BoneChat #99 - OrthoSens - CEO/Founder

Okay, so today on BoneChat 99, we've got Gwen Hanema, founder and CEO of OrthoSense. It's a Swiss startup that plans to turn orthopedic implants into real-time recovery devices. It's kind of what I think of. I brought Gwen in to share his startup and how he plans to unpack a battery-free sensor to reduce revisions and empower patients. So turning the mic over to Gwen, and he's got a few slides, but don't be bashful, raise your hand or just shout out questions. Welcome aboard, Gwen.

Thank you.

Yeah, thank you, Tiger. I'm really happy to be here and have such a great panel that can really help me navigate a bit more on our strategy and positioning. So I'm Gwenaël, founder from OrthoSense, and as Tiger said, we are transforming standard implants into smart devices. Now, before starting this venture, I did two startups, one in 3D printing and numerical optimization that didn't work out, and a second one with an interspinous implant was good after 7 years, but then we had a— it went south with an active founder. So I learned a lot during the journey, and now I started OrthoSense. It's basically based on a personal story. My father underwent 3 different surgeries and the common denominator was basically this blackout window that you have between the follow-ups. And so there the idea was, well, let's try to figure out if we can do something about that and push all the complexity outside of the body. So I have some slides I'll bring up to put a bit of color to the canvas as Mark Viscoglioli said in the first bone chat. So let me see if you can see everything in full screen mode and just shout if it's not the case.

It's in slide share mode. Yes.

Now full screen. Okay, fantastic. Great. So let's see if the Swiss internet connection is working well. So as I mentioned, our mission here is to transform standard implants into smart devices. To basically have this data capturing feature and being able to steer recovery, also help implant manufacturer with the post-market surveillance and collecting the key data and physiotherapists to steer the recovery. Now, I mean, all of you know, we all wear those kind of wearables that track step counts, sleep, and other kinds of metrics. But inside of the body, the implants are silent. And I don't need to educate the group here. I mean, over 30 million surgeries that are performed each year and close to none have connected data with the exception of Canary Medical with the Zimmer Biomet knee. And I really like how Bill Hunter plays it with, by quoting him, you know, you put implants with submillimeter accuracy, but you measure the outcome with a sextant and this drives cost. So this is also the numbers that Canary showed. There's 3 times more money that is spent on the patient care in year 1 and year 2 for the follow-up. But what is really interesting now in the US is Medicare has this mandatory team bundle payment, which will basically hold hospital accountable 30-day post-episode of care— post-surgery, sorry, for the episode of care. So every readmission, every complication will drastically reduce their profit and at the same time quality score. And so there is a real need for connected care and remote follow-up. And here's where we come into play. So maybe here the video is a bit lagging, just tell me. But the concept here is the sensor go inside of the implant. We don't change anything about the surgical workflow. We don't want to create friction there. And we have an external wearable that is powering it from the outside. And then we have a data collection and we have recovery curves that enables really to steer the recovery and inform the patient as well. So how does it work? And please stop me anytime. So we have sensor that we integrate into existing implants. It stays inside of the implant. We don't change anything there. Then we have an external wearable that's basically powering it and transmitting the data. And then we have a software that's doing all the heavy lifting in the background. So more implant force balance. We can also track temperature for early infection, for instance. And then on the patient side, we have an app that with gamification, we try to engage the patient in his or her recovery. And as I mentioned before, we want to integrate into existing surgical workflow and reimbursement pathway. The whole goal here is we decided not to develop our own smart implant. We didn't want to reinvent the wheel. So we want to basically help implant manufacturers transition from analog today to digital tomorrow. We did a first integration for a French implant manufacturer where we did a retrofit from existing implants. It will provide them a unique differentiator, being able to track remote patient— you know, remote and objective outcomes, sorry. And doing that all without needing the subjective, you know, all different questionnaires that we can have. There are great competitors out there. I mean, Canary is one of those. We decided to have a different route by basically pushing all the complexity outside of the body. So this drastically reduces the form factor of the sensor, the cost also inside. That's what also Mark Viscolilli said with the Coflex. He said, really try to reduce the cost of good at the beginning. So we had that approach. It's a double-edged sword because, I mean, they solved the compliance problem, Canary. We need to engage them, you know, in the recovery to wear this external wearable. But we decided to go in that route. Intelligent Implant has really great animal study results. It's the closest competitor in spine. But basically they are doing bone growth simulators. So they have those small electrodes that do bone electrical discharge to 3D print bone inside. But from a regulatory pathway, it's also quite challenging. Similar in the US, I think it was DirectSync Surgical that sold to NanoHive. And then also we have, you know, Verasense, that's an intra-op soft knee balancing that was acquired by Steiger Buford. And the initial idea, and happy to get your feedback as well, is we decided to target the spine market. But what is really interesting is also the double-digit CAGR growth in remote monitoring and telehealth.. And some studies from McKinsey showed that, you know, above 70% of the patients would like to check their information online or prefer telehealth instead of in-person visits. So I think we're in a good trend there as well. And how we will make money. So we have 3 different revenue streams. The first one is we think we will sell the sensor directly to the implementer. They get an extra top-up margin that's reimbursed through NTAP. So those are the numbers from Canary because we didn't have another comparable. Then we have the subscription-based model. So this $97 per patient per month for remote patient monitoring. We give them 60% to the provider. We capture 40% through subscription base. And then once we have sufficient data, also what— I mean, Colleen, happy to get your feedback also what you did with TrackPatch to do maybe episode of care analytics or value-based care with real-world evidence and predictive treatment. This is the high-level idea. We are a team of 3 fully committed, have also the chance to have experienced board members. So Philippe was the founder of Mediday, grew it to the second-largest regulatory consulting company in Europe. He sold it to a listed player in the US. Kelly was a former global arm director of Novartis. And we have also Professor Alfieri, the key opinion leader and a chairman of a cantonal hospital here with nearly 9,000 surgeries. Other advisors as well that complement the, I mean, our structure and strategy. And I'm really happy to have the feedback from experienced BoneChat members, also with potential future advisors. So Mark, I mentioned Rick before, that would be a great add also to the team. And also Yann Lamarche that are already advising us for 6 months and hope that they could join also on our team. There were some acquisitions in the field, so Guardium MEMS with the sensor that was acquired by Simjude back in the time that became— and then also with the platform for remote monitoring, so Masimo, they did their IPO as well, and there was some traction in the field. So we believe that could be a good momentum, and I think we have also good timing. And happy to go into the Q&A in more details on the strategy.

