VBs to Challenge Medtronic’s BMP2 Market Dominance

What are the Viscogliosi Brothers (VBs) up to?

In the course of the last 30 days, two significant and interesting press announcements crossed our desks, one from South Carolina-based Bioventus LLC and the other from New York City-based Ember Therapeutics, Inc.

The Bioventus announcement said that the legendary Viscogliosi Brothers Family Investment Firm was acquiring a portfolio of next generation BMP2 assets and the Ember Therapeutics announcement said they were also acquiring the BMP7 product family and related patent assets including the OP-1 Implant, OP-1 Putty, Opgenra and Osigraft.

Together, the two announcements describe transactions which would make the VBs and their investment partners owners of the largest intellectual property estate (more than 450 patents and other related IP) for the two major forms of recombinant human bone morphogenic protein—BMP2 and BMP7.

Indeed, when these transactions close, the newly minted VB Biotechnology firm will be the first major competitor to Medtronic’s rhBMP near-market monopoly since Stryker Biotech left the business in 2010.

“VB is looking at where the next $1 billion in single product revenues is going to be generated in the orthopedic industry and it is not going to be the next medical implant.” Explained VB Partner Anthony Viscogliosi to OTW when we asked him the question—”What are the Viscogliosi Brothers up to?”

“VB is making a strategic decision that a large component of future orthopedic industry growth will be and is regenerative medicine.”

$500 Million rhBMP Sales in 2017

One company, Medtronic Spine, pioneered the use of recombinant bone morphogenic proteins in spine care and, arguably, laid the foundation for other companies to develop products based on bone morphogenic proteins to improve bone grafting efficacy and safety.

The FDA approved the first rhBMP product for commercial use in October 2008.

In the hierarchy of bone graft products, recombinant BMP is at the top—both in terms of single product revenues and clinical effectiveness. BMP literally stimulates bone production. The most famous study of BMP placed the molecule under the skin of a mouse—where no bone exists—and bone spontaneously[1] developed.

But that very effectiveness was also the source of the greatest concerns regarding these powerful proteins. Numerous studies over the years have detailed cases of ectopic growth in places where bone growth was not intended by the surgeon. As we detailed in our critique of The Spine Journal’s seriously flawed studies of BMP, the rate of complications associated with the use of BMP in spine fusion surgery has declined over the years as, in our opinion, physicians walked up the learning curve in terms of patient selection and implant technique and Medtronic Spine improved its associated BMP carriers and instruments.

Since it was first approved by the FDA for commercial use, BMP has been used, we estimate, in more than 1.7 million procedures.

While Medtronic was the first company to bring an rhBMP product to market, it soon faced competition from Stryker Corporation—which, in 2004 introduced to the market a related, but different bone morphogenic protein—BMP7 or OP-1.

There are several versions of bone morphogenic protein: BMP1, BMP2, BMP3, BMP4, BMP5, BMP6, BMP7, BMP8B and BMP15.

The FDA approved Stryker’s OP-1 in 2004 as “… an alternative to autograft in compromised patients requiring revision posterolateral (intertransverse) lumbar spinal fusion, for whom autologous bone and bone marrow harvest are not feasible or are not expected to promote fusion. Examples of compromising factors include osteoporosis, smoking and diabetes.”

At the time Stryker sold OP-1 to Olympus Corporation in 2010, the product was generating an estimated $100 million in sales.

Olympus never was able to adequately support OP-1 and by 2014 it was gone from the U.S. market.

Today, Medtronic is effectively the only company with an FDA-approved bone morphogenic protein on the market and in 2017, generated more than half a billion dollars in sales of its brand of BMP2—Infuse.

VBioTech LLC and VBiotechnology LLC

According to Anthony Viscogliosi, he and his brothers Marc and John, have spent more than a decade scouring the world for the next generation product for osteoinduction. Notably, the VBs specifically chose to not emphasize speed to market, but rather, as Tony described it, “build an overwhelming body of clinical evidence based on high quality pre-clinical evidence that can demonstrate a superior outcome in tissue repair and regeneration”.

In that way, said Tony, the two firms into which these new products and technologies will reside, will be able to deliver to physicians more success in tissue healing, better quality healing and, in the process, be first to market with highly credible next generation bone morphogenic protein products for osteoinduction.

The BMP 2 assets to be acquired from Bioventus will be owned by a subsidiary of the Viscogliosi Brothers, partially owned by outside shareholders—VBioTech LLC. The BMP 7 assets to be acquired from Ember Therapeutics will be owned by VBiotechnology LLC.

As Anthony Viscogliosi described the business plan to OTW, “Our desire and intention is to bring these two businesses together under one umbrella and bring to market the second-generation BMP technology, such that this combination will result in a powerful multi-hundred-million-dollar business that will effectively compete against the only other BMP product on the market—Infuse.”

