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.

NEIN X NINE = NEIN

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?

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?

Nine Months: A Lifetime

High drama?  No fellow bloggers, this wasn't Judge Judy's courtroom.  Today at around 2:45 p.m. Judge Lagrome D. Davis sentenced Michael Huggins and Tom Higgins to nine months in prison with three months probation and a $100,000 fine for their roles in Synthes illegal promotion and clinical tests by spine surgeons resulting in the deaths of three patients.

Judge Davis said that Michael Huggins showed a "knowing disregard" for the safety of the patients. But one must ask the $21.3 billion dollar question, why didn't prosecutors seek any charges against one Hansjoerg Wyss? Huggins and Higgins must share responsibility for their conduct, yet, how is it that one individual named in the original legal documents as Person #7, not be held responsible for the actions of those that were employed by Sin-thes.  A miscarriage of justice?  Is this another case where the minions pay the price while the man pulling all the levers rides off into Big Sky country counting his billions.

Obviously there will be no joy in the Huggins or Higgins household this holiday season, but then what about the deceased families? Hopefully Wyss will have done the right thing and paid for everyone's legal fees, a small token for keeping his raggedy Swiss ass out of jail.  So fellow bloggers the next time someone asks you to do anything that potentially threatens your freedom, remember that at the end of the day, it's your ass that's on the line.  As for the three deceased patients, may you rest in peace, all for the love of the almighty dollar.

Spine Art?

With the recent barrage of comments regarding Spine Art, TSB decided to send some of our investigative reporters into the Street to identify who is this clandestine operation.  But before we could do any due diligence on this company, it was important to get security clearances for our roving eyes and ears from the CIA.  We started by looking at their website, figuring that a company touting its technology as innovative would be more than happy to let the world see what this innovation is all about.  What we have learned is the Spine Art is developing highly classified stealth like technology that fly's under the radar or under the C-arm. Holding a top-secret security clearance, even TSB was not able to accomplish the task at hand. What we have learned is that Spine Art has classified information that pertains to technology that will affect the national security of both Switzerland, the United States, and potentially the rest of the world.  Having presence in thirty-four countries, it is obvious that this maybe more of a movement than a company, or could it be both?  Actually, our reporters saw them setting up distribution networks in Zucotti Park and Berkeley.  One must question motive when there are no products on display, could this be nothing more than a ruse? So we followed the bouncing ball to the K-wireless website and found a product that was an MIS system that can be utilized wireless we think, or with a wire. At one point we were wondering were we involved in a game of Where's Waldo, when in reality we were involved in a game of Where is Yoda?

So TSB must ask our readers is this a legitimate company?  Do they actually have revenue?  Or is this an organization that is run by a masked man, bunkered down in an Atomic Bomb shelter in the foothills of West Virginia?  Could it be that the Lone Ranger rides again, Hi-O Silver!

Supersize? How about Downsize

Stryker is going to focus on quality by laying off ............................1,000 people

Stryker is going to innovate by laying off........................................1,000 people

 Stryker is going to control cost by laying off...................................1,000 people 

Stryker is going to drive growth by laying off...................................1,000 people

As consolidation becomes the noun du jour, it is interesting to read many of our your reactions especially as companies continue to use the upcoming 2.3% medical device tax as their rationale for laying off more employees, or moving manufacturing overseas.  A point in fact is the announcement by the Almighty Stryker that they will "downsize" their workforce by 5% "as part of Stryker's ongoing focus on quality, innovation, and cost, and position the company to provide strong consistent growth in a changing environment."

