Obesity Back To Basics 2011


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what are the new regulatory challenges facing med tech companies in the bariatric space?

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Obesity Back To Basics 2011

  1. 1. Obesity 2011: Back To Basics In Bariatrics(A#2011400052)Written By Anne StaylorIssue: MTI Aug. 2011Section: Cover Story (Long Article)Article Type: Technology SurveyIndustry Supplies, Equipment and DevicesSegment:Therapeutic Metabolic Disorders; Metabolic Disorders/ObesityCategories:Companies: Aetna Inc.; Allergan Inc.; Apollo Endosurgery Inc.; Arena Pharmaceuticals Inc.; BaroSense Inc.; Blue Cross Blue Shield; Cigna Health Care Inc.; Cleveland Clinic; Covidien Ltd.; Dartmouth College; EndoGastric Solutions Inc.; EnteroMedics Inc.; George Washington University; Geriatric & Medical Cos. Inc./United Health Care Services Inc.; GI Dynamics Inc.; HCA Inc.; HCA Inc./United Healthcare Services Inc.; Intuitive Surgical Inc.; Johnson & Johnson; Johnson & Johnson/Ethicon Endo-Surgery Inc.; Massachusetts General Hospital; Northwestern University; Ohio State University; Orexigen Therapeutics Inc.; ReShape Medical Inc.; Stanford University; TransEnterix Inc.; University of Cincinnati; University of Iowa; USGI Medical Inc.; ValenTx Inc.; Vivus Inc.Summary: The market for obesity products has blockbuster potential, but it s proven an elusive target for the medical device industry. The challenging regulatory environment, weak economy, and skittish investors have slowed the number of product launches in recent years, and there have been some high-profile setbacks for several potential weight loss therapies. But now, a "back to basics" movement, focused on understanding the physiological triggers behind obesity rather than simply restricting food intake, hopes to spur development of more effective minimally invasive weight loss solutions.Further Title Magazine Issue Article IDAnalysis: Obesity Devices And The FDA Medtech Aug. 2011 2011400053 Review Process: An Interview Insight With Lee Kaplan, MD Proving Device Incubation IN VIVO Apr. 2011 2011800060 Works: An Interview with The Foundry ASMBS Highlights New Medtech Aug. 2010 2010400061 Developments in Bariatric Insight Surgery New Developments in Obesity Medtech Oct. 2009 2009400079 Intervention Insight
  2. 2. Access these articles using Windhovers Strategic Intelligence Systems or online store (www.windhover.com/buy) or call customer service at 203-838-4401 ext. 226. Article begins on the next page . . . © 2011, 2000 Windhover Information Inc.No part of this publication may be reproduced or modified in any form, orincorporated into any information retrieval system without the writtenpermission of Windhover Information Inc. (203-838-4401 ext. 232). Thisinformation is intended for the recipient only. Any further distribution is indirect violation of copyright laws.
