The principal activity of TruSpine Technologies Plc is that of a medical device company focused upon the spinal (vertebral) stabilisation market. www.truspine.org
AQSE Growth Market Code: TSP
Price: 13.5p
Shares issued: 87,778,967 ordinary shares of 0.01p each
Market Cap: £11.85m
Results: Finals - November Interims - March AGM - December
Brokers: WH Ireland Ltd, Adam Pollock (020 7220 1666)
Aquis Corporate Advisers: Cairn Financial Advisers Plc, Liam Murray (020 7213 0880)
Company Contacts: Ian Roberts, Chief Executive (0207 118 0852)
CONCLUSION ‘very exciting disruptive medical technologies’
This little medical devices company, which recently floated on the Aquis Exchange Growth Market, is going to cause shockwaves in the $10.2bn pa spinal market when it gets FDA approval for its first product next Spring. Could an AIM float follow?
It is aiming initially at the US market, where nearly 65m citizens have recent episodes of back pain. Some 1.6m spinal fusions are carried out globally each year, some 55% of which are in the US. Healthcare and indirect costs due to back pain are over $12bn pa. TruSpine’s medical devices will be significantly cost saving.
TruSpine has a highly experienced management team with a background in medical device manufacture, sales, distribution and marketing in addition to market disruption and taking products from an idea to a successful commercialisation.
The company must be wary of the extremely busy mergers and acquisitions market for medical devices, during 2020 there have been several of the majors taking out their smaller brethren. SQC Research TARGET PRICE 50p
The Group’s principal activity is that of a medical device company focused upon the spinal (vertebral) stabilisation market.
It is developing disruptive technologies – initially three devices:
Cervi-LOK™ for the cervical and upper thoracic spine;
Faci-LOK™ for the lumbar and lower thoracic spine; and
GRASP Laminoplasty, a treatment for decompression of the spinal cord.
These devices represent a potentially significant development in spinal fixation, by providing stabilisation while not altering the bony spinal anatomy of patients through the use of screws, staples or other devices which currently dominate the spinal market.
COMPANY BACKGROUND
TruSpine Technologies Plc was incorporated in December 2014. The Company gained Admission to trading on the Aquis Exchange Growth Market on 20th August 2020 when it raised a gross £1.4m through a subscription at 36p per share.
A further binding subscription agreement of £250,000 at 36p per share is expected to be settled in November 2020. Upon completion the recent subscriptions will have raised a gross total of £1.65m. Previous funding rounds made by the Company have raised about £4.5m cash by the issue of shares from 19.95p to 36p each.
Principally the proceeds will be used to:
1. to complete the FDA submission of Cervi-LOK™,
2. to develop the surgical approach and specialised instrumentation,
3. to provide product validation in the spinal market and, importantly,
4. to fund the Company through to the point it generates sales of Cervi-LOK™.
THE MARKET
Disrupting – The global spinal devices market is estimated at $10.2bn pa and is expected to grow at a compound annual growth rate of 3.1% through to 2026.
Helping – It is estimated that there are 1.62m instrumented spinal procedures carried out each year with North America currently accounting for some 55% of those procedures.
Transforming – Healthcare and indirect costs due to back pain are over $12bn pa.
This market is expected to grow significantly primarily due to:
· Emerging markets
· Ageing global populations
· Increase in obesity
· Increasing awareness of treatment options
THE COMPANY’S PRODUCT DEVELOPMENT STRATEGY
The Group’s mission is to build a leading independent medical devices company that is at the forefront of reshaping the way clinicians approach spinal (vertebral) stabilisation and therefore alter and significantly improve how severe back pain is treated.
The TruSpine philosophy and mantra is one of preserving nature’s design. In developing revolutionary and uniquely disruptive technologies its devices have been designed to be safer, faster and easier to implant.
The potential cost savings to patients, insurers and surgeons can be significant. The technology is minimally intrusive, minimally invasive and reversable.
The first product to market will be Cervi-LOK™, the first posterior cervical stabilisation device in the world which fully preserves the bony anatomy of the spine.
TruSpine has a phased product development strategy and is planning to commence initial product marketing between late 2020 to early 2021.
The overall aim is to establish the TruSpine products as the ‘go-to solutions’ for the spinal stabilisation market. As well as the three flagship platform products currently under development, the Company also has a pipeline of additional and complementary spinal products.
