SiNtx Technologies Inc (SINT)

[boston745]

Expose on the failure of Zimmer's Trabecular Metal, how Si3N4 can fill the void, & the future
"We call Trabecular Metal 'the best thing next to bone' because we believe it is the most exciting new porous material platform the orthopaedics industry has seen in decades,"


In 2003 Zimmer acquired Implex for $225 million dollars with 7 projects in development, one of them being spine. Ray Elliot, Zimmer CEO at the time had this to say, “We believe Trabecular Metal has the potential to give us opportunities in the fusion and non-fusion spinal categories that other competitors cannot match.". Unfortunately, this story was not as successful as Zimmer had hoped it to be.

Zimmer Holdings, Inc. Announces Agreement to Acquire Implex Corp., Developer of Innovative Trabecular Metal Technology


Trabecular Metal (Zimmer's marketing term for porous tantalum) provided solid results in lumbar for healthy patients. The results were not as good for unhealthy patients and according to 1 trial, a complete failure in cervical applications. I havent found much mentioned on unhealthy patients, but if you look at contraindications you can see that Ardis is limited up to Grade 1 spondylolisthesis (1 being the lowest level 5 highest level).

1. Active local infection in or near the operative region.
2. Active systemic infection and/or disease.
3. Severe osteoporosis or insufficient bone density, which in the medical opinion of the physician
precludes surgery or contraindicates instrumentation.
4. Known or suspected sensitivity to the implant materials.
...
11. Morbid obesity.
18. Prior fusion at the level(s) to be treated. (cant even be used for revision surgeries)

TM Ardis



Complete failure of Ardis in its cervical trial

Results: Six investigators participated in the clinical study at 6 investigational centers in the United States. Enrollment into the study was terminated after 39 patients had been accrued because of concerns over delayed fusion in the porous tantalum treatment groups Of the 39 patients enrolled into the clinical study, 11 patients received the control treatment of iliac autograft fusion, 13 patients received the porous tantalum ring device with the center cavity packed with cancellous iliac crest autograft, and 15 patients received the porous tantalum block device. These patients were evaluated for 24 months as per the study protocol. There were no significant differences in any of the patient demographic variables collected. The mean operative times for both the ring and block device groups were slightly lower than the control treatment. Two patients in the block treatment group were determined to be nonunion between the 6- and 12-month time points and underwent additional surgery. Five patients with porous tantalum devices showed radiographic evidence of device fragmentation, and one patient in addition had radiographic evidence of erosion of the involved vertebral bodies by the device. One patient in the ring treatment group died from a myocardial infarction and kidney failure subsequent to the 12-month follow-up visit, which was unrelated to the device or the spinal fusion procedure. Fusion rate at 2 years for the tantalum device was very low as compared with the control arm (44% vs. 100%). Patient Neck Disability Index scores, Short Form-36 scores, and neurological status scores were similar between the 3 treatment groups. Conclusions: This study demonstrates that stand-alone porous tantalum material is not ideal for a cervical spine interbody fusion because of the low rate of arthrodesis and the risk of device fragmentation in patients who fail to fuse.

Publication Date: (December 2011) Failure of Porous Tantalum Cervical Interbody Fusion Device


The primary focus of this expose is on Spine, but the failures of TM are far reaching including issues with bond strength, loosening, & instability. You can find examples of this is the various product recalls that Zimmer has done fairly recently in fact.

1. Class 2 Device Recall Trabecular Metal Zimmer Dental implant
2. Class 2 Device Recall Zimmer trabecular Metal (bond strength 80% of minimum)
3. FDA Issues Notice of Class 2 Recall for Zimmer Persona Knee Implant
4. FDA Recalls Zimmer Trabecular Metal Modular Acetabular System
5. Class 2 Device Recall Zimmer Trabecular Metal" Total Ankle Tibial Base and Talar Components

Most common reasons for revision surgery from various implant types can be found in the following study:

In a prospective multicenter retrieval program, 76 porous tantalum acetabular shells, 5 femoral stems, 7 patellas and 36 tibial trays were collected from revision surgeries. A subset of the implants were analyzed for bone ingrowth. The main reason for revision was infection for acetabular shells (1.4 year implantation time) and instability for tibial trays (1.8 years implantation time). Two of the thirty primary surgery acetabular shells and one of the thirty-six primary surgery tibial trays were revised for implant loosening. We observed full depth penetration of bone into the porous tantalum layer for the acetabular shells and femoral stems.

