We recently heard the news about Smith & Nephew selling 51% of their Biologics division to Essex Woodlands in a Joint Venture. We caught up with the new President and CEO of the new company and got his thoughts on the news.

Interview with Mark Augusti, CEO Bioventus LLC.

Drue De Angelis: Mark, thanks for taking some time with us today. Could you give us your brief background and how did you end up where you are today? 

Mark Augusti:  I joined GE Medical Systems right out of earning a Degree from Duke University. I was in the imaging business for a number of years, and I had a foray into investment banking from 2000 to 2002. I joined Smith & Nephew in April of 2003 as the Global VP of Marketing for the trauma business, and I’ve been with them since Friday of last week (May 4), when I transferred over as CEO of Bioventus at midnight on May 5^th. At Smith & Nephews I had various orthopedic roles, going from VP to general manager, to President. I’ve been involved with our clinical therapies business, which was EXOGEN and SUPARTZ, in-and-out of the trauma business, and in 2008 moved to President of Smith & Nephews Biologics Division. 

Drue De Angelis: Why did Smith & Nephew want to “spin-off” the biologics division?

Mark Augusti: If you look at the new, stated, strategic aspirations of the CEO of Smith & Nephew, he really wants to focus on the growing markets, the emerging markets, because they’re international and he wants to reallocate the resources from the established markets to the growing markets.  He also wants to focus on their core surgical implant business –  both the orthopedics as well as wound management. So when you look at the biologics business, it was a bit of a tough strategic challenge. Smith & Nephew felt that biologics was important and regenerative medicine was important for the future direction they wanted to play in, but they felt they couldn’t invest it appropriately. There were three investment challenges. One was the scale of investment — the amount of investment required to have meaningful play in that space. Second is  the length of time to market. Most orthopedic companies look to a three year product cycle. Really when you look at biotech or biologics, you’re talking about getting minimum three to five, maybe seven year product development cycle. The third thing is the riskiness of that profile as a public company, and seen more as a medical device company, it’s harder to justify to the investors of Smith & Nephew, public company, the profile of that. So when we started talking about it, even before Olivier came on, we had these challenges. And then when Olivier came on, and really looked at it, he realized that given those three things, there’s a real win-win here for the shareholders. An opportunity to monetize some of the current value in the business for Smith & Nephew shareholders, and that will probably only be 5% of the Smith & Nephew revenue, for Smith & Nephew to retain the minority position, the significant minority position, which should give them the window into biologics. And this is all assuming we find the right investor to partner with us, provide capital, to dedicate to the space. That would allow Smith & Nephew to have that window, and potentially, assuming we do our jobs well, create value for their equity stake. So that’s the reason for the spin-off. We’re very excited about it, obviously, as Bioventus, a private company, focused on ortho biologics, with orthopedic active healing. We think we will be able to do different licensing and acquisition deals that normally wouldn’t rise to the “doablility” of Smith & Nephew, just because, given the other demands they have from their strategic priorities that I’ve outlined previously. As far as what we are going to do different, the main thing is, we’re still going to run our business, competing to win, we’re going to focus on our spaces and we’re now going to focus on longer term investment deals, as I said that 3, 5 to seven year profile. And we’re looking to do very interesting deals off this platform that we have of Bioventus.

Drue De Angelis:  What will happen to the existing Smith & Nephew employees as a result of the spin-off?

Mark Augusti:  As of the transaction closing on Friday, all of the US employees including myself and my executive staff have transferred over. We’re no longer Smith & Nephew employees, we’re now employees of Bioventus.  As for our international business — just due to the regulatory issues, both from a legal and a labor law standpoint – we couldn’t really get it done right away, so you have a process you have to go through, you have  to adhere to that process. Our plan is to do that over time, so that we have roughly 80 to 90 international employees and plan is to have them all come over the next 6 to 12 months. The way it’s working is, as of the close of the transaction, Smith & Nephew is now our distributor internationally, and those employees are still Smith & Nephew employees doing the same thing they did last week, selling our products. Now, given the distributor relationship, we will just work with Smith & Nephew, we have a very good working relationship with them, and we’ll transfer the international business in an orderly fashion.

Drue De Angelis: So, the focus is then in the non-surgical arena, bone healing and different injectables. Are you thinking of expanding beyond that to other non-surgical modalities as well?