THE THREE FLAGSHIP PLATFORM PRODUCTS
Cervi-LOK and Faci-LOK are spine stabilisation devices used in the fusion of the cervical, thoracic and lumbar spine respectively.
They differ from existing methods of vertebrae stabilisation as they are non-intrusive. Cervi-LOK and Faci-LOK clamp onto specific landmarks of the vertebrae bones rather than requiring fixation with screws.
This approach has certain advantages over the traditional pedicle or lateral mass screw systems as detailed in the table below:
Cervi-LOK and Faci-LOK Systems versus Pedicle (or Lateral Mass) Screw System
No invasion of vertebrae Screws inserted into vertebrae
Minimal risk of injury to nerve Risk of nerve injury is common complication
Capable of being reversed since it Permanent alteration to anatomy
does not alter patient’s bony anatomy
Less surgery time less anaesthesia required Longer surgery time more anaesthesia
Devices provide stronger and more fatigue Fails at lower pull out strengths under
resistant fixation load and much earlier in cycle testing
Systems enable surgeons to precisely Less ability to modify placement in
position vertebrae post placement minimally invasive spine surgery
Significantly less X-Ray exposure Unpredictable X-Ray exposure
Competition in the spinal fusion market is high and fragmented, with the majority of companies selling pedicle screw systems. Pedicle screws have been in the market for 30 years and are one of the most common implants used in spine surgery.
The issues resulting from pedicle screws and the associated high rates of misplacement has led to a sub-sector evolving which addresses such complications.
Major company analysis in the spinal devices market currently identifies a high number of competitors, who are able to benefit from scale economies.
Major competitors to the Company will include Zimmer Biomet, Medtronic, Johnson & Johnson, NuVasive, Life Spine and Globus Medical.
However, these existing competitors’ technologies still utilise invasive technologies like lateral mass and pedicle screws and therefore TruSpine should be well placed to compete within the spinal stabilisation market because, crucially, its Products do not alter the bony anatomy of patients
SALES AND DISTRIBUTION CHANNEL
The Company’s sales and marketing team has extensive experience in spine stabilisation, biologics and minimal access spine technologies. They will lead the commercialisation strategy, central to which is the use of surgical Key Opinion Leaders (KOL’s) to:
· develop the surgical approach and specialised instrumentation;
· provide product validation in the spinal market;
· provide first revenue; and
· collect and present comprehensive patient data through surgery, recovery and aftercare; this data will ultimately allow the Key Opinion Leaders to endorse the Products.
Strategic input from a select group of surgical KOLs will help refine the subtleties of the Products and the surgical approach to their implementation. They will also be involved in the necessary studies, white papers, poster presentations and podium appearances which the Directors believe will help to shape the future of the spine market and create better and safer treatment options.
Following FDA clearance, a large proportion of the initial revenues will be derived from the surgical KOLs and Primary User Groups Sites.
The Company has identified several Primary User Groups Sites, which will be groups of surgeons who are ‘early adopters’ of the Products, willing to implant them and to collect necessary data demonstrating their clinical relevance and supporting the Company’s claims in relation to them.
This data collection is in addition to the KOL data collection. Sales and clinical support personnel will identify and agree upon site selection and the necessary criteria to be collected in addition to the day to day management and oversight.
THE FLAGSHIP PRODUCTS
Cervi-LOK™
The Cervi-LOK™ is a screw-free spinal stabilisation system, used in the cervical spine that minimises risk of vertebral artery injury which can cause brainstem stroke or nerve root and spinal cord injury.
TruSpine identified certain anatomic features of the posterior aspect of the cervical spine as ideal for Cervi-LOK anchors to attach. The procedure can be performed through a very small incision, without disruption to any of the critical anatomy such as the bone or ligaments critical to the stability of the spine, and by significantly minimising the threat to the nerves, spinal cord or critical blood vessels.
By securing these anchors to the posterior aspects of multiple vertebrae and linking them together in a simple and minimally intrusive fashion, stabilisation can be achieved. Treatment would be for conditions such as degenerative spine disease, supplemental fixation, deformity, trauma or tumours.
Faci-LOK™
The Faci-LOK™ system takes advantage of anatomic features on the posterior aspect of the lumbar and lower thoracic vertebra that predispose themselves to the application of grasping anchors.
