Medtronic's monopoly in the U.S. sacral neuromodulation market is expected to end soon and the newcomer appears to be more than ready for its U.S. debut.
Axonics CEO Ray Cohen confirmed "with a high degree of confidence" that the company should gain FDA approval for its sacral neuromodulation (SNM) device for both urinary and bowel indications with full-body MRI approval. "And we expect that this will occur sometime in September or early in the fourth quarter of 2019," Cohen said during the company's second-quarter earnings call, according to Seeking Alpha transcripts.
Not surprising, Cohen said gaining FDA approval is the "single most important objective for Axonics." He said the company has been in touch with FDA reviewers regarding both indications on a weekly basis and, more recently, "virtually every day."
While Axonics does anticipate getting premarket approval (PMA) for both indications in September or October, Cohen said the determination letters are likely to be issued on different dates, as the applications are being reviewed by separate divisions. The Irvine, CA-based company's PMA for the urinary indication was accepted by FDA's urology division on Dec. 10, 2018, and its PMA for the fecal indication was accepted by FDA's gastro division on March 4, 2019.
The company has filed several amendments and supplements to its urinary PMA this year, including full six-month data from its 129-patient pivotal study as well as complete testing data to support full-body 1.5T MRI labeling. Cohen said the company also submitted information in response to FDA's 90-day substantive review letter for the fecal incontinence PMA, but he said that additional information did not affect the approval timeline for that indication.
Axonics' r-SNM system is positioned to compete directly with Medtronic's InterStim II device. Medtronic pioneered the sacral neuromodulation space two decades ago and last year launched a "smart programmer" for the product designed to streamline multiple devices into a single, intuitive, touchscreen Samsung mobile device. The new programmer enabled clinicians to personalize each patient's care and allows patients to manage their therapy simply and discreetly, the Dublin, Ireland-based company said at the time.
The r-SNM system is already on the market in Europe and Canada and if the device's experience in those markets is any indication, it is likely to receive a warm welcome from U.S. physicians and patients.
"The reasons are pretty clear. We have got a demonstrably better, smaller, long-lived, and fuss-free product that is more comfortable and easy to use for patients," Cohen said. "In addition, our clinical studies, as well as our commercial practice have demonstrated significantly better clinical results. We believe this story is not a one-off and will be replicated in facilities across the United States, subsequent to our market launch."
Axonics Is Locked and Loaded for Its US Debut
Axonics has completed hiring and training its North American commercial team (100 sales reps, 11 regional managers, and 35 clinical specialists) in preparation of the U.S. launch. The company also has product inventory on hand to meet the anticipated demand, and has a new website with a physician and patient portal that is ready to launch upon FDA approval, executives noted during the earnings call.
In terms of sales strategy, Cohen said Axonics plans to initially go after the 1,000 top volume SNM implanters in the United States, and the company has mapped its sales force strategically to those locations. Those 1,000 physicians account for roughly 80% of all the uptake in America in terms of the number of implants, he added. The benefit of this strategy is that Axonics won't have to find and train new physicians on sacral neuromodulation in order to be successful in its early years.
While the company is not allowed to speak directly to U.S. healthcare practitioners about the device until it is FDA approved, it's clear that Axonics has done its homework.
"We know exactly who those individuals are. We know where they are located. We know what their volume is and so forth," Cohen said. "... So we understand that we have delivered to them what in fact is a product that has all of the features that they have been looking for."
He also noted that the company is not aware of any contract that currently exists between Medtronic and any of the institutions that would prohibit Axonics from being able to aggressively market its product to those institutions on its target list.
"Given the full commercial organization and targeted strategy, we believe [Axonics] can take significant market share in the first full year of its r-SNM launch," said Mike Matson, a Needham & Co. analyst, in a Sept. 3 report.
Needham & Co. just initiated coverage of Axonics, which went public Oct. 31, 2018, and raised $120 million in its IPO.
Axonics' Early Success in Europe
Axonics recently expanded its European commercial team by one new sales rep for Switzerland and three clinical specialists to support the company's growing number of cases in England, the Netherlands, and Germany. That brings the European team to a total of six sales professionals and three clinical specialists, and Cohen said Axonics will consider additional hires in Europe next year.
There are currently 20 hospitals in England, four in the Netherlands, and one hospital in Germany implanting the Axonics sacral neuromodulation system.
"In England, based on Q2 system sales, we estimate on a conservative basis that our sacral neuromodulation product now accounts for approximately a 35% market share of [new] implants," Cohen said, adding that those numbers are derived from an estimate of National Health Service hospitals in England accounting for about 650 [new] SNM implants a year.
SNM Growth Is Slower in Canada
Cohen said that Canada has historically been a relatively modest market for sacral neuromodulation and where only a handful of hospitals practice the procedure there.
"While there are certainly patients that are in need, we believe that the market [is] in a laggard due to the general lack of attention by the incumbent and resulting lack of access to the technology," Cohen said. "As a result, we estimate that Canada implants less than 300 devices per year."
Interestingly, Cohen said he believes Axonics captured around one-third of all patient implants in Canada during the second quarter of 2019, and all of those implants were performed at one hospital, which is now exclusively implanting Axonics devices for both new patients and patients requiring replacement. This center did about 12 SNM implants in all of 2018 and has already implanted three times that number of Axonics devices so far in 2019, and the hospital has indicated to the company that it has a waiting list of patients ready for implants, he said.
"In fact, a few patients coming back in for [implantable pulse generator] replacements have had their leads pulled along with their IPG swapped out for the Axonics device," Cohen said.