Mark Augusti: Well, certainly when things come our way, we look at them and we’re free to do as we want. But I think right now, there’s interesting opportunities in bone healing technologies, as well as cartilage regenerative technologies. We’re looking at some things in soft tissue as well, but we think between bone and healing and cartilage technologies, there’s a lot of opportunity. We have a 300 or so person direct sales force in the US calling on orthopedic and podiatry outpatient clinics, and we think that’s a huge value for Bioventus. We think we have the best performing and largest scale sales force, so we’re looking to leverage that platform to other interesting things. So from that standpoint we also, given the equity and new capital of Bioventus, we’re going to build out this model internationally. It was a little hard to do that under Smith & Nephew given the substance of the operations, given it was a more surgical distribution platform OUS. We started that process and will continue that process under Bioventus and build our own direct selling force internationally  that will focus on orthopedic outpatient and orthopedic active healing technologies.

Drue De Angelis: Very good. That sounds like you got your hands full. Lots to do.

Mark Augusti: Well we do. We got a good partner in Smith & Nephew, and given they have retained a significant position they have every incentive to make sure we get our sea legs under us and get running. You can imagine, I had direct responsibility for a pretty large sales and marketing development, and even clinical affairs and regulatory affairs capabilities. But the challenge is, back office finance, back office HR, and all the IP systems, we got to build those within Bioventus. So that’s what we will be doing over the next year.

Drue De Angelis: Do you think we’ll see more Joint Ventures like this in orthopedics?

Mark Augusti: I think it represents a very interesting model. There’s been partnerships done in the pharma and biotech world before, and med-tech spin-offs but I don’t think there’s been anything as interesting as this where, a major device multi-national has maintained such a large position in the spin-out. And I think if you take the Essex Woodlands and their profile as a growth equity player, as someone who really can invest in technology and do this, it’s a unique model that people are going to watch to see if we can really be successful doing this. At the extend we can, we’d be paving the way in a changing environment with a lot of regulatory changes, challenges on data and health economics data, and really creating value. I think we’re going to prove as we become successful, that this may be a different way to go. I think the days of just getting a product out there, a device, a 510k and try to get a certain amount of run-rate revenue, and hope a strategic comes along, I’m not going to say that’s still not going to happen now and then, but there’s so much stuff chasing the deals, there’s so much capital out there, this is a different model. This is a model that is compelling that will take some strategic thinking, but there’s few firms that can pull it off.  I think other multi-nationals are going to look at this, because frankly, even if you’re larger than Smith & Nephew, you’re going to have similar type challenges when you look at precious resources, and where your investment dollars go. I think, to that extent, people will be interested over time.

Drue De Angelis:  Do you have any announcements relative to new product offerings?

Mark Augusti: I’m not expecting to have any major announcements over the short term, I think we have enough just doing this, and people are going to be watching. This is a challenge for all medtech, and if you look at the Covidiens, the J&J’s, the Strykers of the world, even GE, there’s a lot of big medtech companies who are looking to the emerging markets for their growth. The big challenge for them is, how do they stay relevant and manage their share in the established markets, given all of the changes and the pricing pressures and still fund that growth, which is challenging, while still maintaining an appropriate R&D and new product development pipeline. We’re smaller, but we aren’t very small, we’re an over $200 million company, and I think we’re on the right platform to compete in this space, and orthopedics is calling out for that. There’s so much biological research and research going on, there are few entities that are going to be positioned to really look at what is out there and take a little bit of a longer view, and do the work to invest in this space, and created really good value propositions. The way we’re approaching it is that you’ve got to have a health economic value proposition. You’ve got to have something that has clinical data that you can then talk to the payors and governments about, and get reimbursement for your product. If you look at our two core products that we have, both Bone Stimulation and Joint Fluid Therapy, both have great health economic stories and they’re saving dollars in the healthcare system. One of the key things we look at is, what’s the value proposition, and is it sustainable, and what are the economics behind it? And that’s the way the government is going, whether or not Obamacare gets repealed and those types of things, it is already being established. Having good clinical data really make a difference in allows you to, tell your story, protect your franchises, and frankly, justify being a value for your products, and that’s the direction we plan to move in.

Drue De Angelis: With the challenge of raising money these days, do you think joint venture is something that smaller companies can take advantage of?