Bone Ingrowth in Well-Fixed Retrieved Porous Tantalum Implants



Zimmers taps a competitor for a potential substitute material


December 2011 was the month that the publication was released about the complete failure of porous tantalum (Ardis) cervical interbody device. Coincidentally, Amedica begins recruiting patients for its porous cervical fusion device that same month.
Study Start Date (December 2011): Cascade Trial
Not only is the timing of the recruitment date aligned with publication of Zimmer's failed trial, Amedica's Cascase trial was overseen by Mark P. Arts & Jasper Wolf who so happen to consult for Zimmer.

Conflict of interest

The authors MA and JW receive research grants from Zimmer-Biomet, EIT and Intrinsics. MA and JW are consultants for Zimmer-Biomet and Silony and they receive royalties from EIT.

Porous silicon nitride spacers versus PEEK cages for anterior cervical discectomy and fusion: clinical and radiological results of a single-blinded randomized controlled trial

It is my belief that after the 12 month results, Zimmer somehow reached out to Amedica to examine a possible alternative material. Based on the evidence I believe Zimmer said we are interested in your material but we need to see specific results in a clinical setting. Amedica then put together the trial and Zimmer likely recommended Mark Arts & Jasper Wolf to oversee the trial. This was likely done so Zimmer had reliable sources running the trial that they fully trusted. After 12 months cascade results, previously linked, were compiled I believe Zimmer signed a Letter of Intent with Amedica (likely containing a “No Shop” clause), quoted below, to develop a Silicon Nitride version of Zimmer's Ardis Interbody Implants. TM Ardis is currently limited to only PLIF & TLIF & somehow cervical applications (although limited) while Amedica's Valeo is cleared for use in PLIF, TLIF, ALIF, LLIF, & Cervical which would expand Ardis market reach immensely. Not only that, Si3N4 fuses as fast as autograft, is antibacterial, allows for superior imaging for assesement, fuses very well for more extreme spinal cases, & it increases Ardis marketing potential! This doesnt even include 2nd gen Si3N4 which has shown significant decrease in time for bone fusion over first generation.

SALT LAKE CITY, July 23, 2015 (GLOBE NEWSWIRE) -- Amedica Corporation (Nasdaq:AMDA), a biomaterial company that has developed silicon nitride ceramics as a material platform to manufacture and commercialize orthopedic implants, is pleased to announce that it has signed an original equipment manufacturer (OEM) letter of intent supply agreement with a leading orthopedic device design and manufacturing company.
Under the proposed agreement, Amedica will assist this company with their proprietary design, development, manufacture and supply of silicon nitride spinal implants. The two companies will begin negotiating the definitive agreement once it is satisfied that all necessary and appropriate regulatory approvals can be obtained without significant expense. The agreement underscores Amedica’s continued focus to provide superior and innovative solutions to the market.

Letter of Intent

One day before Amedica signed the Letter of Intent with a company an anonymous poster got wind of possible merger between Amedica & Zimmer. While a merger did not take place at that point, letters of intent are often used for eventual M&A.
Word on the street is a merger/buyout with Amedica



How Si3N4 can replace Trabecular Metal
In sum, silicon nitride has the right combination of strength, toughness, wear resistance, biocompatibility, bioactivity, bone integration, structural stability, corrosion resistance, and easier imaging, all of which are desirable in medical implants


The Strongest of Technology is Backed by Proven Data (all examples here can be found at this link)

First generation Porous Silicon Nitride has already proven to show bone ingrowth clinically equivalent to that of autograft, current gold standard for rate of healing. No other material currently on market can achieve this level of result and all companies are trying to tweak their material to achieve this result.

1. Enhanced Osteogenic Response

Comparing PEEK to silicon nitride in these 7.4 year (PEEK) and 4.4 year
(silicon nitride) postoperative radiographs - it is apparent that silicon nitride fosters
superior bone growth and bone density, despite having been implanted three years
later. Given the patient’s comorbidities and these results, this material should provide a clinician with significant outcome advantages over PEEK.

This was a complicated case of a heavy smoking, morbidly obese patient with prior L5-S 1 lumbar fusion. The silicon nitride Va l e o PL was used to extend the existing L5-S 1 fusion by an additional level. The surgery resulted in excellent radiographic and clinical outcomes. Plain radiographs revealed excellent alignment and complete fusion at just 3 months postoperative.

