Scoliosis Implants: Planning for Change After Surgery

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0:00 In medtech, the difference between a good quarter and a great one isn't always the product. It's the friction standing in the way. Broken sales cycles, misaligned teams, deals that stall at the finish line. Every leader feels it, and the best ones know how to remove it. Welcome to Zero Friction, the podcast where we go inside the minds of MedTech's top commercial leaders to uncover the real barriers they face, the decisions they make, and the systems they build to keep the revenue moving. I'm your host Terry Coutsolioutsos. Let's remove some friction. Well, this is Terry Coutsolioutsos and welcome again to the Zero Friction podcast. Today we have a really missionoriented conversation that we're going to have with John Ashley who is the CEO and co-founder of Auctus Surgical, which their primary and purpose and mission in life is to help solve children's scoliosis. They have a unique elegant technology that really allows for patients to receive therapy today, but also more importantly gives them options and alternatives and adaptability that current technologies

Do not offer. And so with that, I'm going to hand the conversation over to John. He'll give us a little personal introduction on himself, his history in the space, and then we'll dive more into what Auctus does and delivers to the market. So John, thank you so much for being here. Why don't you give us a few minutes about yourself? Terry, thanks so much for having me today. I I really appreciate that and I'm excited to share the the Auctus uh surgical story and mission with your viewers. I spent my career in the medical device space. I had a very uh traditional uh start in the space working for Abbott Laboratories and uh after a nice foundation there got recruited into Medronic. Both of those positions though were in the Silicon Valley, not back where the mother ships are in the Midwest. So, in each case, I was working in a uh division of the company that had been recently acquired, you know, in a startup from the valley

That Abbott had bought uh 3 years earlier and and for Medronic, it was just a year earlier. So I got a really strong foundation in the industry in terms of all the particulars that are required to bring a new product to market from development uh quality systems regulatory operations but I also got exposed to the uh mentality of the startup world because a lot of the colleagues in both of those workplaces were from the uh original startup still and uh we're continuing to to work on that technology. So after both of those positions which were in the cardiac space developing heart catheterss, I decided to jump into my first startup which was Oraatech and I was intrigued by this particular opportunity because most startups have a very singular focus. They've got you know one shot on gold which is important because you need to execute and and make sure you're successful. Uh but Orach uh really had it kind of three shots on goal in their

3:06 Business plan. And when I got recruited as the fifth employee, they had already done uh some of the early development work on their initial shot, which was in the sports medicine market using radio frequency tools to modify tissue to do earlier intervention in the joints uh prior to having to need to do a total joint repairs to those joints. I got hired to start the spine business and I developed the spine catheter to do a thermal treatment in the intervertigual disc to treat low back pain. It was a fantastic company, great group of people. We grew from five employees to over 150. Went public uh grew to 50 million in sales. Uh it was a great experience. uh really taught me all of the challenges that you can see in a in a startup and and the resiliency that's needed to to push for forward and and make things successful. So obviously after that experience I was hooked. I've been continuing to pursue that kind of

Success ever since and and actually my my next experience was also very successful. I got orch was bought by Smith and Nephew and I was given a position there along with my entire team but in spite of the incentives they put in place to keep the team there. I got recruited to go work at uh Fox Hollow. So I left orthopedics and spine went back to uh the cardiovascular space. I got a great opportunity work with Dr. John Simpson. He's a, you know, phenomenal tower of innovation in this medical device space and he was very passionate about Fox Hollow. Um, having spent a lot of his career focused on arterial sclerosis and trying to treat that condition. Fox Hollow's goal was to get the plaque out of the body, not just uh push it out of the way. And uh that company was incredibly successful. As the VP of R&D, I oversaw the group that got the first FDA approvals for the aerectomy catheter, the Silverhawk. That product took off in the peripheral vascular space, which was very unique.

