SmartTRAK’s Top Trends in Sports Medicine

Trend #1: Consolidation on a Large Scale Done, Mostly Tuck-In Acquisitions Going Forward

Now that the Zimmer Biomet merger is a done deal, the number of major players in the arthroscopy/sports medicine market has dwindled to a mere five. Consolidation has already hit this market with Smith & Nephew’s (S&N) $1.6B acquisition of Arthrocare in 2014 and CONMED’s partnership with MTF’s Sports Medicine subsidiary in 2012. Interestingly enough, Medtronic inherited a line of soft tissue fixation devices from their recent purchase of Covidien, however, it is not certain what the Company will do, if anything, with these products. As a result of these recent take-outs, exhibitors on the floor of the American Association of Sports Medicine (AOSSM) meeting in Orlando in July were noticeably fewer with the usual suspects, Arthrex, S&N, Zimmer Biomet, and Stryker, only getting larger. M&A going forward will likely result in smaller deals such as Stryker’s 2013 acquisition of hip arthroscopy developer, Pivot Medical, as companies look to fill gaps in their product portfolio.

Trend #2: Clinical Outcomes Data Combined with Payer Pushback is Leading to Return to Autologous Tissue Grafts for ACL Reconstruction

The use of an allograft vs autologous tissue for ACL replacement saves OR time as well as potential patient morbidity at the graft harvest site. However, there is no additional code allowing for reimbursement to cover the cost of a tendon allograft within the procedure reimbursement rate, so financially there is pressure to perform autograft vs allograft reconstruction.

Surgeons now too are finding the scale tipping to autograft due to a clinical advantage as well as a financial one with recent studies reporting a higher rate of revisions when allografts are used. One such study of matched patients receiving either allograft BPTB or autograft BPTB for ACL reconstruction reported no significant difference in outcomes based on graft type, with patients expressing a high degree of satisfaction regardless of the graft. Of note was a higher revision rate in the allograft group at a mean of 5 years post-implant.

Another assessment of a retrospective cohort from the Kaiser Permanente ACLR Registry identified the overall adjusted risk for revision is 4.5x higher with BPTB allograft than BPTB autograft. The authors report that whether the allograft was irradiated w/ high or low dose, chemically processed, or not processed at all made little difference in the risk of revision.

Trend #3: Continued Strong Growth in RCR Procedures Forecasted

The largest segment of the US Soft Tissue Fixation market, shoulder repair continues to experience robust growth—faster than knee ligament and meniscus repair—in spite of being a mature market with significant pricing pressures. According to SmartTRAK data, rotator cuff (RC) repairs account for 69% of all shoulder soft tissue fixation procedures performed in the US in 2015. Growth of the RC repair market is attributed, in large part, to a more active, aging population and development of smaller suture anchors that allow for additional points of fixation with limited anatomic footprint. The US Rotator Cuff Repair market, estimated at $482MM in 2015, is projected to reach $625MM in 2019E, a CAGR of 6.7%. Single row repairs are increasing at a higher rate (7.5% CAGR) than double row repairs (5.9% CAGR) due to pricing pressures, availability of anchors with multiple pairings of suture, and lack of definitive evidence showing significant benefit vs double row repair.

While most recent versions of suture anchors have been loaded with high-strength suture, "tape" appears to be the next generation for fixation with suture anchors. Similar to Arthrex's FiberTape and LabralTape, S&N is now playing in the market with the launch of UltraTape. There was talk that Stryker will follow suit in the near future. TeleFlex, who distributes suture products to Tornier, Stryker  and S&N, recently received 510(k) clearance for a "tape-type" suture, but we have yet to see whose anchors they will end up in.

With reverse shoulders offering another option for severe tears, OrthoSpace, a young Israeli company, is in IDE trials in support of a PMA with the InSpace balloon, a minimally invasive method for treating patients with cuff atrophy. The balloon is placed beneath the bursa in the shoulder and inflated depressing the humerus into proper position. Arthrocare, now owned by S&N, and Healthpoint Capital are investors in the company. Figure 1 projects US soft tissue fixation procedures by market segment from 2014 – 2019E.