Analyst: Medtronic's Competitive Response Could be 'Too Little, Too Late'
When asked during the earnings call about the competitive response Axonics has noticed from Medtronic in Europe and Canada, Cohen said it may sound strange but "we haven't seen anything worth noting in terms of a competitive response."
"I want to be very careful not to be flippant with any of my remarks because we obviously have a lot of respect for Medtronic ... but if they continue to just kind of to let us go in there and take customers over, then that works just fine for us and our shareholders," he said.
Medtronic told MD+DI in response to questions via email that the company has initiated the CE mark regulatory approval process for the InterStim Micro Rechargeable implantable pulse generator (IPG) and InterStim Surescan MRI leads. The InterStim Micro device is three cubic centimeters in volume and rechargeable. The InterStim Surescan MRI leads will be available for both the rechargeable InterStim Micro, and the recharge-free (primary cell) InterStim II, making Medtronic the only manufacturer to offer full-body, MRI conditional systems in both rechargeable and recharge-free IPGs, the company said.
Matson said in his report that Medtronic's competitive response could be "too little, too late." The analyst said Medtronic's is InterStim Micro Rechargeable IPG should be "slightly smaller" than Axonics' r-SNM, but "we believe that it may be constant voltage and provide less durability from an efficacy perspective."
Constant Current Vs. Constant Voltage
Matson's report also noted a number of other competitive advantages he thinks r-SNM has over Medtronic's current offering in the space, including the fact that the Axonics device offers constant current stimulation that adjusts for impedance and reduces the need for adjustment. The analyst said Medtronic's device is constant voltage and cannot adjust for impedance.
Medtronic responded by raising the following points:
- Constant current (CC) and constant voltage (CV) systems both conform to Ohm’s law and are functionally equivalent
- There is no difference in efficacy between CC and CV
- The degree of stimulation is determined by the amplitude and pulse width and stimulation is comparable in both CC and CV systems
Rechargeable Is Not Necessarily Right for All
One of the most exciting differences for patients and physicians is that the Axonics r-SNM is designed with a rechargeable battery lasting up to a decade longer than competitive devices. The r-SNM was a finalist in the Medical Design Excellence Awards 2019.
But Medtronic points out that rechargeable systems are not automatically the best choice.
"Choosing the best SNM option is an important choice made by a patient and her doctor based on lifestyle, desire to be directly involved in treatment, and a variety of other factors," Medtronic said.
The company noted that recharge-free is the current standard of care and has been used to treat more than 300,000 patients. It requires minimal recurring interaction and provides patients freedom from having to spend time recharging, carrying accessories when traveling, and being reminded about their disease whenever it’s time to recharge. In contrast, patients who may elect to receive a rechargeable option include individuals who want to be directly involved with their SNM therapy, Medtronic said. Rechargeable options are also typically smaller, which may appeal to thinner patients.
"Although Axonics claims that rechargeable systems are the right choice for all patients, there is clearly a demonstrated need for both types. Historically, in other neuromodulation therapy types, recharge-free patients have fewer complaints and fewer explants."
Medtronic points to a study featured in Neuromodulation Journal that found 63% of patients chose a recharge-free neurostimulation device while only 37% chose rechargeable.
A New Tailwind for Sacral Neuromodulation?
During Axonics' second-quarter earnings call, Larry Biegelsen, a senior analyst at Wells Fargo Securities, pointed out another potential tailwind for device-based therapies such as SNM.
The analyst noted a JAMA Internal Medicine publication in late June on a large-scale study that showed that exposure to several types of strong anticholinergic drugs is associated with an increased risk of dementia. Anticholinergic drugs are used to treat a variety of conditions including overactive bladder. With that in mind, Biegelsen asked how big of a tailwind that data could be for devices like the Axonics r-SNM.
The study highlighted a topic that has been of interest for physicians for quite some time, said Karen Noblett, MD, chief medical officer at Axonics.
"This article really demonstrated and did a very nice job in separating out the different types of anticholinergic medications and, specifically, the anticholinergic medications to treat overactive bladder, which is the primary pharmacological intervention that we have," Noblett said.
The researchers analyzed the data by type of burden and level of burden (low, medium, high) and found that the risk of dementia, even in the low burden, went up by 19% and in the high burden was up by 60%.
"And those were just for patients with the overactive bladder anticholinergic," Noblett said. "So this study really has brought home a sort of definitive data about the relationship of dementia in the anticholinergic medications. And I think this will end up change in practice quite significantly as we go forward."
And from a business standpoint, the timing of that publication couldn't have been better for Axonics.
"Here we are entering a market, entering an existing market with a product that is long-lived and we are addressing a chronic problem with a long-lived device," Cohen said. "So I think that physicians will be very receptive, maybe even more so, to our message and to this device than they might have been given that one of the primary tools in their tool chest now looks to be something that most patients are not going to want to take."
Medtronic and Axonics Won't be Alone for Long
Given the potential market opportunity for using neuromodulation in bladder and bowel control, Axonics expects to have plenty of company in this space as time goes on.
“I would invite every company that has any capabilities in this area to come on down and join the fray,” Cohen told MD+DI in an interview late last year. “The rising tide floats all boats and I would suggest that as we grow this market from $700 million to $1.5 billion we’ll get plenty of company."
In fact, MD+DI spoke with a physician-turned-entrepreneur earlier this year about a wearable device she designed for overactive bladder in response to limitations of existing devices. To read about the inspiration behind that device, which led to the founding of Minneapolis, MN-based FemPulse, click here.