Becker's Spine Review

12 SPINE SURGEONS Where 4 companies stand with spinal robotic technology in mid-2020 By Laura Dyrda R obotics remains a top opportunity in orthopedics and spine throughout the pandemic, and despite the financial challenges facing health systems across the nation, many continue to pay for new robot- ic technology as the way of the future. Moody's sees robotic-assisted procedures continuing to expand in orthopedics as well, being a key growth driver as elective surgeries resume. Here is where the four major ortho- pedic and spine companies stand with their robotics offerings. 1. Medtronic completed its acquisition of Mazor in December 2018 in a $1.7 billion transaction. e company originally worked with Mazor on the Mazor X system, which is available in the U.S. currently, and received FDA clearance for the Mazor X Stealth Edi- tion, which combines Mazor's robotics plat- form with Medtronic's StealthStation so- ware. e company is behind on its upgrades for the surgical robot, but Executive Vice President and CFO Karen Parkhill said that robotics innovations remain in its pipeline despite the pandemic. "For robotics, the key issue is that we've got a lot of employees in R&D testing, that very extensive and robust platform, and testing the soware and hardware integration of it," she said. "With COVID, they've had to work re- motely, so they're not onsite; they're not near each other [and] they're not with the robot. It's just more difficult to get their job done ef- ficiently." e company hasn't updated the expected re- lease date of its next robotic technology, but Ms. Parkhill said that the company is making tweaks now and hopes to release it quickly. On June 5, Medtronic entered into a licensing and development agreement for robotic as- sisted surgery technologies with Titan Med- ical. Medtronic will pay Titan up to $31 mil- lion in a series of payments to license select technologies and $10 million in a separate agreement to license certain robotic assisted surgical technologies from Titan. 2. Globus Medical also has a spinal robot on the market: ExcelsiusGPS. e company reported $25.9 million for the first quarter of 2020, down 21.9 percent year over year, large- ly due to the pandemic. U.S. sales, including robotics, up was up 7.4 percent to $158.4 million, but international sales dropped 9.3 percent. During the earnings call, CEO Dave Demski reported strong recruiting and pull through in robotics in the first quarter and enabling technologies grew year-over-year, despite the pandemic. Mr. Demski also said that the company has had record attendance at virtual market de- velopment events in recent weeks where sessions focus on robotics. "Now more than ever, the promise of robotics is compelling," he said, as transcribed by Seeking Alpha. "Whether there's the potential lot shorten hospital stays for patients concerned about being in a hospital or the reduction of cog- nitive load on busy surgeons trying to treat their backlog of patients, robotics offers a tre- mendous value and clear payback." However, Mr. Demski also said that robotics projects to some degree are being put on hold until the crisis passes and elective procedures ramp back up. "Once [hospital administra- tors] understand what their revenues are looking like and they get a little better picture on their capital as well as some of the govern- ment funding, I think they can have serious conversations about how they're going to buy the robot," he said. 3. NuVasive launched Pulse, its integrated technology platform that includes image nav- igation, surgical planning and neuromoni- toring on July 10, 2019. It added robotics to the platform in late 2019, featuring the X360 Pulse platform at the North American Spine Society Annual Meeting in Chicago. e ro- botics technology provides real-time feed- back to surgeons and allows them to make adjustments during surgery. It also sits on a flexible mobile cart that allows it to be moved between ORs. e company's first quarter net income was down 43.6 percent during the pandemic due to a lack of elective spine surgeries, but CEO Chris Barry said during the earnings call that NuVasive plans to continue investing in re- search and development efforts for robotic technology and developing the Pulse system. "In parallel, our robotics application devel- opment continues, and we are making good traction on the soware and hardware arm component of the system," he said, as tran- scribed by Seeking Alpha. "Our integrated platform strategy remains on track and con- tinues to be validated by the market, and we will continue to forge ahead." 4. Zimmer Biomet achieved FDA 510(k) clearance for the minimally invasive Rosa One Spine System in March 2019. e com- pany acquired the technology when it pur- chased Medtech in 2016 for $132 million. e system provides navigation support and is part of Zimmer Biomet's robotic portfolio, which also includes the Rosa Knee. Zack's Equity reported that Rosa One Spine, Knee and Brain systems had been perform- ing well ahead of the pandemic. "e fact is when we look at ROSA and any other robot- ics-related initiatives that we have, these are key priorities," said President and CEO Bryan Hanson during the first quarter conference call, as transcribed by Seeking Alpha. "And our investment, if anything, will accelerate right now and certainly the focus on these projects. And we're going to continue to build out our dedicated specialty sales teams and other high-value commercial programs. ese things will not stop during this time." He said the company did not have any deal cancellations and instead reported some deal deferments. "We are still seeing people trying to get queued up for training, which is a very good leading indicator of where robotics is going to go, and so we feel good about it," he said. Mr. Hanson also said the company will be flexible to meet the needs of customers in terms of acquiring and placing systems. "e fact is we've got to remember that the major benefits associated with ROSA or ro- botics placement isn't necessarily the capital sale upfront. It's nice to have, no question about it, but it's really more around the annu- ity," he said. n

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