Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
The Birth of an Industry
This chapter is devoted to the birth and growth of the neuromodulation industry and the maturation of commercial products that accompanied the industry’s development. We will first take a look at some of the key events that highlighted the early years of the industry. Next, we will examine how the industry matured in the first 16 years of the 21st century. Then we will examine some of the business and marketing factors affecting the industry. The chapter will conclude with a look forward on what lies ahead for the neuromodulation industry.
Early Neuromodulation Devices
In many ways, the neuromodulation industry traces its roots to the birth of the cardiac pacing industry. Although many of the indications and clinical specialties addressed by today’s neuromodulation industry are quite distinct from those of the cardiac device industry, much of the basic technology, including electrodes, batteries, leads, and packaging, is common to both industries.
The first implantation of a cardiac pacemaker in a human patient took place in 1958, but the first long-term successful implant took place in 1960, when William Chardack, Andrew Gage, and Wilson Greatbatch implanted a device that remained in operation for a year. In 1957, Earl Bakken ( Fig. 141.1 ), the founder of Medtronic, Inc. (Minneapolis, MN), had invented a functional battery-powered pacemaker and Bakken and Greatbatch would later collaborate on the manufacture of a commercial device. The earliest implanted pacemakers were simple two-transistor circuits powered by mercury-zinc cells. Later, Greatbatch switched to a lithium iodide cell, which provided much longer lifetimes.
Medtronic remained the dominant player in the cardiac pacemaker for the next four decades, and leveraged its expertise in cardiac pacemakers to emerging applications in neurological diseases and disorders. The company’s first forays into neuromodulation in the 1960s involved early deep brain stimulation (DBS) systems and spinal cord stimulation (SCS) systems.
The first clinical use of SCS for treatment of pain took place in 1967, when C. Norman Shealy implanted an SCS (at that time, called dorsal column stimulation, or DCS) system in a 70-year-old man ( ) based on the gate control theory of and the pioneering clinical work of . J. Thomas Mortimer ( Fig. 141.2 ), from Case Western Reserve University, constructed the first device for Shealy. The external stimulator was connected to the electrodes via a subcutaneous jack. SCS systems went through a series of enhancements over the next four decades, including the development of single-electrode radio-frequency controlled systems in 1972 by Avery Labs (Avery Laboratories, Inc., Comack, NY) and Medtronic, and the development of epidural electrodes in 1978.
In 1981, Cordis (Miami Lakes, FL), now a Johnson & Johnson company, introduced the first totally implantable SCS system. It was powered by a lithium battery. The IPG was packaged in a hermetically sealed titanium case and allowed control of stimulation parameters. In 1984, Medtronic introduced its Itrel IPG for SCS.
Originally, SCS systems used unipolar electrodes. Later, more complex electrode systems were developed, starting with a four-contact electrode, the Quad electrode, introduced by Neuromed in 1981. In 1986, Neuromed, which later became Advanced Neuromodulation Systems, Inc. (Plano, TX) and is now part of St. Jude Medical (St. Paul, Minnesota, MN), introduced an eight-contact radio-frequency controlled SCS system. In 1999, ANS introduced its 16-contact Renew RF system and Medtronic introduced its Synergy IPG, which featured eight contacts with two channels of stimulation.
Outside of SCS, one of the first commercial neuromodulation devices to reach the market was the breathing pacemaker system from Avery Labs, which received US Food and Drug Administration (FDA) approval in 1986. The company’s founder, Roger Avery, had built several prototypes in the 1970s based on the work of William Glenn from Yale University.
Medtronic has been the only manufacturer to market a DBS device for neuromodulation, though other vendors are expected to enter the market shortly. The first implantation of a DBS system took place in Grenoble, France in 1987, and Medtronic received approval to market its system in Europe in 1995. The FDA approved thalamic DBS for treatment of tremor in 1997. In 2001, the FDA approved DBS in the subthalamic nucleus and in 2002 the FDA approved Medtronic’s Activa therapy for bilateral treatment of Parkinson’s disease.
The 21st Century Neuromodulation Industry
After the year 2000, the neuromodulation industry was marked by increased competition, the development of new forms of stimulation, and a wide expansion in the number of neurological diseases and disorders treated. The first 16 years of the 21st century produced a number of key milestones for the neuromodulation industry. A look back at some of the articles published in the industry newsletter Neurotech Business Report since its inception yields an enlightening overview of important developments, which are summarized in the next section.
