CEO with pharma background sees a growing future for hybrid medical devices.
Biense Visser is a CEO with a green thumb. After becoming head of De Ruiter Seeds in 2002 he grew the company through 2008 before selling it to Monsanto for $860 million. A pharmacist by training, Visser already had a flourishing reputation in the generics drug industry when he decided to oversee De Ruiter’s hybrid vegetable seeds business.
At De Ruiter Visser used his pharmaceutical expertise to improve the IP holdings of the family-run Dutch firm before the agribusiness giant and its checkbook came calling. Looking for a new challenge, in January 2009 Visser left De Ruiter to become president and CEO of aap Implantate. Board members of the small Berlin-based healthcare products company had taken notice of Visser’s front-page success with the seed company, he says. The new CEO pruned aap’s overgrown product line to focus on trauma devices and biomaterials for orthopedics applications. The company now specializes in plating systems, cannulated screws, and bone cement for trauma treatment and spine repair.
|Biense Visser, CEO of aap Implantate|
The aap product line features the LOQTEQ compression system for the femur, tibia, and humerus. LOQTEQ is available in Europe, and aap expects to introduce it in the United States soon. In other developments the company recently signed an agreement with Integra Lifesciences Holding of Plainfield, NJ, for aap’s stainless-steel compression screw system. In March aap also closed a $2.8-million licensing deal with a leading medtech company for injectable bone matrix products. The Berlin device manufacturer reports double-digit growth for the first half of FY12.
At aap Visser is exploring hybrids of a different sort, touting the tremendous business opportunities in the hybrid device market. Visser says his interest in combining devices and drug delivery began to grow when friends at Teva Europe, where he was CEO from 1999 to 2002, left the company to join a couple of Israel-based hybrid start-ups.
A 1978 graduate of Utrecht University with a degree in pharmacy, Visser received an MBA from Nijenrode University in 1990. His wide-ranging executive experience includes serving as director of the Central Laboratory of the Blood Transfusion Service of the Dutch Red Cross from 1979 to 1986.
Driving from the airport in Amsterdam on his way to visit a factory the next day, Visser pulled over to the berm for an intercontinental chat with MDDI. Amid the occasional whoosh of traffic the busy executive discussed his path to the device industry, the prospects for hybrid products, regulatory concerns, materials challenges, and the recent Supreme Court ruling on the Affordable Care Act.
MDDI: Why did you leave De Ruiter to become CEO of aap Implantate?
Biense Visser: I was educated as a pharmacist, and after finishing university I joined the pharmaceutical industry and worked in generics for quite some time. As president of Teva Europa, I was deeply involved in the generics industry, not only in Europe but also, for example, in the United States. I was of the opinion that I had assessed the generics business from multiple perspectives, and I was looking for a new challenge.
So I went to a family-owned seed business, De Ruiter Seeds. I managed that for five years, and I brought some of my experience of the pharmaceutical industry to that company. One of the things we did was professionalize the IP portfolio. After five years Monsanto came to notice the company, and they bought it for $860 million. And then I was open for a new challenge in the life sciences industry. That is how I arrived at aap.
MDDI: Did you find them or did they find you?
BV: They found me. In Europe I was at that point in time a well-known pharmacist, and when the deal was made with Monsanto it made the front page of the European Wall Street Journal and some of the guys sitting on the board of aap gave me a call and said, “Why don’t you join us?” I gave it a thought and said, “Why not?”
MDDI: Did the idea spark in your mind that you could combine your pharmaceutical expertise with device development? Was that part of your thinking when you sought the new challenge you were talking about?
BV: It came to my mind. First of all, I was very curious to see what was going on in the medical device industry and what the similarities were, but also what the differences were. I assumed more or less that the medical device industry would observe similar trends as pharmaceutical [with] more and higher regulatory demands, and I thought perhaps I could share my knowledge and know-how with these people like I did earlier in the vegetable seeds industry and perhaps to its benefit. I got a real deep understanding of the opportunities only when I started to work for aap.
MDDI: Was there any one point when the hybrid idea really took root in your mind?