  3. 3. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTObesity 2011: Back To Basics In Bariatricsby Anne StaylorWith its blockbuster potential, the market for obesity products has been an attractive yet somewhat elusivemarket for the drug and medical device communities. A significant amount of venture capital has beeninvested in this space and there has been a great deal of interest in finding a drug or minimally invasivesolution for the treatment of primary obesity. However, in the last few years, a challenging regulatoryenvironment, a weak economy, and a skittish investment community have slowed the number of devices anddrugs hitting the market and there have been some high-profile setbacks for several potential weight losstherapies.On the drug side, three would be weight-loss drug manufacturers (Vivus Inc., OrexigenTherapeutics Inc.,and Arena Pharmaceuticals Inc.) recently met with rejection in the final stages of the FDA review process.And on the device side, some notable start-ups have gone under (eg, Satiety Inc.) or have moved offshore (eg,USGI Medical Inc.) to gain commercial traction outside the US. ( See "FDA Rethinking Weight LossStandards: A Test Case for Patient-Focused Drug Development," "The Pink Sheet" DAILY, June 6, 2011[A#14110606003]; "Proving Device Incubation Works: An Interview with The Foundry," IN VIVO , April2011 [A#2011800060].)In the wake of these events, there has been a movement to go "back to basics" to find a better and moreeffective minimally invasive weight loss solution. At the 28th annual meeting of the American Society forMetabolic and Bariatric Surgery (ASMBS), held in Orlando in June, it was clear that the paradigm for obesityis changing. Researchers and medical device manufacturers alike are now striving for a broader definition ofobesity and are making a bigger push toward understanding the underlying mechanisms behind obesity andhow bariatric surgery leads to weight loss, improves outcomes, and impacts chronic disease.For the last 30 years, surgical procedures and devices have been developed under the assumption that bariatricsurgery achieves weight loss primarily through food restriction and malabsorption. However, this mechanicalmodel is giving way to a new physiological model that postulates bariatric surgery achieves weight loss andimproves other chronic diseases through complex neurohormonal signaling between the gut, the brain, thepancreas, the liver, and other tissues. Today, experts say restriction and malabsorption are responsible for lessthan 10% of the weight loss that occurs following bariatric surgery and 90% of weight loss is due toalterations in neurohormonal signaling.Looking to the future, academia and industry alike hope to use this improved understanding to identify waysto make surgery more effective, to develop new, less risky alternatives to surgery, and to predict whichpatients would benefit most from surgery and which ones are not likely to benefit. In the meantime, devicemanufacturers are developing less invasive technologies for bariatrics with this new paradigm in mind, inhopes of overcoming some of the current economic and regulatory hurdles to bringing new products to marketin this arena.Obesity Market TrendsThe economy and high unemployment have strained market growth in bariatrics over the last few years,especially in the cash market, keeping the number of US bariatric surgical procedures relatively flat in 2009and 2010. However, the US market for minimally invasive bariatric devices is expected to see moderategrowth over the next five years. Valued at close to $345 million in 2010, this market is projected to increase ata compound annual rate of 6.6%, reaching sales of more than $500 million in 2016, according to MedtechInsights recently published market and technology report, "US Market for Minimally Invasive BariatricSurgical Devices." ( See Exhibit 1.) Market growth will be driven by several factors, including continuedgrowth in the obese population, expanding indications for bariatric surgical procedures, and an increasingObesity 2011: Back To Basics In Bariatrics 1
  4. 4. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTdemand for minimally invasive, less costly, and safer weight loss treatments. The market will also be drivenby continued utilization of laparoscopic adjustable gastric banding (LAGB), new minimally invasive devicesand procedures, and emerging bariatric technologies.Considering the huge unmet clinical need and the market potential for obesity products, it seems unlikely thatmarket growth in bariatrics would have slowed at all in the last few years. Obesity continues to be asignificant and growing health problem in the US and throughout the rest of the world. ( See Exhibit 2.) In theUS alone, approximately 200 million adults (or a staggering 68% of the adult population) are categorized asoverweight or obese, according to the Obesity Society. Of these, more than 72 million are considered obese(more than one-third of the adult population) and more than 15 million are morbidly obese, according to theASMBS. Obesity is a leading cause of diabetes, disability, heart disease, morbidity, and mortality, resulting innearly 112,000 deaths in the US every year. It is also responsible for rising health care utilization and costs inthe US. According to the federal government, the total estimated annual health care costs for treating obeseadults in 2008 amounted to nearly $150 billion, with annual spending projected to reach $344 billion by 2018.Obesity Market Trends 2
