By Robin R. Young Reprint 9/26/06 IST stands for Innovative Spinal Technologies but it also stands for one of the largest amounts of capital ever raised by a start-up spinal implant company ($39 million) and it may well be the first surgeon-originated firm that was spun off to professional management and a who’s who list of private equity firms. IST raised its record-breaking amount of funds just a few months ago and we were wondering what CEO Scott Schorer and his team were up to. IST is the brain child of Dr. Bart Sachs and Dr. Stephen Hochschuler of the Texas Back Institute. The idea was to monetize in a more concrete way than just licensing to Sofamor Danek or DePuy or other spinal implant manufacturers the intellectual property that these surgeons develop through the course of their day-to-day activities. And the TBI surgeons are not alone. Virtually all the significant innovations in orthopedics have in one way or another come from practicing surgeons. Charnley. Michelson. Kusclich. The list, of course, goes on and on and we’ve profiled many of these surgeons on these pages. Innovative Spine Technologies was an attempt to formalize the process of taking good ideas, adding engineering and business acumen to create even greater value for the surgeons and investors. The company was created in 2002. Its initial $6 million seed funding came from a consortium of orthopedic companies who were promised equity and first rights of refusal for any intellectual property developed. As it turns out, it was indeed a consortium that was able to purchase the rights to bring these technologies to market—but the consortium was Panorama Capital (JP Morgan), Orbimed and MPM, three of the premier private equity healthcare investors in the world. For $39 million, they bought the rights to own the majority of IST. The TBI surgeons recruited a 34-year-old former Army Ranger Scott Schorer to cobble together an organization, figure out the product plan, get the surgeon’s brainstorms through the rigors of engineering and then onto the rough, regulatory trail to eventual commercialization. Schorer, it turns out, is the principal reason IST has what may well be one of the most attractive fundamental spine product lines among the many small spine companies, with a bank account that would make most other start-up spine companies drool. Before joining IST, he was CEO of Centrimed, the only healthcare exchange that actually made money for investors. Since taking this project over from the TBI surgeons, Schorer has meticulously built an experienced team of engineers, sales and regulatory executives. It was the combination of that team and the initial product platform that, we’ve been told, brought in the funding. Schorer’s senior team has a combined 159 years of experience and includes: 

• Mark Peters, CFO (15 years experience at such firms as Health Language and IBM)
• Janet Webb, VP clinical and regulatory (25 years experience; MEDVantage, Picker, BRI)
• Rob Brown, VP product marketing (17 years experience; DePuy, JNJ, Ethicon)
• Todd Fanning, VP sales (20 years experience; Spinal Concepts, Sulzer, Baxter)
• Bill Joseph, VP operations (24 years experience; NuVasive, Lockheed Martin)
• Dennis Colleran, VP R&D (18 years experience; Smith & Nephew, JNJ)
• Bill Naifeh, VP intellectual property (25 years experience; ANS, Halliburton)

IST’s first product, no surprise here, is a pedicle screw. Most of the small spinal implant companies knocking around this industry started as screw suppliers. The IST screw, called the Paramount Pedicle Screw System, is, however, very different from anyone else’s product. The Paramount™ is a non-cannulated screw that allows a K-Wire to slot through its tip and therefore guides the screw into placement. Seriously, you’ve got to see this to believe it. And play with it. It is a rule of thumb that analysts break anything they play with from a manufacturer. I tried. This Paramount stood up to the abuse well. The 2mm guide wire is a cool innovation since it minimizes kinking and unintended advancement. The locking cap is also proprietary (a useful attribute in this era of patent lawsuits) and was designed to eliminate cross threading. The Paramount Screw is 510(k) approved, on the market and at the IST booth at NASS. Next in the IST line is the Paramount™ VBR System, and what stood out for us when we looked at it was the inserter for the PEEK implant. Honestly, having seen hundreds of PEEK implants, I’m beginning to get a little PEEK design fatigued. But IST’s inserter was clever. It allows the surgeon to actively turn the implant in-situ while not giving up on control of the implant. Again, innovative, well engineered and designed.  IST’s plan is to develop a platform of MIS surgical products along with both fusion and motion preserving implants. In the MIS platform, the company is offering the Paramount ™ NAV. A joint venture between the firm and GE Healthcare, NAV is a surgical navigation aid that will, the company hopes, provide the kind of highly accurate intra-operative targeting that surgeons want from a navigation tool but with just a fraction of the currently accepted fluoroscopic exposure. Lastly, IST’s offering to the motion preserving gods is Paramount™ MicroMotion—a next generation micromotion or dynamic stabilization device. We’ve seen many of these, of course, and this design should stand up well in comparison to others we’ve seen.

Obviously, we are impressed with this company and through both its people and its products; we can see JP Morgan/MPM/Orbimed’s money working very hard. This year’s NASS, given the strength of this team and initial product line, may well prove to be IST’s coming out party.