Below The Knee - December 2024 Edition

Welcome to the December edition of our monthly summary, where we explore key developments across the wound care, diabetes, foot & ankle, and limb salvage sectors with a special 2024 summary of key activity, announcements and developments throughout the year.

From earnings season highlights to innovative advancements, here’s what you need to know:

💲 Finance Highlights

The latest earnings reports reveal both growth and challenges across the industry:

Smith+Nephew: The company’s Q3 earnings showed modest growth in its wound management segment, attributed to increased adoption of advanced wound dressings and single-use NPWT systems.

Integra LifeSciences: Announced plans to streamline its surgical and regenerative technologies portfolio, with a significant focus on wound care and extremity biologics, aiming to improve margins in 2025.

MiMedx: Shared Q3 results reflecting improved biologic product sales despite ongoing reimbursement headwinds. Expansion into new markets remains a top priority for the company in 2025.

Organogenesis: Noted a dip in revenue driven by reduced Medicare reimbursement coverage for their key products. The company is pivoting to focus on alternative product offerings.

Public Market Trends: Across the wound care and extremity space, #AI and imaging companies attracted strong investor interest. Early-stage startups combining remote patient monitoring with telehealth platforms are becoming attractive acquisition targets.

Earnings season continues to reflect steady growth across wound care and adjacent markets, bolstered by strategic product launches and partnerships.

WoundCare as a Fund - How is 2024 shaping up?

We may be wrapping 2024, but financially speaking we won't really know how the chapter ends for a few months. However - throughout 2024, we can see the trends within the overall WoundCare segment and how individual performance has shaped and shifted the larger segment.

📈 Overall the “Fund” is UP 8% YTD through Q3

🏆 Single biggest stock gain – SANUWAVE

💔 Single biggest stock decline – Integra LifeSciences

Above is a summary by market cap and covers the full year, below is a detailed snapshot of Q3 performance for all included companies in "The Fund"

• The effective share price represents the correlative value of the total stock price as a ratio based on woundcare related revenue from total revenue.

Q4 earnings have not begun yet – so in a month or so, we’ll have the very first full year trend of the very first “fund” focused across the wound care space – can’t wait to see how it shapes up.

📢 News & Industry Updates

Medicare Cuts Shake the Market:

• The ongoing impact of Medicare’s reduction in covered biologic skin substitutes continues to dominate conversations. With coverage dropping to just 26 products, representing 9 companies, with applications limited to eight over a 12-16 week period. Providers and manufacturers are pivoting to alternative approaches.

• Here is a list of currently approved companies as of this writing: Geistlich Wound Care, Integra Tissue Technologies, Kerecis, LifeNet Health, MiMedx, MTF Biologics, Organogenesis, Smith+Nephew and Stryker

• While many more are in process of conducting/completing clinical studies, this list is sure to change - but an area of incredible focus for many in the coming months.

Limb Salvage Focus:

• Technologies like remote patient monitoring and image-guided therapies are expanding their footprint in critical limb ischemia treatment.

• Hospital-at-home models for wound care and limb salvage are gaining interest among providers seeking cost-effective and patient-centric approaches.

Foot & Ankle Growth:

• The trauma and extremity market saw growing momentum, particularly in minimally invasive implant technologies that improve patient outcomes and reduce recovery times.

• The number of MIS approach based solutions seems to grow with increasing regularity across the F&A space, and don't expect that to slow down.

• #ArtificialIntelligence being everywhere, but is also growing in Foot & Ankle. Solutions like CurveBeam AI for surgical approach mapping, and implant solutions by Paragon 28 and Treace Medical Concepts, Inc. with AI as a component of their implant solutions.

Market Trends

• MedTech innovation remains resilient amid market volatility. Recent layoffs (14,000 jobs in 18 months) highlight challenges, but falling interest rates and rising IPO activity point to renewed investment, particularly in digital health and data analytics.

• However, trends are pointing toward improved invesment positions with Medline Industries, LP already moving toward an #IPO in 2025.

💡 Innovation in MedTech: Key Highlights Across Wound Care, Orthopedics, and Beyond 💡

Innovation in MedTech continues to accelerate, with advancements spanning artificial intelligence (AI), bio-integrative technologies, and transformative approaches to patient care. Below are some of the standout trends and developments driving the future of healthcare:

Artificial Intelligence

• Over the past decade, FDA-cleared AI-enabled devices have surged from 6 to nearly 1,000, with radiology leading adoption. However, exciting growth is occurring in wound care (9 devices actively employing AI) and orthopedics, with AI applications projected to drive the wound care market to $1.8 billion by 2028.

• Generative AI raises critical regulatory considerations. The FDA's first digital health advisory committee outlined key takeaways: Transparency: Clear communication to patients about AI's role in their care. Equity: Ensuring AI devices perform equitably across diverse populations. Supervised Use: Hospitals are cautious, emphasizing validation frameworks. Error Mitigation: Robust oversight is necessary to minimize AI-driven errors.

Bio-Integrative Technologies

• OSSIO raised $27.6M to expand its bio-integrative fixation platform, supporting commercialization and scaling production. These solutions hold promise for both orthopedics and wound care, offering natural material integration and improved healing outcomes.

