|The company's single-use instruments for spinal fusion surgery--Courtesy of Providence Medical Technology|
Providence Medical Technology announced the closing of a $12 million round of financing that will help it commercialize and expand its offerings of cervical fusion devices for use during spine surgery.
The financing includes equity from existing investors Stanmore Medical Investments, Aphelion Capital and others, as well as the the establishment of a new debt facility with Silicon Valley Bank.
"We are expanding our portfolio of cervical fusion products to address the majority of cervical pathologies requiring surgery," CEO Jeff Smith said in a statement. "Our focus is on differentiated, tissue-sparing devices and instruments that are designed to improve clinical outcomes, minimize complications, increase procedural efficiency, and reduce recovery times. With our new financing, we can accelerate our research and development activities to broaden our innovative product portfolio and further scale our global sales and marketing capabilities."
The company's devices are marketed under the brand name DTRAX. They include single-use surgical instruments enabling tissue-sparing access to the spine, a cervical cage that can be loaded with bone graft for adults with degenerative disc disease, a structural allograft that's placed in the spine during surgery, and associated bone screws and delivery devices.
In addition to the financing, Providence announced the appointment of Jason Hoffman as vice president of global sales, focused on domestic and international efforts. Previously he was a vice president at ArjoHuntleigh and Kinetic Concepts. He also served Johnson & Johnson for 13 years in sales and marketing roles.
According to a recent analysis by the federal Agency for Healthcare Research and Quality, spinal fusion surgery increased 70% between 2001 from 2011, or from 288,000 to 488,000 procedures per year. But insurance companies have begun tightening reimbursement for the procedure after reports of overuse and rising questions about its effectiveness.
Medicare reimbursement is down as well; the government estimated that $200 million was spent on unnecessary spinal fusion procedures in 2011. And it was recently reported that spinal fusion surgeries are 14 times more likely to be carried out in a locality in Florida than one in Maine.
Still, GlobalData analyst Joseph Gregory last year estimated that by 2020 the spinal fusion market will be worth $4.4 billion in the U.S., $684 million in Japan and $665 million in China. He projected procedure volume growth of 40% from 2013 to 2020.
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