A 65 year old, female patient with a 20 year history of narcotic pain management after L4-5 lumbar interbody fusion, underwent a two-level oblique lumbar interbody fusion procedure at L2-3 and L3-4 using silicon nitride implants. Rapid fusion and correction of spondylolisthesis were achieved, in addition to excellent clinical outcomes and dramatic reduction in long-term narcotic usage.

2.Bacteria resistant & Antibacterial Properties

For Si3N4, significantly greater new bone formation occurred in calvarial defects, including material on-growth, when compared to PEEK and Ti at all implantation times. Si3N4 implants also exhibited considerably decreased biofilm formation in comparison to that of PEEK and Ti. At 90 days post-implantation, live bacteria were present in the calvariae with PEEK implants (88%) and Ti implants (21%), while no bacteria could be identified in defects containing Si3N4 implants. Push-out strengths for Ti were higher than PEEK, while Si3N4 samples had strengths which were more than double that of Ti at all-time points

DEMONSTRATED ANTIBACTERIAL PROPERTIES
Silicon nitride inhibits bacterial colonization and biofilm formation. Silicon nitride demonstrates significantly lower biofilm formation at 4, 24, 48 and 72 hours as compared to PEEK and titanium; live bacteria (S. epidermidis, S. aureus, P. eruginosa, E. coli and Enterococcus) associated with silicon nitride implants are
8 to 30 times lower than PEEK and titanium.

DEMONSTRATED BACTERIOSTATIC AGENT

No infection is observed with bacteria-inoculated silicon nitride implants at 3 months, hereas both PEEK and titanium implants maintain a septic state. Silicon nitride demonstrates this property even in the absence of antibiotics

3. Superior Imaging

SUPERIOR IMAGING PROPERTIES
COMPATIBLE WITH ALL IMAGING MODALITIES
Silicon nitride implants are semi-radiolucent with clearly visible boundaries, and produce no distortion under MRI and no scattering under CT; this enables an exact view of the implant for precise intraoperative placement and postoperative fusion assessment.

4. Biocompatibility

Not only is its wear extremely low, but the minimal wear particles are soluble and can be cleared from the body. Silicon nitride is also chemically resistant, hard, stiff, and has a high dielectric constant, all of which discourage fretting and corrosion.

THE STORY OF SILICON NITRIDE

By using different analytical techniques, the resulting data clearly indicate that biochemical reactions occurring at the Si3N4 surface provided silicic acid (H4SiO4) and ammonia (NH3), both of which were active in regulating cellular metabolism. It is postulated that osteoblast cells actually scavenged Si from silicic acid and used part of it to build (SiO4)4- tetrahedra while endocytotically internalizing Si-QDs. In turn, the newly formed Si-apatite and the Si-QDs affected the morphogenetic activity of the osteoblasts through expressing osteoprotegerin (OPG) and the bone morphogenetic protein 2 (BMP2); and while strongly stimulating osteoblasts, they also inhibited formation of osteoclasts.

Bioactive silicon nitride: A new therapeutic material for osteoarthropathy
This 2nd quote is above my understanding, but what it seems to be saying is that osteoblasts are able to “feed” off the surface of the implant because Silicon is an important building block in bone formation.

Silicon has been found to play a vital role in assisting calcium for the growth and maintenance of joints and bones. It induces flexibility in the bones by increasing the amount of collagen, which is the protein component of bones. It also increases the rate of healing of bone dislocations and fractures.

Now that you can see what Silicon Nitride can do, its time to look at its current known potential uses and current & pending markets available for sale.

A list of known products in development & markets

1) 2nd Generation Silicon Nitride (decreases healing time over 1st generation)
2) All porous spine implant
3) Dental Implant
4) Hip Implant
5) Knee Implant
6) Bioactive Coating (can be applied to metallic & plastic surfaces)
7) Ceramic on metal brazing (medical & non-medical applications
8) 3D printed implants (allows for custom implants tailored to individual patients)
9) Non-medical products for use in Electronic & Aerospace industries.

