Neurostimulator implants to aid people with bladder and bowel control conditions have been around for decades, dominated by Medtronic.
But a string of developments across 12 months — including introduction of first-time competitor Axonics, followed by new features for Medtronic’s InterStim product line — have reignited the sacral neuromodulation market, putting it on track to grow 50% in the next year or two, according to a Morgan Stanley estimate last month.
When Irvine, California-based Axonics received FDA approval in September 2019 for its r-SNM system for fecal incontinence, it not only became Medtronic’s sole competitor in the space but brought new capabilities as the first rechargeable version for patients, while also being safe for patients to undergo full-body MRI scans. Two months later, FDA added indications for overactive bladder and urinary retention.
But it wasn’t long before Medtronic matched those features and shrank its device’s size. The company announced in August FDA nods across the three indications for InterStim Micro, a 50% smaller rechargeable device that like Axonics' has full-body MRI labeling and is supposed to last for 15 years, cutting the need for battery replacement surgeries.
A Morgan Stanley doctor survey indicated positives for both medtechs, signaling Axonics’ share is ahead of the Wall Street firm’s modeling and brand awareness of Medtronic’s product higher than expected, with market acceleration to come. Analyst David Lewis pegged Axonics' share at roughly 30% following the InterStim Micro launch.
Similarly, Baird analyst Mike Polark came to an 'everybody wins' conclusion in mid-September following a physician survey. "If the pie is likely to expand and there are just two folks eating, each are likely to get a bigger slice."
Brooke Story, who heads Medtronic’s pelvic health business, said the company believes the U.S. market grew 20% in 2020's third quarter. That's compared to a historical growth rate in the mid-single digits; approximately 3% to 7% over the last 25 years, Story said.
About 30% of the overall market is now rechargeable devices, Medtronic believes.
“I've been around Medtronic for 15 years; we've never seen growth like this for this particular space,” Story said, adding the company believes it's retaken four or five points of share since rolling out the MRI-safe recharge-free InterStim II and rechargeable InterStim Micro. The product line is the biggest for Medtronic's pelvic health business.
Story said the August launch was well-timed with medtech's COVID-19 recovery, attesting that it came as "the world was starting to figure out" how to carry out elective procedures even with the continued risk of the virus. The company doesn't believe the pandemic has negatively impacted the launch, as the business has grown both sequentially and year over year.
Notably, consumers often drive the decision to undergo a sacral neuromodulation implant, given bladder and bowel control conditions' impact on quality of life, said Brett Wall, president of Medtronic's Restorative Therapies Group.
Some 33 million people in the U.S. alone are affected by overactive bladder and nearly 18 million by fecal incontinence. Those individuals are already seeking and spending a lot of money on targeted products; Wall noted late-night TV ads for adult incontinence products that are shipped in discrete packaging. "We just think there's an enormous patient population out there that's accessible."
Accordingly, Medtronic has tapped into social media to grow awareness of its alternative. “We've been investing in direct-to-consumer for the last few years, particularly with Facebook ads and quizzes so that patients can find out about it,” Story said.
Wall said there are opportunities to get into other consumer channels going forward, especially as the procedure becomes simpler and more convenient.
Sacral neuromodulation implant procedures have been common in outpatient settings like ambulatory surgery centers for years, particularly given their 15-minute run time and what Story described as favorable reimbursement. But going forward Medtronic expects even more procedures to shift to ASCs, adding to a trend seen in other RTG businesses like spinal cord stimulation. That's partly driven by trends during COVID-19, when ASCs have been central to the rollout of Medtronic's new products as they've in many cases been a safer, more available option.
Conversely, Axonics started out with a heavier ASC bent and is now evening out more toward hospitals. Axonics did not provide a phone interview with officials, citing a quiet period ahead of releasing third quarter results, but referred to commentary from its second quarter earnings call. CEO Raymond Cohen noted in August that it had recently gained more hospital contracts, so its business will shift to a "more 50/50" balance between hospital outpatient procedures and ASCs.
Both companies remain focused on data generation. Medtronic last week announced a postmarket study of InterStim Micro across all indications of sacral neuromodulation, touting it as the first rechargeable system study to include fecal incontinence. Meanwhile, Axonics plans to initiate a multi-center U.S. registry on its system in the fourth quarter.
Medtronic is also hosting an investor day Wednesday where the company will share other updates on pelvic health and the rest of its businesses.
For one, Medtronic will outline a restructuring it teased on its last earnings call meant to streamline operations at the medtech giant. Under the new model, Story’s pelvic health business will be considered one of 20 operating units, and Wall’s new title will be president of the neurosciences portfolio. The model may be especially timely as Medtronic continues to compete with a narrow specialist like Axonics.