Now these days there's lots of very successful peripheral vascular companies, but at that time to be a success, you had to have a cardiovascular product. A lot of companies would get a 510K in the peripheral vascular and that was great because then they got to get their product out there, use it more, learn about it and um improve it for the cardiovascular space. But you really needed um a win in the heart to have a successful product. Fox Hollow was able to flip that script because the product had such a big impact in removing plaque out of the legs, salvaging people's uh limbs uh so that they could avoid amputation. So huge impact on patients, a fantastic uh financial pathway there for the company. They went public and were then acquired by EV3. So in some ways I was two for two. It seemed like a you know just a fantastic space to be in and and it is a fantastic space. You get to work with you know great people, people that want to make a difference

6:34 Especially in the Silicon Valley in those days. I actually left Fox before the IPL uh to pursue you know my first uh co-founding of a startup. I founded Sapphire Medical with Dr. Dr. Gary Fanton from Stanford uh going back into the orthopedic space and that was a very unique company. Dr. Fanton had been triing some of these products for startups and he wasn't happy with anything that was you know coming into his O and thought he could come up with a better concept. So, we worked together, developed the product, patented it, did all the testing, and got a 510K for a product that not only allowed the surgeon to finely tune the tension on the on the rotator cuff, but if they overtightened it, they could start over in that space. At the time, there was great dynamics in terms of six, seven different sports medicine players. um and a couple of them had uh implemented new next generation uh repair anchors, but the rest of them were losing market

Share. So with Sapphire Medical, we were able to uh sell that at auction with our 510K approval. We never commercialized it. We never even ran a clinical trial. We had our bench data and our cadaavver data and grow that market. They were, you know, losing market share. So we were able to sell that at a 20x multiple uh since then mostly in the orthopedic and spine space uh with several other successful spine startups that I consulted for including spinal kinetics uh as well as one where I was the executive vice president of operations and R&D.

That's great. And you know the funny thing is John as you're rolling through your history you know I spent 30 years in the medical device space and I spent um probably a good 20 plus years in the peripheral vascular and the cardiovascular space. So I know the Fox Hollow story. I worked at Guidant very early in the days of the first multi-link um cardiac stent which exploded the market. I actually helped was one of the first probably 10 sales employees to go market their first peripheral vascular division and we launched I think like six different stent and balloon platforms within 18 months which at that point in time was almost unheard of and so I grew up in this era of medical device of innovation iteration you know it was like every six months you had to have something new coming out you know the competition was severe and fierce and and so you you are in that hot bed of that sort of Silicon Valley medtec

9:20 Community where for a long point in time, you know, that was the vast majority of the new technology was coming out of that space. You can go to the Midwest and look at Boston Scientific and Metronic, but that was really more electrical than anything. And that was pacemaker defibrillator businesses. And so when Fox Hollow came out, the only other debulking device in the market was called the Rotolader, right? And and you're right, Fox Hollow was the first company to actually go in and remove the plaque and that was a groundbreaker.

Great job with the Fox Hollow piece. Why don't you tell us a little bit about like Auctus, what its mission is, what friction are you solving for the marketplace with this new technology and then where you stand today and and like literally where is it going to when do you think it's going to be ready for the market? Yes, Terry. I'm I'm very excited about Auctus Surgical. It is certainly a passion product pro, excuse me. It is certainly a passion project for me. Auctus is trying to address scoliosis.

So, a lot of my career has been in the spine market and the spine market has seen fantastic advances over the last 30 years. Most of the intervention in spine historically has been diffused. The spine, you know, is a very complex part of the body with, you know, multiple levels, a tri-jint complex. It's challenging to even diagnose sometimes where the pain generation is coming from. So the the goal of a lot of spine intervention surgery has been let's take the area that's causing the pain, let's fuse it so it can't move anymore. No motion should result in, you know, less or no pain. So that's been the approach.

But fusion is over a hundred years old spine fusion, right? So if you were to, you know, go ask a patient that uh had a spine problem, would would you like to come into the hospital and I'll give you this 100-year-old procedure? I I imagine most of them would, you know, want to opt for something a little newer, right? And obviously there's been a lot of advances in the approach to fusing the spine. the uh implants, the techniques have uh have gotten much better, a lot less morbidity, you know, less invasive.

But another thing that's been happening in the spine market is a pivot away from fusion to motion preservation. So there's been a lot of advancement there sometimes in fits and starts of approaches to treat the problem by for instance a disc replacement or or a limitation in the motion without going to a full fusion. And there's been success in those areas, but most of that success in those are in you know really focused problems where it's one level or two levels of the of the spine that is causing the problem. So we can do this intervention there and um treat it and reduce the pain for the patient.

