PureGen resulting in pink slips in the Biologics Division at d'Wreck.  July was quiet as it usually is.

August had us asking the question whether technology was distracting the Art of Surgery.  Even Jack White formerly of the Raconteurs and White Stripes commented that technology may make things easier, but, does it takes away from man's creativity?  Once again, it takes an artist to shed some reality on the facts of life.  Are we training a generation of surgeons that will lack the necessary skills to know how to operate?  That was the six million dollar question that a veteran of surgery posed.  Once again, the market for spine was down graded.  Rachiotek and Yale University filed suit against everyone's whipping boy, Globus when it comes to law suits.  Synthes, Medtronic, Rachiotek?  TSB could hear Sonny and Cher in the background, "and the beat goes on, and the beat goes on, the drum keep pounding a rhythm to his brain."

September  brought us memories of the Ali-Wepner fight when Medtronic and Nuva geared up for the Rope-a-Dope, while Sharp's and Scripp's hospital systems issued a storm warning on POD's claiming that they were unwelcome at their facilities.  Did anything really happen? NuVa took it on the chin and their stock plummeted to 18.65, leaving TSB to ask the question, will they ever see 18.65 again?  By the looks of their recent performance, even the analysts' aren't drinking the kool-aid.

October brought us boot camp for the Spine Technology Awards as everyone was polishing their silver and putting out their fine China in preparation for that venue.  Spinal USA made the Wall Street Journal claiming that they were a legitimate company invoking Jim Pastena to claim, well, that they are a real company, duh!  TSB did ask the six million dollar question, where is the innovation? Pedicle Screws, Cervical Plates, Interbody Devices, Biologics, as Clara Peller use to say, "where's the beef?'  Then we wonder why hospitals are capping pedicle screws at $500 like Medstar is in Ohio.  Olympus made headlines by some nefarious activities that have now garnered the attention of multiple federal enforcement agencies in Japan and the U.S. resulting in the V Brothers getting some unwanted publicity.  By the way, what were they doing in the Olympus Booth at the Chinese Orthopedic Associations trade show?  Can someone say $14 +$22?

November brought Nuvasive more bad news as its market cap continue to fall faster than a speeding bullet. Where was Superman?  Did anyone see him?  Word on the Street was the NuVa was taking it from all sides, including losing one its biggest hitters Dr. Cappucino.  NASS was another humdrum meeting, David Paul was spotted walking the floor with his bodyguard Tatoo or was that a human troll?

So as we wrap up another year Santa is looking out for those that are naughty and those that are nice.  It will be interesting to see where stocks like Nuvasive and AlphaWreck end up.  Will they rebound and make those soothsayers, the analysts look brilliant, or will they never rebound? Never rebound?  Never rebound?  Considering that the market has been over hyped and inflated much of the industry's  destiny will rely on the Asia markets.  With Europe in a state of flux, there is no telling whether some of us will ever rebound.  Could this be the year of the small company, and who will be gobbled up as we wonder who will fall to the way side?  So as we wind down the year the question to our readers is, was this a year to lick your chops or lick your wounds?  You be the boss.

Tuesday, December 6, 2011


No spine nation, it's not the Godfather of Soul (may he rest in peace),  neither is it that other Godfather, you know the one that ran a pizza  company who basically was taken to the woodshed by his wife Gloria last weekend, neither is it memories of Adolf Hitler who liked to scream, "Nein, Nein, Nein."  What Nein X Nine =  Nein  amounts to is the answer that the Supreme Court issued to Blackstone Medical and Orthofix with regard to their Petition for a Writ of Certiorari.  The Cert Petition is a legal request to the SCOTUS whereby a defendant, in this case Blackstone and Orthofix, asks the Court to review a decision by the a lower court, in this case, Blackstone Medical Incorporated v. U.S. ex rel. Hutcheson.  But before we go any further let's understand the issue at hand.

