October 29, 2012 Issue
The Most Powerful Name In Corporate News and Information
BONESUPPORT is Focused on Developing Injectable Osteoconductive Biomaterials for the management of Bone Voids and Fracture Healing in Extremity Trauma, with Scientific Evidence Proving that their Cerament actually Remodels to Bone
Mr. Diamond joined
BONESUPPORT in January 2012 as the Chief Executive Officer. He is a seasoned
medical device executive with global experience and has worked in both
start-up and mature companies. He held positions with leading global
companies such as Laserscope, Kyphon and Conmed Linvatec (formerly Zimmer).
Mr. Diamond most recently served as the President Lumenis EMEA. He holds a BS Degree in Biochemistry and Marketing, as well as a Masters in Business Administration from Thunderbird School of Global Management in Arizona.
Mr. Offer Nonhoff comes to
BONESUPPORT from Lumenis, a world market leader in the medical laser
industry, where he was the CFO for the EMEA region for the past 3 years.
Beyond finance Offer was also responsible for Human Resources, Sales
Administration and Order Processing.
Prior to Lumenis, Offer
worked for Animation Lab, a start-up company in the high tech media space,
and many years for Siemens one of the largest medical and electronic
engineering companies in the world.
Ideon Science Park
SE-223 70 Lund | Sweden
46 46 286 53 70
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – October 29, 2012
Mr. Diamond: I have been in the device business for close to twenty years. I started my career in orthopedics then migrated into other specialties for a few years. I recently returned to the orthopedic segment as CEO of BONESUPPORT. The number one thing that attracted me to the company was the technology and the fact that BONESUPPORT fulfilled the promise of delivering a replacement for bone. Twenty years ago when I was just starting in orthopedics, many companies were looking for products that could be a replacement for bone. Many large companies have invested money in developing synthetic bone substitutes. However, none have really held true to their promise and few of them have good scientific evidence. When BONESUPPORT contacted me I was a bit skeptical. So many other companies that had put products on the market that quite honestly were not very effective. After doing extensive research, understanding the time and money spent developing the Cerament products at BONESUPPORT, looking at the scientific evidence, and talking to many physicians who have used the product, I realized that the product truly delivered a replacement for bone. It struck me that this is one of the rare instances where a company has good solid scientific evidence but has not figured a way to commercialize the product effectively. In many cases you find companies, especially in orthopedics, where they have a strong commercial organization, therefore they are able to push product through to the customer, but the products they are selling are not always sound, scientifically based products. Therefore, I saw this as an opportunity that was a little bit the reverse of what you usually see in the market. The focus here is to take all the great work that has been done over the last twelve years, all the scientific evidence that exists, and package it in such a way that allows us to bring it effectively to the market.
CEOCFO: What is it about CERAMENT™ that makes it a unique product?
Mr. Diamond: There are a few characteristics about CERAMENT™ that you should know, compared to other products. First of all, it is a biphasic product, meaning it has two types of active ingredients. These ingredients work together to first, create a scaffold or a structure in the bone where there is a defect, thus helping to keep the defect in the bone stable, and secondarily to promote an environment that allows the body’s own bone cells to grow. Within the same amount of time that the body is growing its own bone CERAMENT™ dissolves so there is no foreign material left in the body, just the body’s own natural bone. Therefore, this is very different than most other products on the market that provide a long term structure so that the bone and the defects are stable, but they do not dissolve over time. Ten years later, fifteen years later, the foreign product that you implanted is still present in the bone. There is no true bone remodeling. This is the number one difference in our Cerament product. Cerament actually remodels to bone. Scientific evidence proves this. Secondarily, most other products today, require large open surgical procedures to implant them. Either they are of powder type materials, or when you mold them together they are sort of putty, therefore you have to insert them through large openings in the skin and the bone. Cerament is an injectable product. For minimally invasive surgery, you can insert Cerament with a needle through the skin into the bone void that you want to fill. Third, because often times we will insert the product in a minimally invasive environment, it is important that the surgeon is able to see where the product is going. Cerament has a radio opacity enhancing agent inside the product itself, so that when you put it under x-ray it ‘lights up’, so the surgeon can see exactly where the product is traveling when they insert it into the bone. When you have an open surgery, the surgeon can physically see where they are putting the product, so they do not need this radio opacity enhancing or x-ray visible material, but it is critical for any minimally invasive surgery to give the surgeon a clear view of where the product is going. Those are three primary differences between Cerament and other products.