12:21 Scoliosis is a very broad uh based def deformation of the of the patient's spine. So it's not one or two levels. It's it's typically 8, you know, 12 15 levels of the spine that are malformed or degenerative and it's causing, you know, a broad problem where these solutions that have been brought to the market so far can't address. Uh, and nobody is going to ever implant, you know, 10 artificial discs to, uh, treat a scoliosis problem. that you know may well I I shouldn't say that because everything always progresses but that would be uh you know that could be 24 hours of surgery to to get that done uh with the technology available today. So scoliosis is kind of this holy grail in the spine world in terms of you know how do you treat it without fusing it and today still the vast majority of patients with spine deformity get fusions and you know and since it's multiple levels almost all of this is uh open surgery very long incisions putting

In you know tight mostly titanium rods and dozens of screws to attach those rods to the spine and straighten it to correct the deformity but then also diffuse the spine. So there's you know a huge lack of movement after that. A lot of these patients hit their heads bend at the hips but everything in between is locked down. So Auctus goal is to with our uh dynamic tethering system we have a So is it a good time to maybe bring the video in from the website? Yeah, that'd be great. With this uh you know animation, we're demonstrating what our system is and how it works. We have a long flexible tether and we implant it through small 1 cm incisions and attach it to screws that are going into the vertical bodies on the long convex side of the curve. Right. Our tether is flat and one end of it is attached to this image in the box. This is an adjuster that also gets implanted

And attached to the spine. You can see how the tether is wrapped up on that adjuster and and the little marks showed that it can move and we can wrap more tether up, spool it up or unspool it. And that's all done magnetically. So this implanted adjuster has a high field magnet in it. And when these patients come back for regular checkups, regular follow-up postsurgery in the doctor's clinic, the standard for all scoliosis patients is you can see that curve of the spine. How much did it's we straighten it, right? That little part there was straightening of the spine.

15:16 Today all the products that are on the market for adolescent idiopathic scoliosis require the surgeon to do that straightening in the O. They most of them are rods and screws like I previously described. There are a couple of static tethers on the market where they use a polymer cord. They attach it to the spine and they pull the spine straight and screw it down during surgery. But in both cases, the surgeon has to get the straightening they want in the O. With our product, when these patients come back for the regular scheduled checkups, the doctor always takes an X-ray, right? The standard outcome for scoliosis is what is the curvature of your spine? And you get that via via an X-ray and measuring it.

These patients, what an elegant solution. By the way, I just want to say that like, you know, you know, for the layman out there, I think, you know, to me it sort of reminds me of, you know, what orthodontists do in a lot of ways, too, right? Yeah, that's a great analogy, Terry. This is an internal brace for the spine where we're pulling it straight, but allowing the spine to still have 80 85% of its normal motion. Motion is is healthy. It's a good thing. Uh, but we're trying to pull that curve out of the way. And what's been shown is something that's been that's called Wolf's law where when you constrain that one side of the spine for these children, the other side can continue to grow. And when that happens, the shorter lengths of the vertebrae and the discs on the inside of the curve get longer and the spine kind of naturally can grow. So, it's in a healthy condition, right? It can become more balanced on its own. But it's very very hard to

Predict that. There's not a a simple little diagnostic test of I've got this 11year-old girl. We're going to, you know, uh tether 12 levels of her spine and based on this test, that spine still is going to grow 4 cm. So this is how much we're going to take the curve out and the rest will grow out. There's no test to do that. And and doctors are every meeting you go to, they're discussing how they're trying to sort this out. They're taking, you know, x-rays of the patient's hand, their hips, their cervical vertebrae, how much growth is left, what do the growth plates look like, and they're guessing, right? But they can't get it correct.