  5. 5. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTCurrent treatment options for obesity include exercise and dieting, prescription drugs, and bariatric surgery.But to date, these treatments have had only limited success in stemming the tide of this disease. Diet andexercise alone have proven unsuccessful in 80% to 85% of patients at one year. The drug alternativescurrently available for treating obesity can be effective for some, but drugs often result in only moderateweight loss (typically no more than 10% of body weight). For people who are obese and morbidly obese,conventional weight loss methods are largely ineffective, leaving bariatric surgery as the primary treatmentoption for this population.Bariatric Surgery TrendsDuring the prerecession years, the number of bariatric surgery procedures had been steadily growing due toseveral factors, including the advancement of laparoscopic technologies and techniques and an increasingdemand for the less invasive, less expensive, and reversible gastric banding procedure, which was approved inthe US in 2001. Over the last few years, rising unemployment and economic uncertainty has caused manypatients to postpone bariatric surgery, particularly given the high out-of-pocket costs usually associated withthese procedures, causing bariatric procedure volumes to flatten or decline in 2009 and 2010. However,despite the current economic conditions, Medtech Insight estimates that 311,100 open and laparoscopicbariatric surgical procedures will be performed in the US in 2011, growing to 433,200 by 2016. ( See Exhibit3.)Bariatric Surgery Trends 3
  6. 6. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTBariatric procedures include Roux-en-Y gastric bypass (RYGB), adjustable gastric banding, biliopancreaticbypass, biliopancreatic bypass with duodenal switch, horizontal gastroplasty, jejunoileal bypass, and sleevegastrectomy. Today, gastric bypass (typically laparoscopic RYGB) remains the most commonly performedoperation for weight loss in the US and is considered by many to be the gold standard for weight loss surgery.But the case mix for bariatrics is changing as new evidence emerges regarding the safety, efficacy, anddurability of various new procedures and as the indications for bariatric surgery continue to expand.Laparoscopic Sleeve GastrectomyOne relatively new bariatric procedure that is beginning to change the case mix is the laparoscopic sleevegastrectomy (LSG), a procedure in which the stomach is surgically reduced to a thin, vertical sleeve that isabout 15% of the stomachs original size. Also called vertical gastrectomy, greater curvature gastrectomy,parietal gastrectomy, and vertical gastroplasty, sleeve gastrectomy has historically been used as the restrictiveportion of the technically difficult biliopancreatic diversion with duodenal switch procedure, serving as thefirst stage of a two-staged approach designed to lower the risk of surgery for the super obese. More recently,physicians have been performing LSG without the duodenal switch and the current scientific literaturesupports the use of LSG as a primary bariatric procedure.With five years of data now available on primary LSG, the number of these procedures has been steadilyincreasing. Although the actual number of sleeve gastrectomies performed to date is difficult to quantify,executives from Allergan Inc., manufacturer of the LAP-BAND, told analysts in August 2011 that withinbariatrics, sleeve gastrectomy increased its procedure share from 8% in May 2010 to 20% in May 2011. Themajority of that increase came at the expense of gastric bypass surgery, but Allergan also saw a threeshare-point decrease in bands.Physicians have been increasingly converting to the sleeve gastrectomy procedure because many view it as ahappy medium between gastric bypass surgery and laparoscopic adjustable gastric banding (LAGB). Mostsurgeons find sleeve gastrectomy technically less difficult than the RYGB and research to date suggestsoutcomes at one year following LSG, in terms of excess weight loss and diabetes resolution, lie midwaybetween those for laparoscopic RYGB and LAGB. Some physicians have also been migrating to sleevegastrectomy from the LAGB as it does not require as much follow-up in terms of postoperative bandadjustments.In 2010, the American Medical Association assigned a Current Procedural Terminology (CPT) code to LSG(CPT 43775), giving the procedure a boost in the eyes of payors. Soon afterward, several major insurers,Laparoscopic Sleeve Gastrectomy 4