CEOCFO: What is it in the material that allows it to do its job and dissolve? Is there a key mixture or a key ingredient that you have come upon?
Mr. Diamond: Yes. The biphasic nature of the Cerament is Calcium Sulphate and Hydroxyapatite. The Calcium Sulphate is the substrate that allows you to deliver the Hydroxyapatite and the Hydroxyapatite is what stimulates the bone to grow. As the bone grows the Calcium Sulphate, over time, dissolves.
CEOCFO: Would you tell us about your various products?
Mr. Diamond: Basically, we have two products that have clearance at this time. The Bone Void Filler product which is approved and available both in the US and Europe and CERAMENT™ C Spine which is available only in Europe but not in the US at this time. The key difference between the two products is that the Bone Void Filler has a certain level of radio opacity enhancement to it. It is not the highest degree of visibility, because you do not need such a high degree of visibility when you are working in areas outside of the spine. That is one big difference. It is the amount of x ray visibility agent in the product; to put it in laymen’s terms. Also, when you are operating on the spine the material another difference is found in setting time, which is the time in which the product sets and hardens, and the working time, the time in which you mix the product. These times vary for different indications. There is a different chemical component for CERAMENT™ C Spine than for the Bone Void Filler which effects the working time and the setting time of the product, depending on the application, whether it is used in spine or not in spine.
CEOCFO: Who has taken notice so far? How are you getting the general public and more of the medical profession to pay attention?
Mr. Diamond: We have two strategies on the commercialization front. Let’s start with the US market first, and then we will talk about markets outside the US. In the US, today the reimbursement and regulatory environment is such that in standard clinical practice more and more surgeons are accepting the use of synthetic materials in bone replacement surgery. The burden of proof to convince the surgeon to change their surgical practice is very low because they have already begun to adopt our type of products in standard clinical practice. The most important factor in gaining penetration in the US market is to choose the right partner who has the best relationships with the orthopedic surgeons. Over the last six months we have made a concerted effort to map out the potential commercialization partners in the US market. We narrowed that down to a very small list. We were in discussions with two companies and just finalized an agreement with Biomet Inc. As many of your readers who follow the orthopedic business may know, Biomet is one of the top five orthopedic companies’ worldwide. They now have exclusive distribution of our product in North America; that being the US and Canada. That is for our Bone Void Filler product in applications for general orthopedics, trauma, ankle and foot surgery and sports medicine. In the US market Biomet is really our connection to getting the word out about the product, because they have very strong relationships with key physicians in the US at the hospital level and a very large sales network. Now, primarily in Europe, which are the other markets that we are involved in, that is a different scenario. With the exception of the UK and France the majority of the European markets today have not adopted synthetic bone as a viable replacement to regular bone in bone replacement surgery. There, the burden of proof is on the company to create awareness about the product and to really change the standard of care in how physicians treat these defects. Therefore, what we have done is set up a direct sales / clinical support network in Germany. Over the last ten months to a year we have been engaging key opinion leaders and centers of excellence to begin clinical studies on our technology, comparing Cerament to the standard of care which today is autologous, or the persons own bone, and then proving the clinical efficacy of our product within the health care system as well, so that they understand there is an economic value to using our product. That is one thing that we are doing that is primarily CERAMENT™ focused. There are two other strategies that we are bringing forward in the European market. The second one is to partner with strong distribution organizations that have presence on a regional level and that are able to combine our products in a sale with other products that they are selling, such as hardware products in trauma. That then allows our products to be pulled through into the sales channel along with other products that may be used in the same surgery. The third thing that we have done, which I think is probably the most exciting, is undertaken focused efforts on new product development and we are expecting to receive shortly, before year end, approval to sell an antibiotic mixed version of our product, which will be ideal for use in orthopedic infection surgery. These new technologies which we consider disruptive or breakthrough technologies, will gain the interest of the physicians so that they will come and seek us out, which will help accelerate adoption of our products in the European market.
CEOCFO: Where is the product manufactured? Is it a difficult process?
