The Next Hot Spine Company?

Integrity Implants, Inc. sold just under $10 million in products last year—its first year. Its co-founders think they can sell $20-25 million this year.

With only two sales people and one product—a TLIF/PLIF—Integrity has been in 1,400 cases in the past ten months. Two weeks before we visited, the company had two training sessions for a couple dozen surgeons.

Their “booth” at last October’s NASS (North American Spine Society) was a wall with a door. The door led to a small room with a conference table, chairs, a rug. It felt like a hidden room, a speakeasy within a busy exhibit hall.

Integrity Implants is not typical.

So, this past February we made the trek down to Jupiter, Florida, to spend some quality time with founders, Chris Walsh, Chief Executive Officer, and Wyatt Geist, President and Chief Technology Officer.

Chris and Wyatt

The first thing to understand about Integrity’s founders, Chris and Wyatt, is that they are absolutely opposite people. They each look at the work in very different ways. Chris is an English major, passionate and a consummate manager. He goes all the way back to Stryker’s early days and mono axial screws. Wyatt is an engineer and inveterate tinkerer. They met as competitors in southeast Florida. Wyatt was with DePuy and Chris was with Stryker.

They are an odd couple that, together, are an extraordinary business combination.

In the mid-90s they started a medical products distribution business. A little California company with a Cheetah for a mascot and crazy idea about lateral spine surgery asked Chris and Wyatt if they’d carry their product.

They did. Very quickly, Chris and Wyatt became NuVasive, Inc.’s #1 distributor—and three-time distributor of the year. They grew NuVasive (NUVA) to $40 million in annual sales.

Chris and Wyatt captured the #2 market for all spinal implants in Florida—ahead of JNJ and Stryker.

How did they do it?

“Chris and I busted our ass. It was us doing our work here,” remembers Wyatt.

In 2004, Chris approached Alex, Keith and Pat (the CEO, President and VP of Sales, respectively, of NuVasive at the time) to sell NuVasive’s implants lines exclusively. Says Chris about that, “We told Alex, Keith and Pat that to bring about procedural change we had to be laser focused and represent only one company.”

So, Chris and Wyatt went all in with lateral spine procedures and NuVasive.

Ultimately, NuVasive bought Chris’s distributorship—in 2013. During the three year non-compete that followed, Chris started a fishing lure business—SpoolTek (now a key supplier to Bass Pro Shops) and joined up with such private equity luminaries as Quad-C Management to locate other (non-spine) companies to build wealth for both himself and fellow investors.

Wyatt, who says of himself, “I love making new solutions to old problems. I don’t pat myself on the back, very often. When I solve a problem, I feel a wave of joy” went to work on several projects including his most famous one—SafeWire—which was sold for beaucoup bucks in 2016.

Getting the Band Back Together

About two years ago Wyatt was selling his SafeWire company and Chris was finishing his private equity run when he called Wyatt and asked if he’d be willing to saddle up and do the product development work for a new spinal implant company.

To anyone else, the timing of Chris’s request might have seemed poor.

Most private equity investors will tell you that the innovation wave has come and gone in spine—aside from, perhaps, robotic assist devices. Top line growth is in the low single digits. Everything is consolidating. The future of spine can be summarized in three words: “bolt-on-acquisitions.”

Chris and Wyatt aren’t like anyone else. There is no MBA for what they do.

In the Spine Business Bible according to Chris and Wyatt, without product innovation spine companies can’t get access to hospitals. Without innovation they can’t push distributors to sell. Without innovation they can’t be cash positive.

Innovation is like breathing.

Chris and Wyatt weren’t buying the rumors that innovation was dead in spine.

Hell, it just meant less competition for new ideas.

Innovation Defined

“Innovation” to Wyatt and Chris means products that, in terms of the pathologies they address, disrupt existing products and do so with value pricing.

When Chris asked Wyatt to go to work on spine innovation, he was essentially asking him to do what he loves. Wyatt was all in, but with a caveat. Chris had to be in charge.

“Chris’s been a way better CEO than I would have ever been.”

So, Wyatt took charge of the technology including licensing and new product roll out. Chris wrapped his arms around the business and operations.