  7. 7. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTincluding Cigna Healthcare Inc., Aetna Inc., and United Healthcare Services Inc./HCA Inc., changedtheir policies to offer LSG; however, several othersstill deem it investigational, including Medicare and insome states Blue Cross Blue Shield, and many small insurers still do not provide any insurance coverage forLSG. According to Jaime Ponce, MD, president-elect of ASMBS and chair of the ASMBS InsuranceCommittee, the ASMBS is collecting more data on LSG and plans to submit the data to Medicare in hopes ofobtaining a coverage decision in the next few years. As insurance coverage improves and as more datasupports the long-term efficacy of the procedure, Ponce predicts LSG could potentially increase its share ofthe market to 30% of all bariatric procedures by 2016.Laparoscopic Greater Curvature PlicationAnother bariatric procedure that has emerged in the last few years is laparoscopic greater curvature plication(LGCP). Also known as laparoscopic gastric plication, this investigational procedure does not require gastricresection, intestinal bypass, or placement of a foreign body and is theoretically reversible, although a reversalis reportedly difficult to do. LGCP reduces the stomach volume by restricting the gastric outlet along thegreater curvature of the stomach in a manner similar to the dissection for a sleeve gastrectomy, but rather thanresecting the stomach, the stomach is folded inward and sutured or clipped to achieve gastric restriction. Likethe sleeve, LGCP also requires dissection of the greater omentum and short gastric vessels. In theory, theprocedure appears safer than the sleeve gastrectomy as it does not involve resecting the stomach and there isless potential for gastric suture line leaks. However, without resection of the stomach, critics say theprocedure is less likely to alter the neurohormonal regulation of ghrelin, a hormone responsible for appetite,which could ultimately affect hunger, weight loss, and other outcomes for this procedure.LGCP procedures are on the rise, and to date, about 1,500 gastric plications have been reported inpeer-reviewed literature, according to Robin Blackstone, MD, president of the ASMBS. Studies in the UShave only published preliminary results with the largest reported population of LGCP patients treated by asurgeon from Iran, Mohammed Talebpour, MD, who started performing gastric plications in humans in 2001.Currently, the procedure is in clinical trials in the US at the Cleveland Clinic and at Ohio State UniversityMedical Center , and is being studied in conjunction with researchers in Brazil and the Czech Republic. Theclinical trial, sponsored by Ethicon Endo-Surgery Inc. (EES; a Johnson & Johnson company), isevaluating the procedure using a laparoscopic gastric plication device being developed by EES that is not yetFDA cleared in the US.In March 2011, after receiving inquiries from patients and payors regarding the procedure, the ASMBSreleased a policy statement on gastric plication, deeming it investigational at this point,. According to theASMBS, the quantity and quality of data regarding LGCP is currently insufficient to determine the safety andefficacy of the procedure, but research is ongoing. To date, only four papers involving less than 300 patientshave been published on laparoscopic gastric plications and yet the procedure is currently being marketed as anew option for surgical weight loss by some providers.Access To CareAccess to care has been, and continues to be, a key limiting factor in the market growth of bariatric surgery.Although bariatric surgery has proven to be highly successful in achieving weight loss, only 1% to 2% of theeligible obese population currently undergoes bariatric surgery. Studies have shown insurance denial andunattainable coverage are the two most common reasons why patients do not undergo laparoscopic gastricbypass surgery. Other reasons include the high cost of the procedures, the risk of complications associatedwith the procedures, social stigma, and patients fear of permanently altering their digestive tracts.According to HealthGrades 2011 Bariatric Surgery Trends in American Hospitals, the payor mix for bariatricsurgery in the US is currently 74.37% commercial insurance, 20.27% government insurance, and 5.2%self-pay. New data suggests a trend toward increasing insurance coverage for bariatric surgery inLaparoscopic Greater Curvature Plication 5