The Viscogliosi Brother Heritage

The three Viscogliosi Brothers, Anthony, John and Marc, are famous for discovering, nurturing and then bringing to market such ground-breaking technology platforms as total disc arthroplasty, uncemented total ankle joint replacement, small bone repair and osteoarthritis (Knee Creations) and doing so on the strength of vast multi-center, Level 1, prospective randomized and expensive clinical studies.

That approach is, in fact, a Viscogliosi Brother heritage.

At a time when most orthopedic products come to market via the 510(k) pathway (since 2008 the FDA has received more than 20,000 510(k) submissions but barely 220 PMA submissions—for all medical devices) the Viscogliosi Brothers insist on bringing products to market through the most rigorous FDA approval pathway – the Pre-Market Application (PMA).

For example, even though the coflex product had been used in more than 10,000 patients in Europe, the VBs insisted on a full prospective, Level 1 PMA spine study which collected healthcare economic data in addition to clinical, radiographic and safety data for spinal stenosis.

Their commitment to doing the hard work resulted in a 95% follow-up rate through two years—the highest ever for a PMA spinal implant (91% follow-up at 5-years!).

The VBs even committed to a head-to-head comparison with lumbar pedicle screw fusion following surgical decompression. Finally, they made sure to include Medicare-aged patients in the study.

The study resulted in tens of thousands of pages of clinical data.

And clinical credibility.

In an earlier time, that same decision with the Pro-Disc arthroplasty system established that product as the market leader—which has endured all these years later.

For the recently acquired BMP assets the VBs are planning a series of multi-center studies to measure clinical safety, quality of the bone healing and the rate at which bone will heal.

Competing With Infuse

Medtronic Spine, which is the largest supplier of spinal implant products and biologic adjuncts to spine surgery in the world, is also the dominant supplier of recombinant bone morphogenic proteins (rhBMP). Most analysts peg Medtronic’s market share in spine at around 32%. In the market for rhBMP, it is virtually 100%.

How will the VBs compete?

As Anthony explained to OTW, “The distribution channel for our bone morphogenic proteins is defined as not-Medtronic. In effect 60-70% of the market that Medtronic’s sales and distribution force is not addressing. Medtronic has a market monopoly with Infuse therefore every other company cannot participate in the BMP2 market. That is our target market.”

In addition, “We’ve created an environment with the two technologies where the gross margin will be far superior to existing BMP products.”

Translation: a lower cost of goods.

Recombinant bone morphogenic proteins have been in continuous development since the 1980s—initially at Genetics Institute, then Wyeth Laboratories, Pfizer, Medtronic, Stryker, Olympus, Bioventus and Ember Therapeutics. Many of the same scientists who created the first BMP2 or BMP7 for commercial use, created more advanced versions of their initial BMP products—which now have been aggregated and reside in the two new VB companies.

“We’ll combine VB talent, Bioventus talent and the heritage of Infuse innovation that began 25 years ago at Genetics Institute. The same individual scientists who developed recombinant human BMP are the same scientists who have developed what we acquired from Bioventus,” said Tony.

The total amount of R&D invested in the IP estate by all these predecessor firms, said Tony, exceeds $1 billion.

“We believe we have a superior carrier portfolio and superior technology base. Reimbursement is clear. There is a great need for enhanced safety, expanded clinical indications and better outcomes.”

“Furthermore, we have the other heritage of success that began at Creative Biomolecules, then Stryker Biotech, then Olympus Biotech, then back to Stryker Biotech, then to Ember Therapeutics and now in the hands of VB.”

“Let’s remember”, said Tony, “that in 2010, VB entered into an exclusive arrangement with Stryker Biotech to acquire the OP-1 portfolio for osteoinduction and we had negotiated a joint venture with Olympus to acquire that and then Olympus decided at the very end they wanted to own and control it also so we sold our rights to Olympus and Olympus ended up buying Stryker Biotech.”

A Lot of Work Yet to Do

“We still have a lot of work to do and we don’t have every question answered,” said Tony. “We have a great deal to further invest in reviving the manufacturing of BMP and bringing OP-1 back to market. However, the intellectual property portfolio that we acquired is substantial and it will be effective well into the 2030s.”

“What we have is not simply BMP2 or for that matter BMP7. We have a unique, new molecule that does more, better and faster.”

“We’re going to be the first to commercialize it.”

Stay tuned, for sure.

[1] Bone growth under the skin appears ‘spontaneous’ but, of course, it isn’t. The BMP molecule induces osteoblast differentiation in a variety of cell types. It will grow bone in areas where no bone exists providing there is a source of blood.