2001
One of the key industry events in 2001 was the sixth annual conference of the International Functional Electrical Stimulation Society (IFESS) meeting in Cleveland. The five-day event, themed “Envisioning a New Century of Breakthroughs,” highlighted six “millennium” papers on key areas of neurotechnology, a truly international assembly of presenters, a small but solid core of manufacturers and sponsors, and several unique attributes not often found at a scientific or engineering meeting. These “millennium papers” were published in Neuromodulation: Technology at the Neural Interface , Journal of the International Neuromodulation Society (INS) and IFESS.
Exhibitors and sponsors at the event included several of the early manufacturers of neuromodulation products and systems. NeuroControl Corp. (Valley View, OH) showed its FreeHand hand-grasp prosthesis, the VoCare bladder stimulation system, and a new miniaturized multichannel programmable stimulator call StIM. The device was targeted at stroke patients suffering from shoulder pain caused by the separation of the shoulder joint and weak muscles after stroke.
Medtronic, the largest corporation in the business, promoted its InterStim urinary control system and DBS product line. Cleveland Medical Devices (Cleveland, OH) showed its BioRadio 110, a compact and wireless brain monitoring device. EIC Laboratories (Norwood, MA) exhibited its range of electrode coating products and services, which work with gold, platinum, silicon, iridium, and other materials. Empi (Empi, Inc., St Paul, MN) showed its line of stimulators for pain treatment and neuromuscular rehabilitation. NeuroStream Technologies (Anmore, British Columbia, Canada), a Canadian manufacturer that would later be acquired by Victhom Human Bionics (Saint-Augustin-de-Desmaures, Quebec, Canada), showed its line of implantable NeuroCuff interfaces, which accommodate electrodes as well as catheters for fluid infusion. Neopraxis Pty Ltd, an Australian firm (Sydney, New South Wales, Australia), promoted its 22-channel Praxis stimulator, targeted at paraplegic patients. Advanced Bionics Corp. (Valencia, CA), one of the leaders of the cochlear implant business, promoted its line of Bion leadless stimulators.
2002
As 2002 came to a close, the neuromodulation industry looked back on a paradoxical year, a year filled with exceptional triumphs in technology developments and depressing financial and economic news from the commercial enterprises in the field. For example, the latter months of 2002 witnessed staff reductions at Aspect Medical Systems, Inc. (Norwood, MA) and Axon (Newton, MA), flat sales at Bio-logic Systems (Mudelein, IL), and the demise of Symphonix (San Jose, CA).
Other examples of bad news in the industry were microHelix’ (Tualatin, OR) decreased revenues and 4-D Neuroimaging’s (San Diego, CA) failed merger with Neuromag (Helsinki, Finland). And the functional electrical stimulation field was still reeling from NeuroControl Corp.’s decision to discontinue marketing its FreeHand hand-grasp stimulator.
But 2002 was not without bits and pieces of good economic news. Several start-up neuromodulation firms received first- or second-round infusions of venture capital at a time when other technology industries were hard-pressed to get attention from VCs. The most noteworthy examples: Vertis Neuroscience, later renamed Northstar Neuroscience (Seattle, WA), received $37 million in funding, Optobionics Corp. (Wheaton, IL) received $20 million, Sleep Solutions, Inc. (Palo Alto, CA) received $7 million, and Cyberkinetics, Inc. (Foxborough, MA) received $5 million.
Several public companies also showed improving financial results—some with record performance—including Advanced Neuromodulation Systems, Cyberonics, Cochlear Ltd. (Lane Cove, New South Wales, Australia), and Integra NeuroSciences (Plainsboro, NJ). Merger and acquisition activity during the year included Compumedics’ (Abbotsford, Australia) purchase of Neuroscan Labs (Sterling, VA), Bionic Technologies’ (Salt Lake City, UT) merger with Cyberkinetics, and Encore Medical Corp.’s (Austin, TX) purchase of Chattanooga Group (Hixson, TN).
Significant FDA product approvals reported during the year were Vertis Neuroscience’s percutaneous stimulation system, Medtronic’s Activa DBS therapy for Parkinson’s, and ANS’ Genesis implantable pulse generator. Some good news also came on the reimbursement front, including favorable Medicare decisions or recommendations on magnetoencephalography, functional electrical stimulation, and implanted stimulators.
