Writing about life sciences innovation around the country, I hear stories every day of companies that envision transforming medical standards of care through new drugs or devices. San Diego-based NuVasive is living the dream right now.
NuVasive (NASDAQ: [[ticker:NUVA]]), as its name suggests, has developed a less invasive way for surgeons to do spinal fusion surgeries. It was a bold and innovative idea when the company was founded in 1995, and when it first brought this system to the U.S. market more than five years ago. Now the leading edge is becoming mainstream as more doctors learn the procedure, and patients like basketball Hall of Famer Bill Walton share their NuVasive success stories. Not even hard questions from insurers who balked at paying the bills seem to have slowed the company’s success—or the growth of NuVasive’s shares on Wall Street.
More than 5 million Americans suffer from some form of chronic back pain, and that has created a spinal fusion surgery market worth an estimated $5.1 billion a year in the U.S. Big medical device players like Medtronic, Johnson & Johnson, and Synthes are leaders in this market with replacement disks, screws and rods that surgeons use to hold the vertebrae in place. But NuVasive has been grabbing market share, and boosting sales at a greater than 40 percent annual clip for years. The company expects to grow sales by more than 30 percent this year, on its way to estimated annual sales of as much as $500 million.
When a couple major private insurers, Aetna and UnitedHealth, publicly stated last year they wanted to see more evidence that the NuVasive system was as good as advertised, spinal surgeons and patients leapt to the company’s defense. The insurers backed off within six months and said they would go back to reimbursing the product. Walton, who suffered from excrutiating back pain for years, recently told a Union-Tribune sports columnist that “I’m getting back into the game of life,” after he had the NuVasive surgery done.
“At the end of the day, this is a higher efficacy procedure. We really have a better, faster, cheaper procedure for our patients, the people we serve,” says Michael Lambert, NuVasive’s chief financial officer.
I got an in-depth overview of the company, and the spinal market, from Lambert and Patrick Williams, the company’s vice president of finance and investor relations, when I visited their office in San Diego a couple weeks ago. What NuVasive does is really different from what its competitors have been offering surgeons and their patients.
The anatomy is quite interesting. Around age 30, people have the maximum amount of water in the intravertebral tissues, which work like shock absorbers in the spine, Lambert says. But that gradually goes downhill as we age. The space between vertebrae shrinks, nerves get pinched, and