The Faci-LOK™ anchor is formed by an upper (cranial) element, and a lower (caudal) element. These are coupled together, so that once each element is in place, the two are slid together and locked in place, providing a firm hold of the vertebra without penetrating the bone.
Initial bench testing has shown this form of securement provides a greater bio-mechanical purchase of the vertebra than pedicle screws. Anchors are applied bilaterally on the posterior aspect of the vertebrae to be stabilised, and then specialised vertical locking elements known as the Motion-LOK are utilised to connect the anchors unilaterally.
The Motion-LOK allows the surgeon the ability to either compress or distract based on the pathology affecting the patient therefore providing segmental fixation.
The GRASP Laminoplasty system
The GRASP Laminoplasty system is revolutionary in design, as it is both minimally invasive in application, and does not require the use of any screws, thereby avoiding damage to the bony anatomy with respect to its fixation and anchoring.
The system ‘grasps’ the laminae using the Cervi-LOK anchor, which is then connected to another unique technology which ‘grasps’ the lateral masses allowing the system to expand the bony spinal canal, relieving pressure on the spinal cord.
This is becoming an increasingly popular method for treating cervical stenosis, which is among the most common conditions to affect the spine, particularly in populations over the age of 55.
The system would be the first system to allow surgeons to preoperatively plan the extent of decompression to be achieved, and would also be the only laminoplasty system that could also stabilise multiple levels; therefore, it would provide unprecedented options to surgeons, thus providing a total solution from a single provider, using common componentry.
It is believed that the GRASP Laminoplasty system will have the following benefits:
the system is less intrusive than the other currently available systems;
the system can be customised by the surgeon to match exact patient requirements;
the system will utilise proprietary software and specialised instruments which can be used to determine exact positioning of troughs in the posterior bony arch of the spine;
the system does not involve the use of invasive lateral mass or other screws, which therefore reduces the risk of damage to the relevant portions of the spine and also leads to generally shorter patient recovery times;
the system retains structural integrity of the spine in order to preserve protection of the spinal cord; and
the system utilises stronger hardware than any known current systems, which can often fracture.
One of the key components of the GRASP system is taken from Cervi-LOK, and therefore development is already at an advanced stage. GRASP forms a natural adjunct to the Cervi-LOK Product.
THE FLAGSHIP COMMERCIALISATION TIMETABLES
The Cervi-LOK commercialisation timetable is expected to be as follows:
Now to mid-November 2020 – Bio mechanical testing and cadaver lab testing
November 2020 – FDA 510(k) Submission
March 2021 – Clearance provided by the FDA
April 2021 - June 2021 – Manufacturing
June 2021 – Commencement of sales and marketing of Cervi-LOK
The Faci-LOK commercialisation timetable is expected to be as follows:
June 2021 – November 2021 – Bio mechanical testing and cadaver lab testing
November 2021 – Submission of FDA 510(k)
March 2022 – Clearance provided by the FDA
April 2022 - June 2022 – Manufacturing
June 2022 – Commencement of sales and marketing of Faci-LOK
The commercialisation timetable for GRASP Laminoplasty has not yet been finalised, however it is expected to commence following FDA clearance for Cervi-LOK.
FDA REGULATORY APROVALS
The FDA provided the Company with written Pre-Submission feedback on its Cervi-LOK Pre-Submission in on 29 July 2020.
The feedback was in line with the Directors’ expectations and provides the Company with a clear pathway to obtain FDA clearance for Cervi-LOK.
The Pre-Submission feedback confirmed, inter alia, the Company’s choice of predicate device which Cervi-LOK will be tested against and the bio-mechanical testing protocols that will required to be undertaken to obtain FDA clearance.
The Company estimates that the bio-mechanical testing of Cervi-LOK will be completed by 30 November 2020, at which date it anticipates it will be able to submit its 510(k) application to the FDA in respect of Cervi-LOK.
PATENT PROTECTION
The Company protects the intellectual property in its technologies and any future application thereof by submitting patent applications in each country in which it intends to operate.
This is an active and ongoing process with new applications being filed to cover revised design, usage and application of the technologies.