  8. 8. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTemployer-sponsored health plans. In fact, despite the current economic environment, bariatric surgeryinsurance coverage continued to grow among all employers between 2006 and 2010, according to Mercers2010 US National Survey of Employer-Sponsored Health Plans, with small employer coverage growing fasterthan large employer coverage. Among all employers, bariatric surgery coverage expanded 13% between 2007and 2010, according to the survey, which included more than 2,800 US employers that offer health insuranceand have 10 or more employees. ( See Exhibit 4.)Although expanding insurance coverage offers hope to those patients who cannot afford to pay cash forbariatric surgery, many bariatric surgeons say access to care, even among the insured, is still a huge problem,as having insurance coverage does not necessarily translate into actual access and availability in practice.According to the ASMBS, about 25% of patients considering bariatric surgery are denied insurance coveragethree times before getting insurance approval, and about 60% report worsening health during this waitingperiod.Many insurance companies require a large copay for bariatric surgery, which is still cost prohibitive for manypatients, or they have strict guidelines that require patients to jump through several hoops before they willapprove bariatric surgery. Most commonly, patients must spend six to 18 months completing a medicallymanaged weight loss program and/or lose 10% of their body weight, even though they have been on multiplediets over their lifetime without success. These requirements can limit access or delay treatment for thesepatients, as many payors do not pay for dietary treatments and carriers often penalize patients who miss asingle monthly visit by forcing them to re-initiate the entire process. In March 2011, the ASMBS released aposition statement on preoperative supervised weight loss requirements, saying that although surgeonrecommended preop weight loss may improve surgical risk in certain patients, there are no Class I studies orother evidence to support this widespread practice and such policies can delay, impede, or interfere withlife-saving treatment.Access To Care 6
  9. 9. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTAccess to care is also being impacted by the 2010 update to the Milliman Care Guidelines for Inpatient Care,which recommended shortening the length of stay (LOS) for laparoscopic gastric bypass to 23 hours in orderto cut costs and improve resource utilization. These guidelines are used by many hospitals and health plans todetermine care and LOS. The ASMBS is challenging these guidelines, as an ASMBS membership surveyfound that 20% of respondents had experienced more than five denials in one month when seeking insuranceauthorizations for bariatric surgeries with a medically indicated LOS of more than 24 hours.At this years ASMBS meeting, Stanford University researchers presented a new study of outpatient bariatricsurgery that could spark more debate on these guidelines. The study included data on 52,000 patients from theSurgical Review Corp.s Bariatric Outcomes Longitudinal Database, a clinical database of bariatric surgerypatient outcomes with data on patients treated at Bariatric Surgery Centers of Excellence. The study foundgastric bypass patients discharged on the same day of surgery were 13 times more likely to die (risk adjusted)and 12 times more likely to have serious complications (1.9% vs 0.16%) than patients who were dischargedafter two days. The overall 30-day mortality rate was 0.1% for patients who stayed in the hospital for two ormore days, and about 0.8% for those who were discharged on the same day of surgery. According to theASMBS, the society continues to work with the insurance industry on this and other coverage issues toimprove access to care.Impact Of Social MediaAlthough difficult to quantify, social media is another factor that many believe is significantly impactingwhether or not patients choose to have bariatric surgery and/or what surgery they decide to have. There is anincreasing number of blogs and social media forums dedicated to bariatric surgery where patients andpotential patients seek answers to questions, discuss current and emerging treatment options and procedures,and share their personal stories of success or failure with various surgical procedures. The role of social mediain decision-making for potential bariatric surgery patients is growing, and experts say the "buzz" on theinternet, particularly chat rooms and blogs that are not very positive, can have a real impact on patients andprocedures. According to Robin Blackstone, the ASMBS has traditionally focused on the education of itsmembership, but is starting to reach out to educate the public through Web sites and other media campaignsthat explain the different procedures and the "medicalization" of obesity—to help the public understand thatobesity is a disease itself and not just a cosmetic issue.Obesity: Beyond The BMIIn addition to improving access to care for bariatric surgery patients, future procedure growth will likely comefrom the expanding definition of who could benefit from this type of surgery and from an increasing role forbariatric surgery in chronic disease management. Although insurance companies have typically used bodymass index (BMI) as a cut off to determine who qualifies for bariatric surgery, in practice BMI is notnecessarily the best measure for defining obesity, identifying who is obese, and determining who