The issue in Blackstone Medical was whether a device company THAT PAID ILLEGAL KICKBACKS to prescribing physicians (we know who you are) could be liable under the False Claims Act for causing false claims to be submitted to MEDICARE.  The basis for the law is that anyone submitting claims for federal monies cannot submit false or fraudulent claims.  If so, the Federalis can recover large fines for each submission as well as treble damages.  Treble damages is a term that indicates that a Statute permits a court to triple the amount of the actual/compensatory damages (are you listening boys).  In addition to the treble damages, the whistleblower shares in the bounty.  Blackstone, Orthofix and its cadre of attorneys were hoping to argue that another law for which the filer had certified compliance was being violated.

Considering that this Writ of Cert came in front of the Robert's Court and was denied is BIG.  It seems that Blackstone's/Orthofix attorneys were hoping for a "Hail Mary"considering that the Roberts Court has decided five FCA cases in five terms.  In addition, for those that applauded the effort of the Writ and the law firm for throwing the kitchen sink at the plaintiff, let us remember a few facts.

            It is estimated that the SCOTUS usually hears 40-50 cases per term
            Legally, 99% of the time, a Writ like the one filed by Blackstone/Orthofix is denied

Why? Because the SCOTUS adjudicates issues that affect and effect Constitutional Law or disputes between Circuit Courts of Appeals with the intent to create uniformity in the law.  So the question is asked, will this establish a new precedent, whereby any company that knowingly and willfully is involved in kickbacks (PODS?)  think twice about its business model?   Will the BOYZ and Orthofix be ready to ante up more than that $50 million in escrow that has been reserved for this rainy day?  Or, will their arrogance and money let them believe that they could crush the whistleblower acting like the two thousand pound gorilla that they like to think they are?  The end result is that not even Darth Vader will right the ship.  So like TSB likes to say, "it's game time BOYZ."  This is an opportunity for the DOJ to set an example once and for all.  Stop acting like the paper lion that you are perceived to be by those of us in the industry that attempt to do the right thing.  Bitch slap the parties involved with the MAXIMUM, don't negotiate.  Let them come to you asking for forgiveness and show them no mercy. Considering that they thumbed their noses at everyone, pay back can be a bitch.  So you know what Jackson Browne use to sing;

I'm sitting down by the highway, down by the highway side
Everybody's going somewhere, riding just as fast as they can ride
I guess they have a lot to do, before they can rest assured
Their lives are justified, pray to God for me baby, He can let me slide

Cause I've been up and down this highway, far as my eyes can see
No matter how fast I run, I can never seem to get away from me
No matter where I am, I can't help feeling I'm just a day away from where I want to be
Now I'm running home baby, like a river to the see.

Seems like Blackstone and Orthofix have them Bright Baby Blues.  Who knows, maybe OTW will write something in defense of the industry?  The bigger question that remains is whether or when will the government proceed with criminal charges?

Thursday, December 1, 2011

The Rainmaker or Is It the Rainman Is Gone

As Yogi Berra use to say, "it ain't over t'ill it's over." Word coming out of Amedica is that the Rainmaker, aka Ben Shappley is no longer the CEO of Amedica.  An inside source has informed TSB that Ben Shappley was greeted by two BOD members and the CFO resulting in Custard's Last Stand at Little Big Horn.  No scalps were taken, but Ben was last seen being escorted from the building in a heated confrontation.  As the company went on to announce Mr. Shappley's termination via a conference call, the company erupted in simultaneous cheers and applause.  Free at last, Free at last, thank God Almighty, Free at last.

Could this termination be a by product of Ben's inability to take the company public?  Could this termination be the result of an acquisition, US Spine, gone awry? It will be interesting to see who will take the helm of this industry darling.  TSB knows that there will be plenty of candidates lining up to take a shot at the title.  You know what John Lennon use to say, "instant karma is going to get you, gonna knock you off your feet, better recognize your brother, everyone you meet." TSB wants to know what are readers think?