Archus Orthopedics Is Doing for the Spine What Doctors Do for the Knees, Hips

9/23/08Follow @xconomy

First came artificial hips and knees that were good enough to let people walk normally, or even run again. Now Redmond, WA-based Archus Orthopedics is doing the same thing with artificial spinal joints. If it can pull this off, patients will be able to have back surgery, and still be able to play golf with a normal range of motion for years later.

“The spine is meant to move,” says Jim Fitzsimmons, the Archus CEO. “It’s ripe for the same kind of joint replacements like hips and knees and everything else we replace now.”

Big medical device companies have gotten attention for their efforts to introduce artificial spine discs as a way to improve on the old-school spinal fusion surgery method. Archus is going after this opportunity through a different part of the spinal anatomy. It is making artificial facet joints, which are the small stabilizers that are almost constantly in motion and play a big role in twisting of the neck and lower back, Fitzsimmons says.

Archus has gathered some serious money behind the concept. It has raised $61 million in venture capital since its founding in 2001, from MPM Capital, Polaris Venture Partners, InterWest Partners, and Johnson & Johnson Development. The company was born at Kirkland, WA-based Scout Medical Technologies, the incubator formed by a quartet of successful medical device entrepreneurs: Fitzsimmons, John Adams, Scott Wolf, and Xconomist Clif Alferness. Fitzsimmons went on to lead Archus, and the company has grown to the point now that 200 patients have received its artificial facet joints in clinical trials. So far, patients who get the surgically implanted devices report less post-operative back pain and shorter recovery times, and X-rays show it can offer a full range of motion, Fitzsimmons says.

To get a grasp, I needed to first understand the context of how this got started. When Scout was looking around at innovative medical device ideas in 2001, it found patents from Mark Riley, a Berkeley, CA-based orthopedic surgeon who founded Kyphon and its Kyphoplasty procedure. Scout knew about that quite well. The procedure is for people with vertebral compression fractures, the sort of osteoporosis-related fractures that are painful as people age, and cause the widow’s hump. It works by sticking a device with a balloon into the spine that creates space between the compressed joints, and inserts a glue that hardens in place, restoring people’s height. It was successful enough that Kyphon was acquired by Medtronic in November 2007 for $4.2 billion.

So when Riley filed lots of intellectual property in 2001 on facet (fuh-set) joint replacements, the Scout team took notice, and got the technology license it needed to go to work, Fitzsimmons says. “Spinal care is the fastest-growing segment of the orthopedics market, and everyone in the market is benefitting from the aging Baby Boom population,” he says.

Traditionally, people with severe back problems, like bulging discs between vertebrae, degenerative facet joints, or both, tend to get spine fusion surgery, Fitzsimmons says. It removes the broken-down bone and cartilage, and uses titanium hardware fused into remaining bone to hold everything in place, allowing bone to re-grow around the apparatus and fuse it all together. In theory, that should stop the movement that causes pain. Medtronic (NYSE: MDT), Johnson & Johnson (NYSE: JNJ), and Stryker (NYSE: SYK) are some of the big names that sell those commodity surgery parts.

The problem is that, as Fitzsimmons says, the spine is meant to move, and when part fused together, it creates pressure points in the spine that have to absorb some of that motion. So people end up with back pain in new places, and come in for additional surgeries years later, Fitzsimmons says. If a device could preserve the natural motion, then maybe it could reduce wear and tear on the spine years later.

Other companies were already working with artificial discs, so Archus looked at the facet joints. Those joints play a role every time we bend forward, bend backward, or twist laterally, he says. As he showed me in a spine model in his office, the Archus device is meant to be held in place by the same titanium hardware used for spinal surgery. But the device has a ball-and-cup joint design to allow just the proper degrees of motion we need to swivel or swing a golf club—but not so much that you’d spin around backwards, he says.

The devices also need to be made modular, because a 250-pound linebacker has a bigger facet joint than a 100-pound ballerina.

While bad spine discs get the blame for most back pain, facets are often little-known culprits that contribute to pain as well, Fitzsimmons says. The market for people with this problem—spinal stenosis, the painful narrowing and degeneration of the spine—is projected to affect 350,000 patients in the U.S. by 2012, Fitzsimmons says. About 180,000 could benefit from the Archus device, and at $5,000 to $6,000 per patient, the market is worth more than $1 billion, he says.

Because of the patient follow-up needed to satisfy the FDA, it will probably be 2012 until the device wins FDA approval, Fitzsimmons says. Archus has two competitors, Hopkinton, MA-based Facet Solutions and Princeton, NJ-based Impliant, which are both thought to be at least a year behind in development, Fitzsimmons says. “Archus has a dominant IP position in facet joints,” he says.

The device has already been cleared for sale in Europe, where regulatory standards are less demanding for this particular type of medical device. Archus has 45 employees in Redmond, and no sales force, so it would look to a partner, or possibly an acquirer, to commercialize its system in Europe. Archus has some expensive work ahead, because it needs to continue to gather data on its device in the U.S., while also pushing forward in development a second-generation device that combines an artificial facet joint with an artificial disc in one procedure, Fitzsimmons says.

When I asked if he’s looking to raise more capital, Fitzsimmons said that’s not his first choice, because he’s more interested in a partnership or acquisition that will give Archus the resources needed to take the technology to the marketplace. He sounds like he’s in talks to make his investors a lot of money. “We’re at a point in time where we’re going to discuss our destiny,” he says.

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