Advanced Therapies and Devices

• Treace Medical Concepts, Inc. introduced the first AI-powered, patient-specific bunion surgery system, setting a new standard in personalized care.

• neoplas med GmbH secured $18M to further develop its cold plasma wound care technology, a breakthrough approach now certified under European Medical Device Regulation.

Partnerships and Global Expansion

• SolasCure partnered with the US Army Institute of Surgical Research to evaluate Aurase Wound Gel for combat wound management.

• Kerecis designated its first European Center of Excellence in Munich, focusing on fish skin and fatty acids for tissue regeneration, marking a key milestone in international growth.

The Big Picture

Innovation takes persistence and time. AI, for example, originated in healthcare decades ago but has only recently gained traction. As technology adoption accelerates across medtech sectors, the focus remains on improving patient outcomes, equity, and safety while fostering collaboration across stakeholders.

As we close out 2024, it's clear that this year has been incredibly busy within the wound care, limb salvage, foot & ankle, and diabetes management markets. Here are some of the most impactful and talked-about advancements and events that shaped the year:

Wound Care

• CMS Updates: Medicare's revised guidelines reshaped the wound care landscape, limiting applications to four over 12 weeks and narrowing the number of covered products from 193 to 15, sparking innovation in biologics and device design.

• Artificial Intelligence in Wound Detection: AI-powered imaging and thermal detection tools pushed early detection and personalized treatment forward.

• Therapeutics Innovation: The approval of biologic skin substitutes emphasizing porousness, flexibility, and serial application offered new hope for complex wounds.

• Development of Smart Bandages: Researchers have been developing smart bandages capable of monitoring wound conditions and transmitting data to healthcare providers. These bandages can detect wound conditions and transmit that information wirelessly to healthcare providers. Some prototypes even allow remote administration of treatments like antibiotics or electrotherapy, which can speed up healing and reduce scarring.

Limb Salvage

• Dissolvable Stent Technology: Abbott's Esprit BTK System, the first FDA-approved dissolvable stent, revolutionized the treatment of chronic limb-threatening ischemia.

• Bionic Limbs: Neurally controlled prosthetics allowed for a new level of mobility and control, redefining rehabilitation and quality of life for amputees.

• Mechanical Thrombectomy Outcomes: Studies revealed an 88.5% limb salvage success rate after one year, marking a milestone in vascular surgery.

Foot & Ankle

• Custom Implants and 3D Printing: Patient-specific instrumentation (PSI) became a cornerstone of surgical innovation, improving outcomes in total ankle replacements and other procedures.

• Total Ankle Replacement Innovations: The year saw groundbreaking progress in total ankle replacement surgery, including the adoption of custom 3D-printed implants and minimally invasive procedures. These developments aim to enhance patient outcomes by improving implant longevity and reducing recovery times.

• Patient-Specific Instrumentation (PSI): The integration of PSI and additive manufacturing in foot and ankle surgery has enabled the creation of customized surgical tools and implants tailored to individual patient anatomies, potentially improving surgical precision and outcomes.

• Focus on Prevention: Awareness campaigns emphasized the importance of proper footwear, strength training, and early detection of injuries, aligning technology with preventive care.

• Market Growth: The global foot and ankle devices market continued its expansion, with projections indicating a market size reaching USD 8,754.0 million by 2034. This growth reflects increasing demand for advanced treatment options and technological innovations.

Diabetes Management

• Cell Therapy Achievements: A 59-year-old man in Shanghai was reportedly cured of type 2 diabetes following a groundbreaking cell therapy treatment. His own blood cells were converted into insulin-producing cells and transplanted, leading to restored pancreatic function and the elimination of the need for insulin injections.

• Stem Cell Transplant Success: A 25-year-old woman had her type 1 diabetes reversed through a pioneering stem cell transplant. Post-procedure, she began producing insulin naturally, eliminating the need for external insulin injections.

• Advancements in Glucose-Sensitive Insulin: Researchers at Novo Nordisk developed NNC2215, a bioengineered glucose-sensitive insulin that adjusts its activity based on blood glucose levels, potentially reducing the risk of hypoglycemia. This innovation represents a major advancement in diabetes treatment.

• Advances in CGM Technology: Continuous glucose monitors achieved greater precision and accessibility, empowering patients to better manage their health.

• Therapeutic Devices: New combination products integrated insulin delivery with advanced monitoring, simplifying diabetes care.

2024 has been an incredible year for innovation, collaboration, and progress across these markets. The lessons learned and technologies developed this year are creating a foundation for continued growth and unlimited possibilities.

🎯 Looking Ahead

In December, we explored groundbreaking advancements in MedTech, including the growing role of #AI in wound care and orthopedics, bio-integrative technologies shaping the future of patient care, and collaborative efforts driving innovation. These highlights reflect how persistence and strategic partnerships are fueling transformative changes across the industry.

Get ready for January's edition, where we'll dive deeper into commercialization strategies for MedTech startups, analyze key trends shaping 2025, and spotlight how AI and advanced biologics are setting new standards for wound care and limb salvage. Stay tuned for actionable insights and fresh perspectives!

Your insights have shaped these updates—continue to share your thoughts and feedback!

Until next month,

-Scott