17:58 And what we've provided is a a way for them to adjust the implant after surgery to fine-tune it based on each individual patient's anatomy, based on their growth rate. They don't have to get it right in the O. And it's already something that's happening in the workflow that their patients are coming back 3 months after surgery, 6 months, a year. They're getting exams. They're asking the patient how they're doing. And they take this X-ray. They always want to see what the curve of the spine is, but they also want to see the condition of the implant because it's not unusual at all for the rods and screws to have a problem or even the non-adjustable tethers to break. So, they can assess that on X-ray and see what the curvature of the spine is. But for the products on the market now, if they see a problem, they only have one solution either or or you know, one option. They can wait and see if

That problem, that broken cord or that broken screw is going to cause a problem, going to cause pain, or they can go back into the O and, you know, take out the broken screw, replace it, replace the broken cord with a new one. With our product, when they look at it and assess the curve, if the patient's growing really quickly and their spine is mostly straight and they're still growing, they can use this external controller you're seeing here, place it against the patient's back, activate it, and they can reduce the tension on the internal implant so that the spine can continue to grow without starting to bend the other way because that is a significant complication With the static tethers on the market now, the clinical literature shows 10 to 15 of those cases, the spine is growing greater than what the doctor predicted during surgery. And then those patients have a a right curve scoliosis instead of the left curve that they had before surgery. So a significant complication.

With our product, you can reduce the tension. So you would never get that over complication. In addition to that, for the patients that don't grow as much as the the doctor predicted during surgery or prior to surgery, they can increase the tension over time to further straighten that spine. When you look at a scoliosis surgical intervention today, success is a relatively low bar. These patients pre-operation have 40, 50, 60 degree curves. And when you look at the literature and on average the curves, whether it's the rod and screw fusion or the static tethers that are recently on the market, the average curves are usually 22, 28, 30°.

20:53 Step back and think, well, geez, that's still got a problem there. And yes, they do. But from an overall standpoint, it was a success. This patient with a 60deree curve is now 28. That is a much better balanced spine than they had before. They're going to have a much healthier life moving forward. But why couldn't they end up with a curve that was 10° 5°? Again, today with the treatments that are there for these adolescent idiopathic scoliosis patients, they can't make an an additional correction without going back into the O. So, it's been accepted that a 25° 20° uh curve, you know, 2 3 years after surgery is a big win. With Auctus, we believe we're going to get these patients uh down to 10° or less. That's to us a win.

Well, it sounds like it's a huge win for patients. And, you know, again, I'm going to go back to the mission of pediatric care. And this is all all the way through adolescence. it it probably removes additional surgeries. I love the fact that it's adaptable and flexible and you know creates opportunity for increased tension, reduce tension based upon what's going on. And where does it stand today? Like what where is you know are patients being treated with this today? Is it in the market? What where where do you stand today?

Well, unfortunately we're not yet in the market, Terry. We're uh what's considered a pre-clinical company. We've uh you know developed our product and a lot of testing of it on the bench in cadaavvers and in animal models. In particular, we've implanted the product in pigs, attached it to pig spines and then followed them for a period of time where we not only assess that the product is durable and it with you know withstands the the loads and the motion that the animals are are imparting on it on a daily basis. But we've done these adjustments that I just described where we've taken that external device, put it up against their backs, and then either increased or decreased the tension. In the studies we've done, we've we've randomized that, right? So, you take X-rays of the animal's spine before doing the adjustment. You do the adjustment again randomly, either increasing or decreasing the tension, and then you take X-rays afterwards. And in all cases, in the most recent pre-clinical trial we did, we were

23:25 Successful in all the adjustments comparing the before and after X-rays and followed these animals for 3 months doing four to five adjustments in each animal every you know 10 days to 2 weeks or so and expplanted the products after the 3 months. You know in these animals in a 3 month time period they they double in size. The spines do grow a bit in length. So that in that time period is very analogous to a growing child. The products we expplanted were all in perfect shape. They look just the same as they did the day we put them in.

There was no damage or wear and all of our adjustments were successful. So we have really strong validation of all the functionality of the product in the short term. Obviously, we still need to do some final testing before you put an implant like this in a patient's uh spine. You simulate it going through multiple years of implantation in uh you know a mechanical system where you know you go through 20 million cycles of loading. We've uh we're going through that testing now and once we've successfully completed that our design will be you know locked. will be will freeze the design and and move it forward for clinical use. But to you know address your question, we anticipate that in 2027 we'll start using this in patients. It'll be initially used in a clinical trial setting with the pediatric product uh that we're developing. We have a what I'm going to say is a an advantageous clinical and regulatory pathway. The FDA has publicly recognized that, you know, the pediatric

Market space is underserved. Yeah. Um it doesn't get the same kind of investment and innovation as other areas that, you know, like you mentioned previously. So what the FDA is doing is they're leveraging what's called the humanitarian device exemption pathway for pediatric products. Now that uh statute was put together for areas where there's um very few cases and in the guidelines uh the HDE or humanitarian device exemption pathway is supposed to be used for areas that just have 8,000 cases or less per year. It's like an orphan drug application.

