INSIGHTEC CEO SAYS TECHNOLOGY IS A GAME CHANGER IN INCISIONLESS SURGERY
INSIGHTEC which is promising the world incisionless surgery, has been the most interesting company in the Israeli medical device industry for the past 20 years, but also has a reputation as spending cash while not realizing its promise. In recent years, however, the company has seen a change for the better.
Insightec developed technology that makes it possible to focus sound waves from several directions on a single point, which is heated and ablated without damaging the tissue on the way. A decade ago, the company, then controlled by Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT) underwent a crisis following the commercial failure of its first product for treatment of benign uterine tumors. Insightec survived the crisis mainly due to the tenacity and faith of the late Motti Zisser, then the controlling shareholder in Elbit Imaging, whose main activity was in real estate. The company's fortunes have since taken a turn for the better with 50% growth in revenue between 2016 and 2017 and continued growth projected in 2018.
In the name of the share capital, the approval, and the CEO
Insightec owes its turnaround to three main factors. The first is large investments, initially $62 million by York Capital simultaneously with an investment in Elbit Medical, and a huge $150 million financing round this year at a company value of $610 million led by Koch Disruptive Technologies (KDT). The second is approval of its product for treatment of essential tremor by thermal ablation of brain tissue and the product's commercial success. The third is the recruitment of chairperson and CEO Maurice Ferré, co-founder and former CEO of robotics company MAKO Surgical, which dealt in orthopedic surgery. Under his management, the company grew to 500 employees and over $100 million in revenue. It was sold to orthopedics company Stryker Corporation in 2013 for $1.65 billion.
In an exclusive interview, Ferré tells "Globes" about what Insightec has been through and its future plans. "I knew Kobi Vortman, Insightec's first CEO, many years ago through Samuel Morry Blumenfeld (who was both an executive in GE Healthcare and an investor in Insightec). One day, Kobi came to me all excited and said, 'We're going to replace all of the operations in the world with non-invasive technology using focused ultrasound!' I nodded, but of course, I had no idea what he was talking about then," Ferre remembers.
Ferré: First the US, then Berlin
Ferré was involved with non-invasive surgery at the time. When he sold MAKO Surgical to Stryker, he was exposed again to Insightec and its progress with the product. Ferré later became a leader in surgical robotics. "When I sold MAKO, Morry invited me to see Insightec again. I spent a day with the team, and when I saw the progress over the years, I started to become enthusiastic. I had just sold the company, and I wasn't sure how much I wanted to start new activity immediately, but when I saw what Insightec was doing, my future path was set."
"Globes": The company's business situation was not great.
Ferré: "The company developed many apps for many groups of people. Its technology is very complex. Several attempts are necessary to properly develop each app, not to mention the difficulty of trials and getting approval for a product. When I came to the company, I immediately realized that we had to choose a focus for it."
In the neuro segment, "It's not as if we're abandoning the other products; we're prioritizing. We've created a roadmap that I believe is creating value and leading the company from research to a real business entity."
What is the roadmap?
"The first market is movement disorders, and the most advanced product is the one for treatment of essential tremor (tremors not due to Parkinson's Disease). That is how we reached three achievements in the past three years. We obtained FDA approval after a very significant trial. Then we started the reimbursement process. We already have a code and value, and in November, we're getting an excellent code and value in 36 US states. We also got approval from Blue Cross Blue Shield, a leading private insurance company.
"2019 will be the year of commercialization for essential tremor. We see potential for placing 200 systems at $2 million a system. This is the size of the market in capital systems. I think we can reach this $400 million within 10 years or less in the US alone.
"We're upsizing our business infrastructure, because now's the time. We have marketing and reimbursement approval, we have a sales organization, and we also have proof of effectiveness from a various of studies we conducted that were published in respected journals and strong demand from patients. We have already identified 50,000 patients who waited for approval of reimbursement.
"Up until now, we've worked with hospitals linked to leading academic institutions, which are early adopters. More people are interested in the next article, not necessarily in treating as many patients as possible and seeing as much revenue as possible for the hospitals. Now we're moving to the next stage - the next tier of hospitals after the leaders, which are already interested in real commercialization. This is our task for 2019-2020, and this is what will support our growth in the coming years.
"At the same time, we're expanding from a partnership only with GE to also Siemens. This change will support our expansion, especially in Germany (where Siemens is established) and also in the rest of Europe. Italy and Spain can be significant markets for us. Now that we have Siemens, we expected growth in these markets.
"The third part of the growth strategy for the main product is China. We're preparing to enter this market soon."