Yeah, that's a great fast opening. So, um, yeah, we can dive— let's dive into questions. I know everybody's head's spinning. Uh, if I only start off the obvious one, you, you've gotten an opinion that's Class 2 in the US?

So now we, we scheduled the, uh, QSUB meeting with the FDA, but now with the, with the government, we have to wait. That will be in January. But we believe—

yeah.

So, um, yeah, apologize for our politics.

Are you planning to work with individual device manufacturers to incorporate your sensors into the devices?

Yes, correct. That's the idea, Colleen.

So, you know, maybe with the exception of Zimmer, I don't know how married they are to Canary, But, but, you know, I think, I think it's brilliant to embed the technology into the implants. And the main reason is reimbursement and not having to change the care plan for patients. I mean, we learned the hard way at TrackPatch. That's very difficult. And reimbursing using the remote codes as the only form of reimbursement, the remote therapeutic codes. Is really hard. It's just so, so hard. So I think you guys are totally on the right path there because it just makes it seamless. And I think that having real-time feedback as well as implanted or embedded into the device is a great scenario, right? I mean, you don't have to suffer through the delay that Canary does. Yeah.

And one thing that we see also with Hinge Health and SWORD, you know, that gained some traction. I mean, Hinge, IPO at $2.6 billion valuation, if I remember correctly. They generated $123 million in Q1 of revenue. I think it went to $130 million in Q2 because there's also this need, you know, for digital physiotherapy, especially in remote areas where people are driving 1 hour maybe to see their PT. So the fact that you can do that at home and also combine this real-time— so they put on the wearable, they collect the data, they report pain score, which you have also objective measures. You can guide them through the physiotherapy session, and then you collect all that data. That's a bit the approach. But also in terms of the bundled payment, I don't know if that could be a good strategy as well.

