EKSO and EVAR spark interest at conference

By Larry Haimovitch

Medical Device Daily Contributing Writer

August 21, 2014

BOSTON — The Canaccord Genuity (Vancouver, British Columbia) 34th Annual Growth Conference, which was held here last week, once again featured a diverse group of public medical device companies. One of the most interesting presentations featured EKSO Bionics (Richmond, California).

EKSO, which completed an initial public offer (IPO) in January, designs and builds human exoskeletons principally for the rehabilitation of patients whose mobility has been impaired by either a spinal cord injury (SCI), stroke or other neurological incident. EKSO initially applied its technology, which was developed in a university setting to enhance soldier strength and endurance. Its early military products evolved into the military’s Human Universal Load Carrier (HULC), which enables a soldier to carry a 200-pound load over a long distance and in rough terrain.

The genesis of the company’s foray into the human robotic medical rehab market occurred after the brother of one of the founders sustained an SCI and the founder witnessed first hand the relatively primitive caliber of SCI and stroke rehab equipment.

The company delivered its first medical market rehab system in February 2012 and in late 2013 added software upgrades which have significantly buoyed its performance. It has shipped approximately 80 units to date.

This device gives patients with an SCI or other lower extremity paralysis the ability to stand and walk. First time users typically walk the first time they wear the EKSO device and experienced users generally can transfer to and from their wheelchair and don or remove the device in just a few minutes.

CFO Max Scheder-Bieschin, who presented here, noted that by allowing patients to stand and walk, there appear to be a plethora of healthcare benefits to the patient. These include reductions in urinary tract infections, pressure sores, bowel problems, pneumonia and other respiratory issues, bone loss (osteoporosis) and cardiovascular disease. He pointed out that the psychological benefits are enormous and perhaps equally important considering how debilitating depression can be for people living with spinal cord injuries.

Perhaps more importantly, he pointed out that these attributes create tangible financial benefits to the healthcare system. Specifically, two company sponsored studies showed that EKSO users experience annual savings of $9631 in total rehospitalization expenses, while additional medical costs (e.g., reduced prescriptions, reduced doctor office visits) are slashed nearly $30K per year. Thus, overall savings from using the EKSO is over $35K per year.

Scheder-Bieschin also noted that “the economics to the hospital are very favorable,” estimating that each EKSO user generates an additional $20K in annual revenue to the hospital. He further added that in some cases a hospital purchasing an EKSO (average selling price of about $125K) can recoup that cost in as little as one or two years.

The market opportunity for robotic rehab devices appears to be enormous. To wit, according to recent market research data from Wintergreen Research (Lexington, Massachusetts) and The Christopher and Dana Reeve Foundation (Short Hills, New Jersey) the global robotic rehab market is expected to soar from about $50 million this year to $1.9 billion by the year 2020. As a market leader, Scheder-Bieschin said he expected EKSO to enjoy rapid shipment and revenue growth in the next few years.

Responding to a question on the competitive landscape, he indicated that there are several contenders who are vying for a share of this promising opportunity. One notable player is Rewalk Robotics (Yokneam Ilit, Israel), which filed for a $58 million initial public offering in July. The company was featured in an article in Medical Device Daily on June 30, 2014. Rewalk’s system is quite similar to the EKSO device but appears to be less suitable for patients with incomplete lower body paralysis.

The market for endovascular aneurysm repair (EVAR) market has been one of the most rapidly growing sectors of the global device industry and two players presented here at the conference. Endologix (Irvine, California) CEO John McDermott estimated the worldwide EVAR market at approximately $1.4 billion today and projected that it would grow at about 6% over the next five years, reaching about $1.8 billion by 2018. Moreover, he believes that the market is significantly underpenetrated and pegged the global market potential at $3.3 billion,

Endologix has grown rapidly in the past several years.Its global reveue reached $132 million in calendar 2013, nearly doubling its 2010 sales of $67 million. The company has been consistently garnering market share from its larger and well-established competitors, which include Medtronic (Minneapolis), Cook Medical (Bloomington, Indiana) and W.L Gore (Newark, Delaware).

