It’s an interesting take on the David vs. Goliath battle.
Founded in 2015, Parsippany, New Jersey-based Onkos Surgical is trying to penetrate an orthopedic device market dominated by industry giants such as Stryker and Biomet.
While it has some solid partnerships and a new $17.6 million Series B financing round under its belt, how can it possibly compete?
The tactic, according to CEO Patrick Treacy, is specialization. Onkos isn’t taking on Goliath, it’s just taking on one arm. Or a leg for that matter.
“We refer to the business that we’re creating really as a specialty medtech model,” Treacy explained in a phone interview.
The team finds and licenses aging assets that haven’t been invested in for some time. With some innovation, a strong sales model, and a range of add-on services, Onkos injects new life into the device and makes it relevant once again.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“It has allowed us to be highly capital efficient,” he noted. “We could hit the ground running quickly and then bring those products into contemporary status.”
Onkos is laser-focused on a subspecialty within orthopedics — orthopedic oncology. It’s a field that has been left behind, Treacy explained, due to surging demand for age-related orthopedic products and an innovation creep into areas such as robotics.
“It became more and more apparent that with the continued growth in orthopedics and the advent of the baby boomers getting more primary joints that there was a space in musculoskeletal oncology that was becoming overlooked,” Treacy said. “There really hadn’t been any innovation or new developments in probably 15-20 years.”
To connect with that orthopedic oncologist crowd, Onkos has deployed a hybrid sales team and signed a distribution agreement with Vivex Biomedical. It’s a two-way street. While the specialty medtech startup is bringing in existing technology platforms, it also has committed to targeted areas of innovation. Three specific needs have been relayed to the team by surgeons in the field, Treacy said, through discussions that predate the startup’s incorporation.
“If you speak with [orthopedic oncologists] they will say that they’re an orphan group that MacGyver’s things together and nobody is really helping them with the tough stuff,” he said.
When tumors or growths are removed from bones, highly customized implants are often needed to replace the missing segment. In the past, the technologies have borrowed from other areas of orthopedics, but issues remain with infections; the reattaching of soft tissues, such as tendons and ligaments; and what is known as aseptic loosening, or a loosening of the implant without the presence of an infection.
Onkos has been targeting those weak links with funding from a Series A round led by 1315 Capital. The original 3D printing pioneer, 3D systems, also signed on as an early partner and an investor, helping to fuel 40-70 percent quarter-on-quarter growth. The headcount has ballooned from 3 to 37, Treacy stated.
Both 3D Systems and 1315 Capital returned to the table for Wednesday’s Series B, led by Canaan Partners. Onkos will use the new funding to expand its sales, marketing, and R&D platforms. The team is currently working on regulatory approvals ahead of an anticipated launch in Western Europe and Australia in 2018, Treacy noted.
In the meantime, there is work to do domestically. While Onkos has taken a very targeted approach, new applications for its products have organically grown. Its ELEOS Limb Salvage System, for example, is designed to replace segments of bone lost through the removal of cancerous growths. Yet it is also being used for the revision of major hip or knee replacements or for reconstruction surgeries after traumatic injuries that shatter sections of bone.
The short-term aim is to be a first-in-class orthopedic oncology company. Longer-term, Onkos wants to make a bigger move against the industry Goliaths.
Photo: janulla, Getty Images