Yeah, I mean, I think the bundled payment is about to get a little bit more serious. And there was a lot of indications they were going to go down that route over the last several years. But I think now the value-based care and the bundled payments are really going to start to come to the forefront, which will be important to have the data. You know, our experience at TrackPatch is you need, you know, in terms of datasets, you really need tens of thousands of datasets to be able to get the attention of payers. If you wanted to somehow leverage reimbursement, even further, you know, through payer channels. But, you know, clearly you could get there over time.

Yeah, and I would have also some question maybe to the bone chat members. Where do you see maybe the first clinical need that we could use as a target beachhead? Is it, you know, in spine in like complex cases, it's revision? With the Rush University Hospital, we got some great interest for revision knee surgeries, you know, to detect infection because if you can monitor with the temperature over time when they put the temporary spacer. But really keen to get your inputs on where you see what could be the best beachhead for us to target at the moment.

I don't know the technical difficulties of embedding the technology into spine devices since they can be much smaller than knees. But I would say, given the outcomes in spine, it's a pressing need to be able to improve the patient outcomes and have data do it, to do it. So I don't— maybe it's a more difficult technical exercise from your perspective. But I think the need is there.

Oh, we have a great lineup now.

You want me to go? So I'm sorry, this is Raymond Cloutier. I missed the first maybe 5 minutes and you did a great job, obviously being very concise, but I missed the parameters that you're able to measure. So when you ask the question, What should you prioritize? What first came to my mind is, and I do want to make a comment in general after I ask or mention this, is do you have the ability to measure particulate debris?

No, that at the moment, not. I think that will be really challenging. What we can measure, I didn't mention it in the beginning, so we can measure pressure or force, micro-movement. Then we can deduce also the bone integration or osseointegration. We are working also on the temperature. We have initial results that look promising for early infection, but microdebris, I think that would be really challenging. We have to think about it, but—

And what about pH?

That's in, it's in the longer road in the pipeline, also as a second gen of sensor without electronics. But yeah, I think it will be also challenging at the moment.

So I'm not a, I'm not a biologist by any means, but if you could correlate some kind of signal to early osteolysis, it to me, that's even more important than infection because of the incidence is way higher than infection and much more impactful. Now, if I can make an editorial comment, and this comes really close to home because my wife has 2 knee replacements that I designed. And so every day with every step she takes, it matters to me. And one's, I think, 13 years out now with early indications of osteolysis. And so there's a human element of what you're doing and all these other sensor companies where information is not necessarily because of, you know, it can generate anxiety. So I assume you've got psychologists or somebody thinking through those ramifications because, you know, there's the whole medical, the art of medicine that should be considered. At least that's my opinion. That's my own personal opinion with personal experience.

Thank you for the feedback.

Um, um, I think I'm up next. Um, so I have a few pearls. Um, LVADs, have you— do you do anything in the cardiology space?

No.

So LVADs have a high incidence of infection. I think this is the perfect indication, more so than the revision rate in, um, in in anything in orthopedics and spine. I think that's the better indication personally. Um, but I think spine is definitely a consideration as long as— so, uh, Piedmont was just on a few weeks ago, um, and they have to come up with a way to reduce spend by $30 million next year. So, and if you're on a bundle payment plan, the last thing that they're going to want to do is increase the cost. And so that translates the cost directly to the manufacturer. So, I think your costs are too high. Secondly, I think the subscription, particularly if you have to get it integrated into EMR, that's a 2-year sales cycle minimally. So, unless you work directly with the EMR, you're— it's going to be a very tough challenge, and it's a completely different sales. Would you agree with that, Marc? It's a completely different sales cycle. And so, I'm sure Marc can— Marc, go ahead if you want to illuminate on that.

Go, you're on a roll.

Okay.

Yeah. Um, and so, um, I would work directly with EMR Cerner, you know, um, work with them to, um, get it built into their system. So the hospitals don't have to do that heavy lifting. And so it's already integrated within EMR because if you rely on the hospitals, you're going to, it's, it's, it's awful. It's absolutely awful. Um, and then. I want to— I don't think I mentioned this, but loosening does lead to infection. So there's a lot of credibility behind pH. That's a big mis— far too misunderstood portion of orthopedics and spine. pH is very valuable to consider. And so I would love it to see if you can integrate the pH.

Great comment.

Well, let me say something real quick. So Gwen asked to go unplugged so we can talk about anything that we're— I'm not going to record the second half of this, so we can ask anything. We can talk about competitors, patents, anything you want to talk about. Okay, keep it going.