Mark Augusti: That’s a great question, and we will see. I think it is tough if you don’t have the scale, the revenue. That remains to be seen, and that is why this is so unique, in that, we’ve got a really good cash flow which gives us the platform and the options to move forward. I think it is going to be tougher on the startups, and people want to see startups with a more detailed plan, funded through, getting beyond pre-revenue. It’s clear to me, at least is today’s environment, that strategics are not really interested in taking on the regulatory risk, the reimbursement risk, and all the other things they might have taken on in the past if they thought that the idea that a new “mouse-trap” would look good. There’s so much risk out there in the medtech world, you may not even get reimbursement. I think things are having to be funded longer as such are requiring more capital, and it’s making it tougher for the venture community. That’s why Essex Woodlands has been really farsighted in trying to partner and do a deal like this. They have set themselves apart on this deal and being able to do something like that. I also think Smith & Nephew did the same thing, and the board of directors should get credit for that. Clearly, I had the germ of the idea for that and advocated for it, but it’s not any one person, there’s a few people who see the value in it and have to get comfortable with that. I do think when this deal was announced back in January, other multi-nationals took notice and said, we’ve got “smaller” businesses in our portfolio that are a bit trapped, that we know we’re not able to fund appropriately, as we would like; so let’s try and understand this deal, how do you do a deal like this and have it make sense.

I think we’ve got a great team and we’re all about transitioning the team appropriately, and we’ve got great partners, great employees. I know my employees are excited about this. There is more to come as we go forward.

Here are financial report updates from 20 orthopedic and orthopedic-driven device companies for the first quarter of 2012 or the recently reported third quarter of the 2012 fiscal year. If you have comments or questions on this list, please contact Laura at lmiller@beckershealthcare.com.

Spinal Kinetics, Inc., the designer and manufacturer of the innovative M6 Artificial Disc, today announced that the German District Court in Mannheim has dismissed Synthes’ patent infringement claim involving German utility model No. DE 20321645U1 against Spinal Kinetics. The court also ordered that certain litigation costs are to be paid by Synthes.

The M6-C cervical and M6-L lumbar artificial discs help patients suffering from degenerative disc disease of the spine; a common cause of chronic and severe back and neck pain. The M6 technology provides an alternative to spinal fusion and is designed to preserve motion and reduce the chances of subsequent degeneration of adjacent discs. Introduced internationally in 2006, M6 has quickly become one of the market leaders in Europe and is available in over 17 countries worldwide. With over 16,000 implants to date, the M6 continues to generate enthusiasm among both patients and surgeons desiring motion preservation.

“We are very pleased with the German District Court’s decision in this case,” said Tom Afzal, Spinal Kinetics’ President and CEO. “The German District Court’s decision, along with the earlier U.S. Federal District Court’s finding in December 2011, further validates our global intellectual property position.” In the U.S. case a jury found that Spinal Kinetics did not infringe on the Synthes patent in question (U.S. Patent No. 7,429,270), and, in addition, the jury also found the Synthes patent to be invalid.

The M6 is the only artificial disc that replicates the biomechanics of a natural disc by incorporating both an artificial nucleus and annulus. In the U.S., Spinal Kinetics has successfully completed an FDA IDE Pilot Study of the M6-C in patients with both single and two level cervical disc disease and has received approval from the FDA to initiate a large, multi-center Pivotal Study of the M6-C cervical disc.

About Degenerative Disc Disease
Between each vertebra throughout the spine is an intervertebral disc; a shock-absorbing pillow that helps maintain proper spacing, stability, and motion within the spine. Each disc has a fibrous outer band called the annulus fibrosus that encases a central, gel-like substance called the nucleus pulposus. The nucleus and annulus work together to absorb shock, help stabilize the spine, and provide a controlled range of motion between each vertebra. Degenerative disc disease is a condition caused by the breakdown of the intervertebral discs. Often brought on by age, the spine begins to show signs of wear and tear as the discs dry out and shrink. These age-related changes can put pressure on the spinal cord and nerves and may cause back pain and other spinal conditions such as spinal stenosis or a herniated disc.

About Spinal Kinetics
Founded in 2003, Spinal Kinetics is a privately held medical device company focused on partnering with spine surgeons to develop innovative and practical motion preservation systems for treating degenerative diseases of the spine. The M6-C cervical and M6-L lumbar artificial discs have rapidly established themselves among the leading artificial discs available due to their unique biomechanical properties that mimic natural discs. The company is located in Sunnyvale, California.