Current Markets

1) United States (all spine products except CsC)
2) Europe (all Valeo based products including CsC)
3) Australia: (Valeo cleared but not currently marketed)
4) Brazil: Valeo C & Valeo TL

Pending Markets
1) US: Valeo C+CsC
2) China: Valeo spine implants (Lumbar & Cervical)
3) Japan: Valeo spine implants (Lumbar & Cervical)

How Acquiring Amedica fits with Zimmer's long-term Goals


Who’s Next

In 2011, another anonymous poster calls out an acquisition of Amedica by Zimmer citing licensing Si3n4 as one way to bolster their spine revenue while also acquiring next generation hip & knee implants. Another poster believes this is a good fit for Zimmer if Si3N4 proved to be as good as claimed. So far results have been very good:

SALT LAKE CITY, UT -- (Marketwired) -- 02/27/17 -- Amedica Corporation (NASDAQ: AMDA), an innovative biomaterial company which develops and manufactures silicon nitride as a platform for biomedical applications, announced today that Researchers from the Department of Orthopaedic Surgery of Tokyo Medical University (Shinjuku-ku, Tokyo, Japan) led by Professor Kengo Yamamoto MD PhD recently completed a five million cycle (Mc) comparative hip simulator study examining the wear behavior of an advanced highly cross-linked and vitamin E stabilized polyethylene (E1® Zimmer-Biomet, Warsaw, IN, USA) against two different types of ceramic femoral heads -- MC2®silicon nitride (Amedica Corporation, Salt Lake City, UT, USA) and BIOLOX®delta (CeramTec, Plochingen, Germany). BIOLOX®delta is currently considered the "gold standard" for ceramic femoral head materials. While the polyethylene wear loss induced by both types of ceramic heads was extremely small (< 0.60 mg/Mc), mean wear associated with MC2®silicon nitride heads was approximately 15% lower than the BIOLOX®delta components.
This independent wear study was conducted in accordance with international standards at the Medical Technology Laboratory of the Rizzoli Orthopaedic Institute (Bologna, Italy) by Professor Aldo Toni MD under the supervision of Dr. Saverio Affatato PhD (Rizzoli Institute) with consultation and support from Professor Giuseppe Pezzotti PhD (Ceramic Physics Laboratory, Kyoto Institute of Technology, Sakyo-ku, Kyoto Japan). Amedica and Zimmer-Biomet (Tokyo Office) provided the femoral heads and acetabular liners; however, neither company actively sponsored the research.
The testing was independently conceived by Professors Yamamoto and Pezzotti, and funded by the Department of Orthopaedic Surgery of Tokyo Medical University. This is the first reported improvement in polyethylene wear performance by a ceramic other than BIOLOX®delta; and it is part of a series of planned comparative wear tests that will culminate at 12 Mc. Further details of this interim hip simulation test will be provided in a joint publication planned for release in a scientific journal.

This is in line with the strategy to grow through inorganic means by focusing on mega acquisitions. Management is also striving to develop spine portfolio in order to cash in on the opportunities. Reportedly in the first quarter, Zimmer Biomet saw a 32.1% improvement in Spine and CMF segment. The company's spine offerings such as Mobi-C Cervical Disc prosthesis and Vitality Spinal Fixation System showed a considerable progress in performance.
Zimmer Biomet has been of late working to strengthen its foothold in the emerging markets that provide long-term opportunities. The company's strategic investments in these regions over several quarters with a view to enhance operational and sales performance are yielding results.

Zimmer Biomet Rides on Spine Business, Knee Challenges Stay

This is what Mr. Florin, acting CEO, had to say during Q2'17 conference call:

Dan Florin
Craig, I would tell you that our strategic priorities and objectives are unchanged, accelerated top line growth with full product supply and with strong commercial execution, while at the same time making progress on our production and quality enhancement program and then moving ahead with the critical R&D programs that we have talked about. Management and the board frequently discuss and evaluate many strategic alternatives: divestiture, acquisitions, adjacencies, focusing on what would deliver long-term value to shareholders. So, that’s always the conversation. We believe in the spine and dental markets. The spine market, again, we believe we are going to be growing in that market in Q4. We are very excited to have the LDR portfolio as part of that business. The dental side, as we have described, dental did decline in the quarter. That actually was consistent with our internal expectations for Q2. That was really tied to disruption in our European commercial organization as we reposition that for long-term growth. Importantly, the U.S. had a positive growth quarter, the first one in quite some time. So that’s very encouraging. As we have described previously, Craig, we like the dental market. We estimate that market growing 3% to 5%. The business provides an attractive return on invested capital. We need to get it growing. We are making adjustments to the portfolio. We have just hired an excellent leader for the dental business. And as we sit here today, we believe in the market and our ability to restore momentum in the dental market.