Trend #4: Meniscus Repair Making a Comeback as New Findings Show Tears in the White Zone May be Repairable

Ceterix’s NovoStitch has started a movement to show that there are many additional meniscal tear patterns amenable to repair than once thought. Arthrex is following suit with the recent launch of the Knee Scorpion and SpeedCinch meniscal repair device. [Zimmer Biomet’s JuggerStitch has recently also received 510(k) clearance for meniscal repair. With the industry driven conversation about the expanded indications for meniscal repair and the launch of several new products, meniscal repair procedure volumes are projected to grow, along with a shift in market share away from S&N. According to SmartTRAK projections, S&N is currently the US market leader in meniscal repair with revenues of $59.1MM in 2014 and 58.2% market share.

Trend #5: Adjustable Loop Femoral ACL Fixation Surpasses Fixed Loop Technologies While Sheath & Screws Systems Gain Popularity for Tibial Fixation

Due to ease of use, reliability, and a recent study showing adjustable loop implants are comparable to continuous loop devices for femoral fixation along with a shift towards soft tissue ACL grafts, Arthrex’s TightRope is running away with this market. Arthrex is currently the US market leader in knee ligament repair with $84.6MM in 2014 and 36.1% share according to SmartTRAK estimates. Although having only 2% overall soft tissue fixation market share, Stryker Sports Medicine released an adjustable loop, cortical fixation product called ProCinch in August 2015. Due to the small size of the sales force compared with Arthrex, ProCinch is not expected to take a large amount of market share from Arthrex, but is expected to convert business from fixed loop users due to surgeon demand and ease of use.

It has long been known that tibial fixation of ACL grafts is the “weak point” of the repair and a likely source of ACL graft failure. Previously, interference screws alone or with secondary fixation from a post and washer or off-label use of knotless suture anchors was the gold standard for tibial fixation in ACL reconstruction. DePuy Synthes was the first to market with the Intrafix screw and sheath system which offers graft compression against the tibial tunnel walls for enhanced tendon to bone healing, circumferential fixation points, and graft protection during screw insertion. According to SmartTRAK, while interference screws are still the most used form of tibial fixation in ACL reconstruction, sheath and screw systems continue to gain popularity and are currently used in 20% of cases.

DePuy Mitek's INTRAFIX holds >50% share in the screw and sheath market, with the remainder shared by Cayenne's AperFix, Arthrex’s GraftBolt, and Zimmer Biomet’s TunneLoc.

Trend #6: Biological Augmentation to Enhance Time-to-Healing Will Take Center Stage

Biologic regeneration therapies such as PRP, BMAC and amniotic tissue-based products are gaining traction and, increasingly, being used as a first or second (after steroid or HA injections) option to treat shoulder and knee pain. Additionally, PRP is often used as an adjunctive therapy to rotator cuff surgical repairs intraoperatively. While it is known that these biologic products contain growth factors and stem cells that have the potential to accelerate healing, the exact mechanism of actions of these products for each indication is still under investigation. However as more evidence emerges, there is strong optimism and belief that biologics have a role in orthopedics. Products such as the Harvest/Terumo Harvest PRP, Arthrex Angel and Zimmer Biomet’s GPS III PRP products are among leaders in this arena. At a per procedure cost ranging between $2K to upwards of $7K per treatment, today this is largely a self-paying market. As a result, companies are flocking to get a piece of the action by marketing autologous cell-based systems—even though clinical evidence supporting their use is still emerging.

The human amniotic membrane has been shown to have anti-adhesive and anti-inflammatory properties. Grafts derived from human amniotic tissues were originally used for burn and ophthalmic indications, and now have found their way into clinical areas ranging from urology to neurology, plastic surgery and orthopedics and beyond. Sports Medicine surgeons utilize amniotic membranes to augment and protect tendon repairs intraoperatively in upper and lower extremities. In addition to membranes, multiple companies offer flowable and micronized versions of amniotic tissue products which allow percutaneous injection to the target site. Nationwide, facilities are offering amniotic stem cell injections as treatment for pain associated with OA and tendonitis in the foot, ankle, knee, elbow, shoulder, and other painful joints. While a handful of clinical trials have been undertaken, there is little clinical evidence to support use in these areas, however surgeons and patients alike seem to tout the regenerative benefits of amniotic derived stem cell therapies. Similar to PRP injections, amniotic injections are often times used as a less invasive alternative to try prior to resorting to a surgical intervention. Like autologous stem cell treatments, all amniotic derived therapies in the orthopedic space are considered investigational by payers, however, self-pay patients are readily demanding and investing in these procedures, with industry and physicians happy to supply.