For more information on Spinal Kinetics or the M6 Artificial Disc, please visit www.spinalkinetics.com

OIC website…. www.orthoimplantcompany.com

Smith & Nephew to form biologics joint venture with Essex Woodlands (S+N press release)

Smith & Nephew plc (LSE: SN, NYSE: SNN), the global medical technology business, announces today that it has, through its subsidiaries (“Smith & Nephew”), agreed to form a joint venture with Essex Woodlands (www.ewhv.com), a specialist healthcare growth equity and venture capital firm, to further develop its Biologics and Clinical Therapies division.  The transaction is subject to obtaining required regulatory approvals and satisfaction of other customary conditions.

The new entity, called Bioventus LLC (“Bioventus”), will be 51% owned by Essex Woodlands and 49% by Smith & Nephew.  In addition to this shareholding, Smith & Nephew will receive approximately $98 million cash, which will be used to pay down debt, and a $160 million 5-year note from Bioventus.  Smith & Nephew will transfer the vast majority of its US Biologics team and Clinical Therapies business to Bioventus and, for the time being, Smith & Nephew will continue to distribute Clinical Therapies products outside of the US.

Commenting on the transaction, Olivier Bohuon, Chief Executive Officer of Smith & Nephew, said:
“In a single act we have given our existing Biologics business the resources to address longer-term development projects, retained access to the exciting area of orthobiologics, realised value for reinvestment in nearer-term opportunities, and freed up management resource to focus on driving efficiencies in established markets.  Essex Woodlands are strong partners and the joint venture will benefit from their significant expertise in developing healthcare businesses.”

Bioventus will continue to market its current portfolio of products, including the EXOGEN^◊Ultrasound Bone Healing System and joint fluid therapy, and will seek to add further offerings.  Smith & Nephew and Essex Woodlands are committed to investing a significant proportion of Bioventus’ cash flow into R&D over the next five years.  The business will continue to be headquartered in Durham, North Carolina and the existing management team, led by its current President, Mark Augusti, will transfer to Bioventus.  Smith & Nephew will retain its research facility at York, UK.

Marty Sutter, Founding Partner and Managing Director of Essex Woodlands said, “We see tremendous growth potential with this new venture as more patients discover how active products can help heal and treat joint and bone ailments without invasive surgery.  Smith & Nephew has built an excellent business and we are excited about the prospect of working with the management team on the next phase of growth as it brings more active therapeutic products to market.”

In 2010 Smith & Nephew’s Biologics and Clinical Therapies business generated a trading profit of $44 million on revenues of $223 million (of which $33 million came from sales outside of the US) and as at 1 October 2011 had unaudited gross assets of  $121 million.  The transaction is expected to be completed in the next few months and will be modestly earnings dilutive.

Ondra Partners is serving as financial advisor, and Davis Polk & Wardwell LLP is serving as legal advisor, to Smith & Nephew on the transaction

Much of the political conversation in Washington these days concerns innovation, job creation and competitiveness. But talk is cheap, and elected officials must enact policies that enhance economic activity and job creation. The medical device industry is an example of Washington doing exactly the opposite.

Medical device manufacturing is one of the nation’s most dynamic and vibrant industries. The United States is the global leader in medical technology innovation, and it is one of the few major industries with a net trade surplus. This industry is responsible for more than 400,000 American jobs—and is indirectly responsible for almost two million more that supply and support this highly skilled workforce. Most important, its products are essential elements of modern medical care. They include everything from CT scanners and pacemakers to blood pressure cuffs and robots used by surgeons.

Yet instead of protecting this paragon of American ingenuity and innovation, the Obama administration and Congress have viewed the industry as a cash cow from which they could milk profits to help pay for the president’s health law. So they added to the Affordable Care Act a 2.3% excise tax on medical devices that will take effect at the beginning of 2013.

This tax is especially pernicious because it is assessed on sales, not profits. To put this in perspective, imagine that you’ve manufactured medical devices and had sales of $1 million, after all your costs and expenses—everything from materials and labor to research and development—your profit was $100,000. The excise tax would be $23,000, wiping out almost 25% of your profits.

Many medical device companies have to ramp up sales before they become profitable. Due to the long, draconian and sometimes unpredictable regulatory process that must be negotiated before a product can be sold, it can take from $70 million to $100 million in total sales before these businesses make their first cent of profits. Nevertheless, they would have to pay the excise tax on their revenue.