BV: You know, Teva is a well-known pharmaceutical company by now but some of my friends at Teva left and they joined start-up companies in Israel like Polypid or Collplant, and they were also actively working on hybrid products, for example controlled release of antibiotics or bone-promoting factors from a certain background. That is how I deepened my understanding and also deepened my understanding of the opportunities.
MDDI: Would you have worked with another device company in order to do what you wanted to do in your career? Or was aap a good fit for you?
BV: I evaluated along different perspectives. One of the perspectives was that it was medical devices. Another one was that the company was a small one, and I wanted to see whether I could help to grow that company. The financial situation of the company in 2008 was terribly bad. It had high debt, it had losses. Also from a managerial point of view it would test my competencies to see if I could lead such a company. And, of course, there was the very attractive aspect that it was based in Berlin.
MDDI: Generally speaking, what types of trauma could be treated using a hybrid device?
BV: Basically, trauma devices are used for repair when the bone is broken or something more complicated [happens]. One of the things that comes to your mind is what we can do to improve healing. You can think of not only improving the material as such or the implant as such but to add, for example, an antibiotic coating in order to prevent infections. You can also add bone-promotion factors that will improve the healing so that you have quicker healing.
So it makes sense not just to use steel or titanium but to add materials in order to improve the healing process. Surgeons will like it, and of course the patients will like it, and if you do these types of additions, you also save on healthcare costs in my opinion.
MDDI: Are there any technological challenges developing the hybrid applications you just described?
BV: If you look at the titanium business the combination of an implant with coating is not yet standard. We at aap are working on a combination of products with silver coating; also other companies are working on that. For example, Polypid is working on the controlled release of antibiotics and growth-promoting factors. We’re still in the early stages, but I think apart from the regulatory hurdles that we may encounter it can go rather quickly. We’re talking perhaps a three- to five-year period, maximum.
MDDI: You mention regulatory concerns. Do you think these issues will be difficult for these particular types of devices?
BV: What I know to say first of all is that there are differences between the European authorities and U.S. authorities. Second, I know that there is a debate going on, and of course you can have all types of regulatory discussions about whether a trauma product with an antibiotic coating would be a medical device that would qualify for a 510(k) or that it would be a generic product that would use a PMA approach. The regulatory path for hybrid products is not clear.
Apart from that more or less bureaucratic discussion I think that people also will judge the pragmatic effect of it. But we’re all convinced that we definitely need for these medical devices clinical evidence to really prove that they work—that what you claim as an improvement is really delivered. There will be discussions ongoing. Yes, regulatory will be a hurdle, but I think that the interests of the patient, the industry, and the regulatory authorities will be aligned and that they will find consensus.
MDDI: It seems to me you’d have to bring the regulatory authorities into the conversation as you develop these devices to keep them abreast of what’s happening and what your goals would be.
BV: I completely agree. That’s also actually happening.
MDDI: Shifting gears, the LOQTEQ plating system is not available yet in the U.S. When will that be happening?
BV: We filed the first four plating systems at the end of 2011/early 2012, and we expect approval basically for the first four systems during the third quarter of this year, the [fiscal] quarter that just started.
MDDI: It should be a pretty smooth introduction for the U.S.?
BV: For the regulatory it is a rather straightforward path.
MDDI: On the business side what has been the most significant accomplishment at aap since you’ve arrived?
BV: One of the things that we did but we also had to do is come up with a new strategy for the company. The company had basically a far too wide [number] of activities and products and markets, so we started to focus the activities of the company. And if you start to focus you need to develop the skills of people, or you have to bring on board new people. And if you want to build a sustainable and profitable position in the business you also have to come forward with IP, and you need experts to help you develop IP that makes sense.
These skills were basically not well developed in the company. The company had actually no patent portfolio, sorry to say. When we started to focus on trauma and cement, along that side with good IP experts that I knew also from the pharmaceutical industry we created a little IP committee. We started to appreciate people for ideas that they brought forward and we developed, among others, the LOQTEQ patents.
MDDI: Would you call your IP portfolio strong?