The band’s lead singer and guitarist were back together. But the Mick and Keith of spine needed supporting band mates.

Enter Andrew Wolf. After eight years at NUVA, he decided to join the spine’s version of Mick and Keith as Integrity’s new Executive Vice President of Products. Chad Grant who was top engineer at NUVA, came on board. Jonathan Spangler, NUVA’s head IP and general counsel, is now Integrity’s counsel and member of the board of directors. Integrity’s VP of Sales is David Hill formerly of SpineWave. Brad Sutika, who helped build X-Spine into a $62 million company is Vice President of Marketing and Clinical Affairs.

NuVasive’s mascot was the Cheetah.

Integrity’s is the Osprey.

Both are lightning fast. Both eat what they kill.

As Chris and Wyatt like to say, speed is everything for a start-up.

Relevancy

Integrity is well funded. Chris raised $33 million from some of the largest, most successful family offices on Wall Street. There is no institutional money in Integrity.

In terms of products, both Wyatt and Chris said that Integrity’s main point of differentiation will be clinical and market relevancy.

Clinical relevancy. Here’s how Wyatt described clinical relevancy (or lack of it) for expandable cages.

“You know, we have an expandable cage that expands in every direction. To me that doesn’t mean anything.”

“We DO expand laterally and up and down. I can put a mechanism in there to make it really cool, right? But then the mechanism is in the way.”

“Our approach is to make expandable cages as much about bone grafting as anything else. We want to model the cage so that it is the best ship-in-the-bottle we can build—so that will never collapse.”

“That’s why some surgeons don’t use expanding cages. Not enough room for bone graft and they worry that it’ll collapse.”

“You’ve got to understand the whole problem. You must be clinically relevant.”

Pricing

To Chris and Wyatt, relevancy also means addressing the financial needs of the hospital/clinic. Pricing is a huge concern in the market today.

Integrity’s implants cost less to manufacturer—and that’s built into the development model.

In order to break down the hospital barrier, Integrity has made solving the cost containment issue a key strategic focus. There are, in Integrity’s view, two modes of surgeon relevancy. There’s relevancy to the number crunchers in the C-suite and then there’s relevancy into terms of the patient’s pathology.

Solve the pricing and clinical relevancy issues, THEN distribution comes into focus. With just two full time sales people, it is no surprise that Chris and Wyatt put distribution at the end of the to-do list.

The workhorse of the company is an interbody implant for both PLIF and TLIF called FlareHawk, the world’s first cage to expand in height, width and lordosis.

It is also a PEEK implant with a titanium core. Later in 2018, Integrity plans to introduce a hybrid PEEK interbody implant—which will have the same porous titanium FlareHawk does.

FlareHawk’s porous titanium was licensed from Sites Medical in 2017. The material, called OsteoSync™ Ti, delivers a high friction coefficient to FlareHawk which helps stabilize the implant.

But what really sets it apart is the open pore geometry and micro-texturing. In preclinical testing, those attributes demonstrated bone attachment strength nearly twice that of titanium plasma spray and approximately seven times that of PEEK at the five-week follow up period.

Also in the works is a solid titanium interbody implant as well as a hydrophilic materials version.

What’s Next?

Wyatt told us, “Everything we launch is going to be different. And better, more relevant.” Like an innovative lateral interbody implant that goes in 10 wide and expands to 20 wide. The kicker? It can solve the issue of neuropraxia at 4/5.

“This is an interbody thesis that give the surgeon minimal nerve retraction, maximum bone graft, unlimited bone graft delivery,” said Chris, “and which we can manufacture at a better value than the standard of care products.”

In the pipeline are new-fangled pedicle screws that will “…legitimately stand pedicle screws on their head.”

Two types of affordable biologics are also on the way including a unique form of structural allograft with fiber reinforcement.

Details and examples of Integrity’s launch plans for 2018 will be, we hope, on display at ISASS’s annual meeting this April in Toronto.

This time, in addition to the wall with the door, there will be a bigger room and more seriously cool implants and instruments to play with.

And, best of all, Chris and Wyatt will be on hand to show how it all works.

The band is back.