The nation’s medical device industry is vulnerable. It is not comprised of behemoths: 80% of its companies have 50 or fewer employees, the very businesses we are relying on to turn the U.S. economy around. The new excise tax comes when regulatory delays and uncertainty are increasing, and as many device firms are shutting down or moving abroad to take advantage of the more favorable tax and regulatory climate in Europe. The tax will force companies to lay off employees, cut back on research and development, or diminish capital investment.

The governors of five prominent states—Tom Corbett of Pennsylvania, Mitch Daniels of Indiana, Nikki Haley of South Carolina, Robert McDonnell of Virginia and Scott Walker of Wisconsin—agree. “As governors of states with a significant concentration of medical technology manufacturers, we believe that this tax could harm U.S. global competitiveness, stunt medical innovation and result in the loss of tens of thousands of good-paying jobs,” they wrote in an April 30 letter to congressional leaders.

Anticipating the excise tax, several companies already have announced layoffs or withheld investments. Recent surveys show that medical technology executives are examining a host of other undesirable options, including passing along the added costs through price increases. Even if the market would tolerate that—which is surely questionable given the current pressure to drive down costs—it would, ironically, raise the costs of medical care. That was not supposed to be an outcome of ObamaCare.

The U.S. remains the global leader in medical device development and manufacturing, although reports from PricewaterhouseCoopers and others show that its lead is tenuous, in part due to regulatory uncertainties and dysfunction that thwart innovation. If we allow foreign competition to seize the lead, it will be difficult to regain.

We need to create a more nurturing entrepreneurial climate, one in which ingenuity and innovation are rewarded, not penalized. Legislation has been introduced in both the House and Senate to repeal the medical device excise tax. That would be a good start.

Dr. Miller, a physician and molecular biologist, is a fellow at Stanford University’s Hoover Institution and a fellow at the Competitive Enterprise Institute. He was the founding director of the FDA’s Office of Biotechnology.

Well that didn’t take long.

Just a few days after MAKO Surgical Corporation announced that it missed consensus revenue and earnings estimates, a shareholder filed a lawsuit in U.S. District Court for the Southern District of Florida against the company, along with its President and CEO, Maurice Ferré, M.D. and CFO Fritz Laporte. The company was expected to have sales of around $23.8 million, but came in at $19.6 million.

A day after the May 7 announcement the company’s common stock price fell 37%.

The shareholder, James H. Harrison, Jr. is proposing a class action lawsuit by other shareholders against the company. He hired a Florida law firm, which immediately issued a press release seeking more clients. Law firms frequently issue press releases announcing that they are “investigating” a company and fish for clients. We usually do not help them on these fishing expeditions, but in this case, Harrison has actually filed a suit.

Companies sometime do get hit with a shareholder class action lawsuit after share prices drop significantly. The issue in this case will be whether the company and its executives misled investors about material facts, and did so intentionally.

The complaint, announced on May 10, alleges that defendants issued materially false and misleading statements regarding the Company’s financials and future business prospects.

“Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (i) that the Company was poised to suffer a wider first quarter loss as it was experiencing higher costs and slower sales of its RIO systems; (ii) that utilization rates of the Company’s RIO systems were dropping; (iii) that the Company’s 2012 outlook provided at the start of the Class Period lacked a reasonable basis when made; and (iv) that, based on the above, defendants lacked a reasonable basis for their positive statements about the Company or its outlook,” said the release from the law firm.

The company reportedly did not respond to request for comment about the lawsuit from local media.

The Collaborative Spine Research Foundation (Collaborative Spine), a non-profit fundraising and grants administration organization co-created by the Neurosurgery Research and Education Foundation (NREF) and the Orthopaedic Research and Education Foundation (OREF) to advance the science and practice of the highest quality spine care through the collaborative funding and support of clinical research, has announced its board of directors. The Collaborative Spine board of directors consists of equal numbers of orthopaedic surgeons and neurosurgeons, as well as a physician from a third medical specialty. The members are:

• Ray Baker, M.D.
• Charles Branch Jr., M.D., FAANS
• Zoher Ghogawala, M.D., FAANS
• Richard J. Haynes, M.D.
• James D. Heckman, M.D.
• Paul McCormick, M.D., MPH, FAANS, FACS
• Peter S. Rose, M.D.
• Christopher Shaffrey, M.D., FAANS
• Jeffrey C. Wang, M.D.