If you analyze the anatomy of MacMillan's quote, it reflects a perverse corporate mentality that has been prevalent for years, whereas publicly traded companies rationalize their decision to downsize its workforce to preserve growth for its shareholders. Has there ever been a CEO who had the chutzpah to tell its shareholders that they will have to tighten their belts for the sake of innovation? Now that would be out of the box, Stevie. Have you ever heard a CEO at one of these giant companies announce that they were taking a pay cut, or foregoing their stock options or bonus, because their company really isn't providing quality, innovation, or even growing the business at double digits, let alone being profitable after years in the marketplace? Let's be honest many of these companies take advantage of modified accounting rules as much as they attempt to increase revenue by buying marketshare or even occasionally launching a not so innovative, but new product.  It never has anything to do with their lack of vision, it always comes down to some external force or the current boogeyman that is causing lack of growth.  C'mon Stevie Wonder where is all that innovation coming from at Stryker? If the acquisition of Orthovita is innovation, I guess Stryker is really innovating.  Stryker is no different than a company like Covidien, in that it is a "bean counter" driven company.  Their foray into the recon medical device market was driven by their acquisition of HA technology, their jump into trauma was a by product of their acquisition of Osteo, and they acquired DIMSO to enter spine. Where is the innovation Stryker?  So, here is how Stryker is going to bring quality, innovation and cost to its shareholders, by downsizing the workforce by 5%.

TSB is sure that Stevie Wonder goes to bed at night tossing and turning that he has to let 1,000 people go, but at the end of the day, its all about the shareholder, isn't it?  We are sure that when the time comes to hand out those pink slips, he will send them a message on behalf of all of those at Stryker telling them how valuable their contributions have been and that Stryker will be providing outplacement service to help them find employment in an economy that is built around downsizing to begin with, but isn't that the same propaganda that has been Stryker's modus operandi for all these years?  TSB could hear Stevie Wonder in the background,

I just called to say I love you, I just called to say how much I care, I just called to say I love you, and I mean it from the bottom of my heart.

One Million and Counting

Spine Nation:

Those of us at TSB, would like to thank each and everyone of you for supporting our blog site.  As the ticker keeps ticking, TSB has reached a new milestone.  The month of November has graced us with our one millionth viewer for 2011. That's right, 1,000,000 and counting, in addition we are averaging over 60,000 unique visitors per month.  Last year we had 750,000 readers, meaning that contrary to what visionary industry analysts like Mike Matson, Joanne Wuensch, or Raj Denhoy may profess, and you all know that those boys and girls never pump up the volume, TSB may just be the fastest growing spine platform in the industry, growing with laser like precision, avoiding Japanese companies at all costs, avoiding hiring relatives to write stories on behalf of our personal interests. Yes indeed, we are humbled to provide those of you in the trenches with a forum. Whether you are a sales rep, marketing director, engineer, nurse, hospital administrator, patient, surgeon, owner of a POD, delusional CEO, or had some bad plastic surgery, we love you all.  You are what makes us get up in the morning and keep a watchful eye on the industry. We keep many of you entertained, get some of you angry, and keep some of you on your toes.  No fellow bloggers, TSB will not be erecting any Golden Arches, there will be no Spine Technology Awards, neither will we be investing in a stem cell company, there will be no analyst luncheons, no Taj Mahals being erected to honor the Spine Gods, we'll just keep on keeping' on. You know what Billy Squier once sang,

You crave attention, you can never say no, Throw your affections any way the wind blows

You always make it, you're on top of the scene, You sell the copy like the cover of a magazine

Puttin' on the eyes, 'til there's nobody else, You never realize what you do to yourself

The things we see make the daily reviews, You never get free, Everybody wants you

So in closing, there's no need to write a review on NASS.  Based on your many comments, we still feel that NASS rips off the attendees, charging, say what, how much? Whoa Baby! A G note to walk around in a drug induced stupor?  Listen to Karl Rove?  Is that where our money goes, shame on you NASS.  Boring! It would have been more interesting listening to a crash survivor from the Uruguayan Rugby Team than another political bloviator. As one of our roving reporters stated, the model in the silver outfit with the headlamp was lame, the girl with the low cut top had fame, and walking the McCormick Center caused foot pain. The Baxano and SI-Bone booth had activity, but maybe that was more of a reflection of how boring many companies have become, rather than how innovative some of those technologies really are. It was nice to see David Paul and his sidekick Tatoo walking the floor. TSB wants to know who had the best new technology?  Cervical?  Lumbar? MIS? Interbody? Pain Management? Biologics?  We want to know what our readers think?  Did anyone had technology that was ripe for the pickings? You be the judge.  Is there one company that really stands out?  Who is ripe for an acquisition?  Who will be subjected to an inquisition?  As another year winds down, it will be interesting to see who is left standing when the dust settles. Once again, TSB wants to thank you for your support, now let's finish the year on a strong note.