Mr. Diamond: We manufacture the product here in Lund, Sweden. There are several sub-manufacturing steps involved. It is a very technical process, as you need to get the exact ratio of ingredients correct. Once the exact ratio of the ingredients is correct, then the process is very reproducible. There is a technical scientific component early on in the manufacturing process to ensure that the biphasic nature and the ratio of Calcium Sulfate to Hydroxyapatite is respected, to make sure that we also have the right ratio of contrast agent, so that when you mix it all together you get the right properties every time. In fact, one other thing that your readers might be interested in knowing is BONESUPPORT is probably one of the few companies in the space of Orthobiologics that has a significant number of PhD biomaterial scientists on staff. We have an excellent understanding about how to manufacture these products and make sure that, consistently, the physician gets a reproducible result when they use the product. That does require a lot of technical know-how.
CEOCFO: Offer, I see that you are also new to the company. What attracted you to BONESUPPORT?
Mr. Nonhoff: I was attracted by Lloyd proposing this opportunity to me and the fact that this company really has a proven track record of twelve years in scientific research on the product. Lloyd and I have a history working together, so knowing the management style, sharing the same vision and having respect for each other were also contributing factors.
CEOCFO: There has been some fairly recent financing. Are you funded to get through the next steps?
Mr. Nonhoff: Yes. We are funded to be completely independent and to commercialize the product and reach a positive cash flow.
CEOCFO: Do you find that the investment community in general has been receptive? There are tough times everywhere in that area.
Mr. Nonhoff: Times are very tough. In general it is difficult. There are many companies with great ideas looking for money. However, we have had strong interest in our company and products and I believe that is a reflection of the scientific evidence and the efficacy of our products.
CEOCFO: In general, what do you see as the biggest challenges as you execute your strategy? How are you ready?
Mr. Diamond: One is on the front of new product development. The second is the time that it takes to develop markets where you are changing clinical practice, or the standard of care. I will start with the second point first. In the US market we are now set. We have a top notch partner. They have the right relationships. We don’t have to change the standard of care. Doctors have already accepted the product in the US market. Now it is just a matter of working closely with Biomet to ensure that we get maximum exposure within their product portfolio. BONESUPPORT outside of the US it is more of an unknown and like anything else you have revenue plans and projections that you put in place. However, there may be major changes in the European reimbursement environment. Perhaps the economy does not improve as quickly as economists hope it would and that may negatively effect how quickly physicians adopt our technology. That eventually may push sales out. We can mitigate that risk by having the right partners, but it is a risk. The bigger risk I see is not investing in development and taking our core technology into areas where we really think we can get an excellent return. As I mentioned earlier, we are now impregnating our product with antibiotics. The first product will be coming out on the market in Europe before year end. However, there are other types of additives that may also be good when mixed with our product; such as bone morphogenic proteins, stem cells, or anticancer agents. Our product is a very stable product to carry other types of drugs into the body. Therefore, if we have good funding and we are able to reinvest the monies, we can push our development platforms further. That is another risk that I see – although it is more from the perspective of forgone opportunity.
Mr. Nonhoff: I think there is another obstacle. New technologies are coming to the market and the markets become very tight. Teaching the market to use our product is a huge challenge in conjunction with competing technologies.
CEOCFO: Given the background that both of you have in commercialization and knowing how to do it, why should people pay attention to BONESUPPORT today, from an investment perspective.
Mr. Diamond: I think that it is very rare that you have a company in medical devices that has taken twelve years, fifty million euro of private and institutional money, venture money and European grant money, to really develop a solid products with sound scientific substantiation. The high-risk part is over. The more secure investment is the company that has a disruptive technology that has been proven, where there has been a lot of time and money spent in scientific research and development of a product in a market segment of high growth. Our product has been substantiated. We are your present in a market environment that is growing and cutting edge. Orthopedics is still a growing market – very much so. Biologics is one of the fastest growing markets within Orthopedics, because physicians are looking for better technology, less invasive technology, and the payers are looking for a better health economic proposition. We are in the right segment and our product answers that need. Not only are we a sure investment, but I believe we have the right product at the right time in the market.
I strongly agree with
what Lloyd said. This company has been around for twelve years, with the
same major investor during much of that time. You will rarely find this
level of commitment in today’s world. Normally, after two years, investors
will tell you, “bye-bye”. They do not have patience today. They are not
committed. Here you see something completely different, which I have not
seen in my previous experiences. This is a level of commitment that reflects
the value of the technology and the promise to change the standard of care.
This is the number one difference in our Cerament product. Cerament actually remodels to bone. Scientific evidence proves this. - Lloyd Diamond
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