Trend #7: Extremities is Next Frontier in Soft Tissue Fixation Arena

Most companies in the Sports Medicine arena have been selling soft tissue implants to sports medicine surgeons who are focused primarily on the shoulder, knee and hip. With increased attention on the Extremities market, makers of extremities hardware have added soft tissue implants to their sales reps’ bag to tap into this once overlooked market. The development of small knotless anchors such as Zimmer Biomet’s Juggerknot and S&N’s Fast-Fix are finding application in the Foot & Ankle space for ankle instability and in the Hand, Wrist & Elbow for TFCC and collateral ligament repair.

Trend #8: New Cartilage Replacement Technologies

While allogenic-derived cartilage replacement products have skirted FDA stringent PMA/BLA approval process, they have not gone unnoticed among insurers who are questioning reimbursement of these products. Meanwhile, several cartilage replacement products are making their way through the rigors of FDA trials including Vericel’s MACI, ISTO’s Revaflex, Histogenics’ NeoCart, Aesculap’s NovoCart, among others, who will be armed with clinical data to address payers’ concerns. The jury is still out on whether these products regenerate the real deal -- Type III hyaline cartilage -- or an inferior scar-like tissue known as Type II cartilage.

Trend #9: Hip Arthroscopy Continues to Grow at the Fastest Pace

The fastest growing segment of the US Soft Tissue Fixation market, hip soft tissue repair continues to experience robust growth—faster than shoulder and knee. Growth of the labral repair market is attributed, in large part, to a more active and aging population, clinical research showing improved outcomes with labral repair vs debridement, the development of smaller suture anchors that allow for additional points of fixation with limited anatomic footprint, and increased industry focus on hip arthroscopy through new technologies and surgeon education. Innovations in hip labral repair include: new methods for joint access via distraction and surgical navigation as well as curved, flexible, thinner and longer instrumentation. The 2015 US Hip Repair Fixation market is projected to reach approximately $81MM in 2015, increasing to $158MM in 2019E, with a CAGR of 19.2%.

Trend #10: New Technologies for Meniscal Preservation On the Horizon

With the recent reversal of FDA’s decision regarding Ivy Sports Medicine’s CMI collagen meniscal scaffold, it is likely that other implants for partial meniscal replacement will appear on the scene now that only a 510(k) with clinicals is required for clearance. Orteq’s Actifit, now owned by UK cartilage developer, CellCoTec, has been on the EU market for several years and has approved IDE to begin US trials. SmartTRAK estimates the US Cartilage Replacement market will soon go into high gear when newly approved products launch in the 2017-2018 time frame reaching $130MM by 2019.

Rather than partial replacement, Memphis-based Active Implants is focused on replacing the entire meniscus with its NUSurface polyurethane implant. Currently in IDE trials and enrolling patients at 9 US sites in the VENUS PMA trial, the Company commenced a second study in June, the [SUN](https://clinicaltrials.gov/show/NCT02483988) (Safety Utilizing NUSurface) Clinical Trial, a multi-center, single-arm, prospective, open label, non-randomized, observational study to gather safety & probable clinical benefit data in 118-pts previously treated with a medial partial meniscectomy. Enrollment is expected to begin in September. Leading researchers believe that the meniscus may be the most important joint structure to salvage given studies linking partial meniscectomy to OA. In fact, the paper receiving the Cabaud Award at this year’s AOSSM, found that at the time of partial meniscectomy, articular cartilage and meniscus exhibited molecular events associated with OA despite no gross evidence of degeneration in the knee. The authors concluded that these findings identify early effects of meniscus injury on meniscus and articular cartilage, which likely lead to the development of knee OA.