Now the pediatric markets are small but even for adolescent idiopathic scoliosis it is you know you know five times larger than than that that pathway. But in spite of that limitation the FDA is using this as a means to help companies get new products on the pediatric market. And by that I mean it's a faster pathway to market and a smaller clinical trial. and the FDA is out there publicly saying, "Hey, we want to get these products to children. Uh, please use this pathway." Once you have the approval, you you will be constrained to only 8,000 cases a year, but that'll get you on the market and you can continue to collect data and get beyond that limitation. So, that's our pathway to market. And why it's a quicker pathway is we will do a clinical trial, but it's just, you know, one clinical trial. We don't have to do a phase, you know, we don't have to do a phase one safety study and then a pivotal. We'll just be

26:54 Doing a pivotal trial. And we only have to do 50 patients for the pivotal trial. So that's a relatively small study for an implanted device. And you know, as a result, it'll be faster and cheaper and we'll get on the market uh with our product 2029 2030 after doing that. We do have to do follow the patients, the 50 patients for 2 years. So that's the the time frame. If we start in 2027, you know, end of 2029, early 2030, we'll be able to launch. Again, once we launch uh it'll be a product available for patients, but we'll continue to collect clinical uh data and build up the uh number of patients till we can get beyond that 8,000 uh limit. we'll we'll submit additional data and get a denovo application once we get to 200 250 patients and uh then we won't have that restriction on the ability to market.

That's great. Well, you know, I would just say if you're a parent and with a child that has scoliosis, I'm I'm sure there's going to be more than 50 patients in line waiting for this technology. Absolutely. And and Terry, I I have a very close MIT colleague of mine who whose daughter went through this. I mean, I actually, you know, known this uh young lady since the day she was born, was very, you know, close with her family, saw her ballet performances, skied with her on and her parents on the slopes, and she was a very, you know, active young girl and got this scoliosis diagnosis, and her spine deteriorated rather quickly. I think between uh 10 and 1/2 and 12 she was in the O and having the surgery done and um she's got a fused spine and after the surgery she couldn't you know do ballet anymore right competitive soccer you know dropped way down in terms of her ability you know the skiing got less aggressive and she had to come up with all new activities

For her life you know she's you know told me many times that any kind of motion of her spine would be an incredible benefit benefit and uh that's what we want to do. Well, that's great. Well, John, I thank you so much for being here today. It's been a great inspirational story. It also helped me go back and and live some of my uh you know, some of my more fun days in the trans catheter space as well. And uh I'm surprised we never really crossed paths, but we we kind of did, but we never really crossed directly before. But I appreciate you being here. And then John, if um there are investors or other people that are interested, how can they engage you or on you know learning more and maybe you know helping out a little bit?

29:32 Yeah, I'm happy to uh speak to anybody about this investor surgeon parent. They can they can contact me uh either at johnctusurgery.com or uh they can call me. I'm happy to take phone calls. 650302-4380 is my direct line. Thank you so much, Terry, for giving me this opportunity today. Uh we're very excited about the impact we can have on these kids and happy to, you know, have Yeah. And I'll just add in, you know, Auctus Surgical, which is actusurgical.com, um is where you can find the website and there's a whole contact form there as well where you can reach out and connect with John or anybody else on the team.

So, John, thank you so much. I appreciate it. Happy Friday and uh looking forward to bigger and better things. Okay. Thank you, Terry. Appreciate it. You have a good day. That's a wrap on Zero Friction, the show built around one simple idea. Remove the barriers and the revenue will follow. If today's conversation was valuable, please subscribe and share it with somebody who needs to hear it. That's how we will grow this community. I'm Terry Coutsolioutsos, revenue architect powered by AI. Come find me at my website, my revrx.com, and let's talk about what friction is costing you and your organization. Until next time, keep removing the barriers and keep the revenue flowing.