According to McDermott, one of the keys to his company’s success is that
“we are the only company with two technology platforms to treat a wide range of patient anatomies.” It offers both an EVAR and EVAS (endovascular aneurysm sealing system), the latter the result of the acquisition of Nellix in 2010. McDermott indicated that the Nellix device is the first and only device that seals the entire aneurysm with a unique design that very likely will reduce secondary interventions and surveillance.

This device, which features a proprietary endobag and polymer sealing system, is already has a CE mark and is enjoying very strong growth in the EU. Despite a very cautious rollout, in 2Q 2014 Nellix procedures in Europe totaled about 500 versus 300 in 1Q, generating revenue of $5.5 million, up from $3.0 million in 1Q14. Very impressively, Nellix now represents about two-thirds of the company’s EU revenues.

In the U.S., McDermott stated that its IDE has been approved, with a planned enrollment of 180 patients at 30 centers. As of the second quarter analyst conference call, total enrollment stood at 75 and the company continues to expect to reach its full enrollment in late 2014.

In early June BMO Capital Markets (New York) sponsored a conference call with Andrew Holden, MD, Director of Interventional Services at Auckland City Hospital (Auckland New Zealand). Dr. Holden has perhaps the largest series of Nellix patients and he said that “once Nellix is available globally, it could become the dominant device in the market . . . possibly reaching at least 50% of all procedures.”

In addition to the robust Nellix rollout in the EU, Endologix is also aggressively pursuing percutaneous EVAR (PEVAR). In April 2013, the FDA approved its PEVAR application and McDermott asserted that Endologix has performed the “only prospective randomized trial to evaluate percutaneous EVAR.” With this approval, the company embarked on a physician training program in May 2013 and hopes to have 500 physicians trained by the end of 2014.

Trivascular Technologies (Santa Rosa, California), which is a major player in both EVAR and PEVAR, also presented here. After about 16 years as a private company, Trivascular completed an IPO in April, raising a total of $81 million.

Its CEO Chris Chavez extolled the virtues of his company’s Ovation Prime system, which received FDA approval in late 2012 and began its commercial activities in 2013. It recorded global revenue of nearly $20 million in 2013 and so far this year, its sales have nearly doubled over 1H 2013, reaching close to $15 million.

According to Chavez, two key components of its stellar commercial account for its success to date: (1) its device has the lowest profile FDA approved delivery system (14 Fr) and (2) It has the broadest IFU (indication for use) of any EVAR device on the market.

The former advantage means easier access to the aneurysm, especially in patients with narrow or torturous vessels, it reduces the need for ancillary devices for pre-dilation and it expands the opportunity to do an EVAR procedure percutaneously.

The broadest IFU is significant in that it expands the EVAR option to more patients. According to Chavez, about 30% of EVAR patients do not fall within the IFU criteria and he noted that there is a direct correlation between adverse outcomes and off label use of competing devices. He said “competitive devices address an estimated 25% to 45% of potential patients whereas our device can treat about 70% of patients.” Said differently, he opined that “40% of the cases we performed in our pivotal trial would have been off label for competitive systems.”

The upshot of the company’s highly innovative technology is that its clinical data is superb, with a far lower rate of adverse events than the competition. From a patient’s perspective, this is highly significant as well, with a substantially lower rate of adverse events and a reduced hospital stay.

Both Endologix and Trivascular are garnering market share from the incumbent. Another EVAR company that looks to be a meaningful contender is Lombard Medical (Oxfordshire, United Kingdom), which also completed an IPO in April, raising $48 million. Lombard has broad geographic approval for its Aorfix device, which is the only EVAR device cleared by the FDA for the treatment of abdominal aortic aneurysms with angulation at the neck for up to 90 degrees. All other approved grafts are only cleared for the treatment of anatomies that are less complex (i.e., neck angulations of up to 60 degrees). Lombard recently gained marketing and reimbursement approval for Aorfix in the large Japanese market and is also enjoying rapid sales growth, albeit from a small base as it aggressively ramps up its direct sales force in the U.S.

2014 Canaccord Genuity Conference

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