BV: If you look at the LOQTEQ, at the trauma product line, well, trauma has been basically a monopoly of Synthes for the last 10 to 15 years and very few people—almost nobody—has succeeded in coming forward with locking and compression that you can do in one hole with one screw. We managed to do that, and we did it in such a way that we did first of all not violate prior patents or infringe upon the patents and on top of that we brought new ideas. I consider that, yes, as a first success.
MDDI: On the manufacturing side, what raw materials are you using and how available are these materials?
BV: For the trauma products we use the standard titanium and stainless-steel products. They are generally available. We are also working on magnesium as an alternative for these metals, and magnesium is a resorbable. Resorbable magnesium is not available. You have to develop that with people who understand magnesium deeply. On our biomaterials side where we do the cement we use PMMA, which is a generally available product. But if you start to work on coatings with antibiotics you enter basically a new area of new materials, and of course you look at other food or pharmaceutical sides of the industry that you start from a material that is generally accepted as safe.
MDDI: Such as?
BV: Let’s say if you start to work on the coating of trauma products then it makes sense that you start to use lipids, and there have been pharmaceutical products and cytotoxic products for the treatment of cancer that are supplied in a lipid formula. It makes sense that you start to look at that type of lipids if you can apply these on titanium or stainless steel.
MDDI: As far as you know then, there don’t seem to be any great hurdles to accomplishing that. It’s just a matter of developing these applications over the next couple of years. Is that correct?
BV: That’s correct. We have studies going on with, let’s say, 30-40 patients who are treated with these lipid products with an antibiotic in it. We also have done clinical studies of cement that contains silver for the treatment of bacteria that are multiresistant. We are really in the clinical phase and evaluating the clinical results, so it’s not something that is far out but something that is really happening now.
MDDI: Of the materials you mentioned are the prices steady?
BV: No strange developments, no. Of course, if you take a [specific] product, let me give you one example. You can buy collagen that is normally derived from bovine or porcine origin that is readily available and cheap. You now have companies that work on recombinant collagen—collagen that is a human collagen and the gene is put into a plant and the plant produces then a collagen. That is, of course, a very pure material, and for such a product you pay perhaps $3000-$4000 a gram. But these are very new materials, where this material would be perhaps a hundred times more expensive than a bovine or a porcine collagen.
MDDI: In 2011 aap reported 3% growth in product sales in the trauma division, which is aiming for 10% growth in 2012. Has the economic turmoil in the Eurozone affected the company’s business performance or will it be a problem going forward?
BV: This morning we did a press release with our six-month results for 2012. Product sales increased in the first six months €16.6 million, up 18% over the same period last year. And in our outlook for the rest of the year we expect to deliver a product sales increase of 14%. On top of that we also entered into a new exclusive license agreement in March 2012 that adds €2.2 million. So our overall revenue growth in 2012 is expected to be greater than 20%. Last year it was only 6% but it had more to do that we are still in the transformation stage from being a highly diversified company to become a focused company. I think that as of 2012 after the transformation phase we enter now the growth phase, and I think in the year ahead we will see that.
For trauma [division] the markets are of course the United States, China, and Brazil. In these markets trauma is a serious problem because of traffic accidents, labor accidents, and the growth markets are not so much in Europe. And, yes, if you sell product in Italy, if you supply a state hospital [for instance], you might have to wait a year for your money. These are currently not the most effective markets. Since we are a rather new kid on the block we try to grow in markets where the money is readily available.
MDDI: So the macroeconomic conditions probably don’t affect healthcare-related businesses as much as other industries.
BV: Yes, agreed.
MDDI: Finally, does the U.S. Supreme Court’s recent ruling on the Affordable Care Act provide any clarity for businesses in the medtech industry, would you say?
BV: I was in the U.S. last week, and I spoke to a few people who are leading sizeable companies in the U.S. and they said perhaps the most important decision is that there is now clarity because business will benefit from the clarity that has been provided. As such, I recapitulate what these people said [that] it will not have a very big impact on our industry.
So the clarity is welcome, and I think of course we have to accept it is a sales opportunity, but it will also have an effect on price and I think that prices will become more competitive. I also think that, like we have seen with pharmaceuticals before, when you can do it with a generic instead of a branded product, use the generic, and I think these types of decision also will become more common in medical devices.