The Collaborative Spine board of directors will oversee the establishment of grant and award criteria; the establishment and enforcement of conflict-of-interest standards; the recruitment of qualified, independent peer-review teams; and the development of strategies to secure financial support from spine-care stakeholders.

“Our board is uniformly committed to a substantial expansion of opportunities for multidisciplinary clinical spine research,” saidJames D. Heckman, M.D., board chair. “We are neurosurgeons and orthopaedic surgeons, uniting as spine surgeons, to make more resources available for rigorous, hypothesis-based research and, ultimately, help those with spinal conditions live a better life.”

“This is an opportunity to truly raise the bar when it comes to advancing clinical spine research,” said Charles Branch Jr., M.D., FAANS, board secretary-treasurer. “By bringing together two specialties that share so much in common, we have the chance to build collaborative study groups, compare data, look at outcomes and make a significant impact when it comes to improving the lives of those dealing with spine-related disorders.”

The Collaborative Spine Research Foundation was formed in December 2011 to advance the science and practice of the highest quality spine care through the collaborative funding and support of clinical research. The organization initiated dialogue with industry leaders in January 2012. For more information about the co-founding organizations, please visit www.oref.org andwww.aans.org/en/NREF.aspx.

20 Orthopedic & Spine Device Company Leaders on the Move (Laura Miller @ Beckers)

Here are 20 orthopedic and spine device company leadership moves so far this year.

The Orthopaedic Implant Company, (website here) whose mission is nothing less than a big change in the paradigm around the sale of hardware used in orthopedic surgeries, is beginning to gain some traction.

The company headquartered in Reno is posting 25 percent sales growth year-over-year, and the sales growth is beginning to accelerate as the company steadily introduces new product lines.

But Itai Nemovicher, president and co-founder of the 18-month-old company, acknowledges OIC continues to battle long-established competitors that don’t want to see change in the sector.

The battleground: Screws and similar hardware that orthopedic surgeons use as they repair fractures or replace hips and knees.

Traditionally, some of those finely crafted pieces of hardware have cost as much as $300 for even a small screw, costs that have been borne by the patient and his insurance company.

OIC, by comparison, finds orthopedic devices that are coming off patent protection. It outsources manufacturing to FDA-approved facilities and tightly controls costs up and down the line. Until recently, for instance, Nemovicher was the company’s only employee.

A big cost-savings comes because OIC doesn’t send a cadre of marketing specialists into hospitals, says Dr. Tim Bray, a surgeon with Reno Orthopaedic Clinic and one of the founders of the hardware firm.

Marketing costs typically account for 30 percent of orthopedic hardware costs, Bray says, and device-makers often station sales representatives inside operating rooms to assist surgeons.

OIC, by comparison, has relied for its marketing muscle on the nationwide connections of Bray and Dr. Peter Althausen M.D., a Reno Orthopaedic Clinic surgeon who also holds a master’s degree in business and serves as the company’s chairman.

The company recently hired its first sales representative as it begins stepping up its marketing efforts.

“We wanted to make sure that the model worked,” says Nemovicher.

On the other hand, the company’s cautious entry into the market acted to slow its initial growth even more than its founders had projected.

Because the company initially introduced only a handful of product lines, Althausen says, OIC sometimes struggled to get in front of hospital purchasing executives who preferred to deal with fewer vendors who could deliver a wider range of products.

OIC is overcoming that with the introduction of new product lines — it’s averaging about one new product a quarter — as well as testimonials from hospitals that are beginning to post big cost savings.

One northern Nevada hospital, for instance, estimates savings of $250,000 from the use of OIC hardware, Althausen says.

That’s a message that is particularly attractive at surgical hospitals owned by physician groups or medical facilities that have agreed to share the gains from cost-savings measures with medical professionals.

“Then, there’s an incentive for savings.” Althausen says.

The privately held OIC’s first-year revenues fell short of expectations, Nemovicher says, but sales began to accelerate at the start of 2012.

The sales that the company is booking today often result from sales calls in mid-2011, OIC’s president says, as a sales cycle of six to nine months is common when hospitals and surgeons move cautiously to buy a new product from a young company.

The company’s goal is to save the health care system $1.2 billion by 2015 through sales of its products to replace higher-priced orthopedic hardware.