Still, the overall financial picture for the neuromodulation industry in 2002 was not as favorable as was the technology development outlook. Significant progress was made in a number of early stage and more mature product categories, including microstimulation systems, electrode development, cortical control systems, visual prostheses, and stroke rehabilitation devices.
2003
In 2003, the editors of Neurotech Business Report chose to single out a few individuals and organizations for special recognition. The result was the somewhat impromptu “Gold Electrode” Awards, which were intended to add some profile to the industry. Synapse Biomedical’s (Oberlin, OH) diaphragm pacing system was selected as the best new product of the year, and Afferent Corp. (Providence, RI) was named the most promising start-up firm.
There were several events in 2003 that stood out as significant developments for the neuromodulation industry. The first was the implantation of a diaphragm stimulation system in actor/activist Christopher Reeve in February. Reeve was just one user, and the potential market for the device was not huge. But the fact that he was willing to undergo the procedure, and became a vocal proponent of the device, is significant if for no other reason than that he had previously not been a major proponent of functional electrical stimulation devices as a treatment for paralysis.
Another key event of 2003 was Medicare’s decision to cover DBS for treatment of tremor and Parkinson’s disease. Reimbursement continued to be a major hurdle confronting the neuromodulation industry, but the relative speed with which this decision followed FDA approval of DBS treatment for Parkinson’s disease was a positive sign.
Still another major development in 2003 was the progress Cyberonics made in obtaining FDA approval of its VNS therapy for treatment of drug-resistant depression. Though, as later years would reveal, the process was far from over: the positive research results and an early indication from the FDA that a timely decision was forthcoming were encouraging signs. Aside from the sheer market size of this application, it was significant because in penetrating even a portion of the mood disorder market, Cyberonics may well have demonstrated to other neuromodulation device manufacturers that they can compete in markets where the pharmaceutical industry appears to have a firm grip.
While venture capital investment was not rampant in 2003, there were enough deals done to give hope to start-up firms. Perhaps more significant was the fact that major medical device manufacturers, including Boston Scientific (Natick, MA), Medtronic, Guidant (St Paul, MN), and Johnson & Johnson (New Brunswick, NJ), showed signs that they were looking closely at this market.
2004
As years go, 2004 was better in many respects than the three that preceded it. From a financial standpoint, the biggest news was undoubtedly Boston Scientific Corp.’s purchase of Advanced Bionics Corp., a deal that would prove to be worth more than $2 billion. This valuation profoundly affected the venture capital community’s perception of the neuromodulation industry. Probably the biggest disappointment of the year was the FDA’s decision to ignore its own neurological devices panel recommendation and deny Cyberonics’ PMA Supplement for VNS treatment for resistant depression.
But between these two extremes, there were a number of significant developments in 2004 that continued to highlight the maturation of the industry. The establishment of the National Science Foundation Engineering Research Center for Biomimetic Microelectronic Systems (Los Angeles, CA) was one such development, as was the announcement of a new advanced prosthetics program at DARPA’s Defense Sciences Office. The National Institutes of Health’s first Neural Interfaces Workshop, which merged the Neural Prosthesis Workshop with the DBS Consortium, was another highlight.
On the technology front, there was significant progress in areas such as EEG interpretation, brain–computer interfaces, cortical stimulation for stroke rehabilitation, DBS, magnetic stimulation, neural-silicon hybrids, retinal implants, neurorobotics, and controlling neural growth. New product categories that emerged in 2004 included occipital nerve stimulation systems, rechargeable SCS systems, and navigated brain stimulation. New entrants in the industry were prosthetics vendor Innovative Neurotronics, Inc. (Bethesda, MD), implantable probe supplier NeuroNexus Technologies (Ann Arbor, MI), neurorehabilitation firm Restorative Therapies, Inc. (Baltimore, MD), and neurorehabilitation firm Bioness, Inc. (Valencia, CA). Initial public offerings included NeuroMetrix (Waltham, MA), which brought in $24 million, and Stereotaxis (St Louis, MO), which fetched $40 million.
You're Reading a Preview
Become a Clinical Tree membership for Full access and enjoy Unlimited articles
If you are a member. Log in here