Zimmer Q2'17 Trascript

In both the Nasdaq article & Mr Florin’s quote from Q2’17 transcript, Zimmer’s objective is to go after Spine & Dental markets. To do this both the article and transcript point to acquisitions as a method to enhance both spine & dental portfolios. The anonymous post from “Who’s Next” blog post indicates that Zimmer wishes to acquire Amedica’s tech to as a means of licensing Si3N4 for spinal applications, etc..; Zimmer would essentially work like Invibio does for PEEK. Although, based on the letter of intent signed in 2015 it would seem Zimmer will also sell its own implants made of Si3n4 in addition to licensing.

Zimmer deciding to manufacture a Si3N4 version of Ardis would allow Zimmer to have a differentiated product for spine. In addition to that, FDA clearance of 3D printing Ardis implants would allow Zimmer to save big on COGS which would in turn allow Zimmer to sell a more cost competitive implant to PEEK; something it was unable to do with Trabecular Metal which had premium costs. CEO Dr. Sonny Bal had this to say on the subject of 3D printing a porous implant:

3D printing of silicon nitride can change the manufacturing cost dramatically, particularly when it comes to the porous implant, which was the subject of the CASCADE trial from Europe that I talked about.

Amedica Q2'16 Transcript



Emerging Markets

Zimmer’s 2nd major objective is capturing emerging markets. No area is expected to grow faster than Asia Pacific region with is estimated CAGR of 8.6% through 2024. The largest market is Japan, which currently comprises 44% of the Asian market. Zimmer does not currently have a spinal sales presence in Japan nor does LDR. The second largest market is China, which is growing at a faster rate than Japan. This is largely due to China’s large population gaining access to better healthcare. By 2021 the spine market in Japan, China, & India is expected to eclipse 2 billion annually and China is expected to be the leading market in Asia. You can bet that Zimmer’s strategy would be to align itself to capture the growth in these markets, who are very ceramic friendly.

China, India, Japan spine markets 2011-2021


Other key emerging markets are Russia, Mexico, & Brazil. Brazil’s spine market was estimated to be 490m in 2014 and is expected to reach 624m by the end of 2019 growing at a rate of 4.97%. Mexico market size was 278m in 2014 and is expected to be 354m by end of 2019. That’s a cagr rate of 4.91% . I bring up these 2 markets because Zimmer-Biomet has some legal difficulty stemming from bribes paid to local officials. Zimmer-Biomet is current under scrutiny in both these markets for what appears to be 3 more years. Acquiring Amedica and thus Sintex distribution deal may provide an opportunity for Zimmer to operate behind the scenes. This could help restore their image.

Chinese Market

Zimmer has a decent sized presence in China and does have some amount of sales structure in place to sell spine devices in China via LDR. However, it does not have a strong spine sales presence in China. Leveraging partnerships with local companies is key for expansion in any market in Asia. Acquiring Amedica would give Zimmer a partnership with a large local manufacturer Weigao Orthopedics. Weigao currently has committed to purchasing a minimum of 425,000 units of Valeo spine implants over a over a ten-year period once Valeo is cleared for marketing by CFDA.

We also look forward to expanding our partnership beyond spine products and into hip and knee applications. Weigao Orthopedic is well positioned to facilitate the approval and commercial launch of Amedica's silicon nitride spinal fusion devices in one of the world's largest healthcare markets.

Weigao CEO, Mr. Gong Jianbo, indicates how Weigao is interested in more than just Amedicas spine products. This could be a major source of revenue for Zimmer after merger and would connect Zimmer with the largest orthopedic company in China. The following research paper details how partnerships are the best way at capturing markets in Asia.
Medical Growth In Emerging Markets

Japanese Market

One last subject to touch on is not an emerging market but currently the third spinal largest market in world, Japan. Zimmer has limited spine market presence in Japan. Acquiring Amedica would open that market up to them. With Amedica's current partnership with Kyocera already established, it seems highly likely that Zimmer would use Kyocera as a distributing partner in Japan. Logically the best way into the asian market is through local companies. Kyocera would make for a huge ally in Japan.
Given the recent tweet by Amedica it is possible that approval of Valeo in Japan is coming very soon. ISO ertification 13485:2016 has been aligned with PMDA ordinance # 169 and is integral in the QMS process which also happens to be the final step in the approval process.