DIRECTORS
Ian Roberts, Chief Executive Officer (Aged 55)
Ian has over 25 years’ experience in the medical technology and medical device sector, with more than half of that time spent in the orthopaedic industry covering marketing, sales manufacturing and distribution. He started his orthopaedic sales career with Stratec Synthes (AO) Limited, before joining Howmedica as Marketing Manager for the trauma and spine division. Stryker Corporation acquired Howmedica, which enabled Ian to develop a trauma and spine division in the UK and Europe for Stryker. Following which he became Country Manager for Hospira Inc (an American global medical device company) for the UK and Ireland, managing large manufacturing, sales and administration teams of approximately 250 employees. More recently, he has been advising investment funds on alternative investments with a focus on life sciences.
Norman Lott, Chief Financial Officer (Aged 64)
An experienced CFO with significant public company experience. Chartered accountant Norman has also been involved in several international corporate transactions and has experience in the healthcare sector.
Martin Armstrong, Non-executive Chairman (Aged 65)
As a senior partner of corporate and accountancy and corporate insolvency firm Turpin Barker Armstrong, Martin has significant experience in corporate and financial management, financial systems, accounting, audit and strategic planning, as well as turnaround and corporate insolvency.
Dr Timothy Evans, Non-executive Director (Aged 65)
Appointed to the position of Apothecary to HM the Queen and The Royal Households of London, Dr Evans runs a private, independent general practice in London. He specialises in women’s health and also has an interest in functional and musculoskeletal medicine.
Annabel Schild, Non-executive Director (Aged 55)
Ms. Schild is an entrepreneur, having invested in multiple companies in finance, technology and hospitality over the last 31 years. In addition to her wealth of investment experience, Ms. Schild has also held directorships including non-executive roles across a range of industries including hospitality.
CONSULTANTS TO THE COMPANY
Professor Frank Boehm Jr. MD, Inventor and Technical Consultant
Professor Boehm is a pre-eminent figure in the spinal surgery field – a medical doctor who has performed more than 2,000 neurosurgical procedures and published numerous articles and original research papers on spinal surgery. Inventor and chief designer of the three Flagship Products.
Janice Lee Stone, Director of Regulatory and Quality Affairs
Janice earned her undergraduate degree in biology and clinical degree in Respiratory Care from the State University of New York. Subsequently she has gained more than 30 years’ experience in both the delivery and administrative sides of the health care system. Ms. Stone is a fully trained facilitator in total quality management/patient experience initiatives and is also a trained ISO auditor.
MEDICAL ADVISORY BOARD
The Medical Advisory Board comprises four experts in the neurosurgical and orthopaedic sector providing advice and support to the Directors in relation to scientific and technical aspects of the development, testing, marketing and commercialisation of the Products.
Dr Leon K. Liem, MD, an experienced spinal expert and neurosurgeon,
Dr Richard A. Bassin, MD F.A.C.S, who has a wealth of both clinical experience and business knowledge. He works in a technical consulting role for numerous private equity houses including Goldman Sachs, Smith-Barney and others advising on the potential value of investing in new and unique medical technologies and medical start-up companies,
Dr Mark V. Smith, MD, former Assistant Professor of Neurological Surgery and Spine Surgeon at SUNY Health Sciences Centre in Syracuse, he has over 20 years of clinical neurosurgery and spine surgery experience, and
Dr William Lavelle, MD, trained in orthopaedic surgery and completed his Spine Surgery Fellowship at The Cleveland Clinic in Cleveland, OH.
SHAREHOLDERS
There are 87,778,967 ordinary shares of 0.1p each in issue.
Major Shareholders and Directors* (as at 10th Novem
ber 2020):
LCS Trust, 20,000,000 shares (22.78%); FocusPlay Retirement Benefit Scheme, 4,629,905 shares (5.27%), Annabel Schild*, 4,166,667 shares (4.75%), Norman Lott*, 1,750,000 shares (1.99%), Ian Roberts*, 861,111 shares (0.98%), Martin Armstrong*, 333,333 shares (0.38%), and Dr Timothy Evans*, 166,667 shares (0.19%).
Cairn Financial Advisers LLP hold an option to acquire 875,456 shares (0.96%).
FINANCES
Following the recent Aquis Exchange Growth Market round of fund raising, it is estimated that the Company has net cash at bank of around £1,000,000. That figure should be sufficient as working capital for the near future.
However, further funding at higher prices must be anticipated as operations start to accelerate. When the sales start to flow through the cash generation will be rapid and the bottom line will be a big beneficiary.
