Ossis preview

Ossis focuses exclusively on the design and marketing of world-class patient-specific orthopaedic implants.

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Ossis is New Zealand’s only orthopaedic implant design company. Ossis focuses exclusively on the design and marketing of world class patient-specific orthopaedic implants, primarily for use in the treatment of complex degenerative defects of the pelvis and spine and sarcoma (cancer) of the pelvis.

Overview

The global orthopaedic implant market is valued at over US$47b and is projected to grow to US$75b by 2023 . The global growth in implant demand is being driven by:

  • Baby boomers reaching the age where their own joints are failing them
  • Increasing rates of obesity in the western world
  • Desire to stay active and independent as people age
  • Asian middle class spending more on healthcare

As demand increases the implant market is rapidly evolving in the face of technological innovation.The declining cost of 3D printing technology and increasing availability of software to process and manipulate digital image data is creating opportunities to provide patients with previously uneconomic personalised treatments for complex anatomical defects which are superior in their clinical performance, compared to traditional treatment methods.

At Ossis, we use the latest digital image manipulation and design software and 3D printing in titanium to deliver life-changing treatments to patients, who may otherwise be permanently incapacitated. In comparison to commonly used “off the shelf” (OTS) orthopaedic implants, our patient-specific implants provide surgeons with a better solution to deliver more positive clinical outcomes for their patients.

Investment Highlights

  • We have successfully implanted over 200 patient-specific pelvic and sarcoma implants in Australasia, with no design or manufacturing related implant revisions to date.
  • Global sales reach through a recent partnership with rapidly growing United Kingdom orthopaedic firm, Corin Orthopaedics.
  • An engineer centric customer relationship model – an approach that resonates with surgeons and allows us to build strong industry relationships.
  • Strong projected revenue growth from $1.5m in FY19 to $6.1m in FY22P, an annualized growth rate of 51%.
  • Global market opportunities within the US$7.0b hip segment.
  • Strong board and management team with significant industry and management experience.

The Ossis solution

“Off the Shelf” (OTS) implants work well when used to treat simple anatomical defects. However, they are not designed for use in the treatment of complex degenerative defects and sarcomas. OTS implants therefore have a higher failure rate when they are used to treat complex anatomical defects, requiring further, even more complex revision of those failed implants. Depending on which country is being considered approximately 10% - 18% of all hip implants will require revision.

We extract and manipulate patient image data (x-ray, computed tomography and magnetic resonance imaging) and from that information we design our implants to meet the specific needs of each patient. As a result of being specifically designed for the patient, our implants:

  • Fit perfectly, ensuring they are in absolutely the right position which ensures correct pelvic alignment, centre of hip joint rotation and leg length. The position of OTS implants is typically driven by available bone stock, which may not deliver the best outcome for the patient
  • Do not require extensive and unnecessary removal of the patient’s bone. Our implants are designed to fit the patient’s anatomy minimizing bone removal, whereas with OTS implants the patient’s anatomy must be made to fit their fixed shape and size, which is likely to mean greater bone removal and consequently poor boney support; and
  • Fix the problem the first time, meaning that subsequent surgeries that require extended periods of patient rehabilitation are avoided.

Due to their patient-specific nature, our implants can be more expensive than the closest OTS implant, however healthcare funders are learning to take a “total cost of care” approach to cost, considering cost savings resulting from the use of patient-specific implants that deliver better long-term patient outcomes and lower total cost of care. After considering our clinical success rates, reduced surgical time and quicker hospital discharge and rehabilitation, we believe the total cost of care for a patient receiving one of our patient-specific implants is approximately 14% less than when an OTS implant is used in the same circumstance.

Market positioning

The orthopaedic implant market is large, highly profitable and competitive. It is different from most markets in that surgeons make the prescribing decision, but payment is made by a third-party funder, for example the public healthcare system or private healthcare insurers. Because of this dynamic, implant companies have, within reason, little incentive to compete on price, but rather they compete based on service levels to surgeons. We not only provide high service levels to our surgeons, but we also differentiate ourselves from potential competitors by having our engineers provide that service, if requested by the surgeon.

We maintain our competitive position, against our competitors, through a combination of:

  • Our modern design philosophy using 3D printed porous bone/implant interfaces to encourage bone ingrowth that fixes the implant permanently in position. Our unique porous structures have been proven to have strength properties superior to those of surface structures used on most of our competitors implants.
  • Our compact design to minimise bone removal, muscle damage and blood loss during surgery, reducing surgical time, length of stay in hospital and patient rehabilitation times.
  • Short delivery times, typically 3-4 weeks, compaed to 12-20 weeks for our European and North American competitors. This is a better outcome for hospitals, surgeons and patients.
  • Collaborative engineering approach, with our engineers strongly figuring in the sales and customer relationship management roles, driving repeat implant use by surgeons.
  • Our engineers provide surgeons with extensive theatre support, if required, for their first few surgeries using our implants. It is uncommon for a companies engineers to provide this level of sales support.
  • Actively presenting our excellent clinical performance data at surgeon meetings, while continuing to build our proprietary clinical data sets. We work with our surgeon partners to develop and maintain case data information.

Financial Overview

Financials* ($'000) FY17A FY18A FY19P FY20P FY21P FY22P
Revenues 946 1,183 1,530 2,475 3,847 6,115
Gross Margin 65% 69% 60% 66% 66% 65%
EBIT (367) (248) (446) (361) 330 1,310

Our forecast revenue growth is driven through expanding our distribution networks in key target markets of Australasia, USA and Europe, in order to increase our share of the rapidly growing global market. These forecasts assume $1.35m of capital is raised in this round.

Growth Plans & Use of Funds

Our strategic objective is for our patient-specific implants to become the “gold standard” of care for complex degenerative defects and pelvic/lower spine sarcomas, whereby our implants deliver superior outcomes and offer improved clinical and health economics benefits for surgeons, patients and funders, compared to off-the-shelf implants.

We are seeking to raise up to $1.35m to capitalise on this international growth opportunity. Funds raised will go toward key growth initiatives, including expanding our sales and marketing activities in international markets, gaining United States regulatory approval for our AceOs pelvic implant and purchase of instruments sets required for surgeries.

Next Steps

Patient-specific implants are the way of the future. We believe patients should no longer have to put up with implants that weren’t designed to meet their exact needs. With the advancement of multiple technologies decreasing the cost to produce patient-specific implants, we can make a real difference in the quality of life for an increasing number of patients worldwide and is so doing so dramatically reduce down ongoing medical cost for patients and those providing healthcare.

If you wish to receive more information about the upcoming capital raise for Ossis, please leave your details and an indicative investment amount below. We will be in touch with all interested investors in due course.