would mostbenefit from bariatric surgery. At this years ASMBS meeting, researchers discussed the need to redefineobesity and to look at expanding the selection criteria for bariatric surgical patients to include other factorsbeyond BMI.Expanding Role In Less Obese PatientsIn spite of the weak economy, growth in bariatrics will be positively impacted by the expanding role ofbariatrics in less obese patients. In February 2011, the US Food & Drug Administration (FDA) approved theexpanded use of Allergans LAP-BAND Adjustable Gastric Banding System, an inflatable and adjustablesilicone ring that is surgically implanted around the upper part of the stomach to limit the amount of food thatcan be eaten at once. The decision expanded the approved indications for LAP-BAND to include obeseindividuals with a BMI of 30 to 34 who also have an existing condition related to their obesity, such as type 2diabetes mellitus (T2DM) and high blood pressure. (Previously, the device was indicated for use in adultsImpact Of Social Media 7
  10. 10. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTwith a BMI of at least 40 or a BMI of 35 and higher with at least one obesity-related medical condition.)Although this represents a narrower indication than originally sought by Allergan, as the company had alsoproposed to expand the indication to include people with a BMI of 35 to 39 and no obesity-related condition,the expanded indication opens a large, previously untapped market for the LAP-BAND. With this expandedindication, Allergan estimates that approximately 37 million obese adults who have a BMI of 30-40 and atleast one comorbid condition now qualify for the LAP-BAND when all other conservative weight-losstherapies have failed. Allergan is also in clinical trials to determine the potential safety and effectiveness ofthe LAP-BAND system in morbidly obese adolescents (ages 14-17) with at least one obesity-related healthcondition. The company filed a supplemental premarket application (PMA) with the FDA in Q3 2009 for useof the LAP-BAND in morbidly obese adolescents. To date, about 650,000 people worldwide have received aLAP-BAND.During Allergan s Q2 2011 earnings call, David E. I. Pyott, the companys chairman, president, and CEO,reported that year-to-date sales revenues for the firms obesity intervention line were down 13.5% in thequarter. In the US, which accounts for the bulk of global sales, Pyott said the overall number of bariatricprocedures performed was down 8%–a trend the company attributes to high unemployment rates and access tocare issues. To address the downturn, the company plans to leverage its recent FDA approval for the lowerBMI indication with payors and is dedicating special resources at the management and field levels to addressthe access to care and insurance issues. According to the company, the LAP-BAND accounted for about 48%of the total market in Q1 2011, and LAP-BANDs share within the band category increased from 74% in May2010 to 82% in May 2011. The company reported weak sales in the second quarter in both Australia andCanada, which was offset by strong sales growth in Latin America.In addition to the LAP-BAND, gastric bypass surgery may also have an expanding role in treating less obesepatients with T2DM, according to new research presented at ASMBS. Researchers from Stanford Universityanalyzed data from 980 gastric bypass patients and found that patients whose presurgery BMIs were below 35(n = 12) had 100% resolution of their T2DM in the year following surgery, compared to just 75% resolutionin patients with a BMI of 35 or more. At one year, patients at the lower BMI not only saw improved outcomesin terms of diabetes, but also had better weight loss relative to their presurgery weight and shorter operatingtimes than patients with higher BMIs.According to John Morton, MD, associate professor of surgery and director of bariatric surgery at StanfordHospital and Clinics at Stanford University, one of the co-authors of the study, this initial study suggestspatients should be getting to surgery sooner rather than later before their weight gets too high and surgerybecomes less effective. He also believes gastric bypass surgery should be reevaluated for use in lower BMIpatients. "This study suggests that BMI should not be the only indicator for bariatric surgery, particularly iflower BMI patients can see these kinds of results," said Dr. Morton. "It may be time for a reevaluation, as hasbeen done with LAGB patients with a BMI of 30 to 35."This and dozens of other studies have evaluated bariatric surgerys impact on T2DM, and research shows thatdiabetes symptoms can improve or resolve within a few days of having bariatric surgery, even beforesignificant weight loss occurs. One of the most cited studies to date investigating bariatric surgerys impact onT2DM was published by Henry Buchwald, MD, PhD and colleagues in March 2009 in the American Journalof Medicine. This study demonstrated that bariatric surgery can effectively improve (78.1%) or resolve(86.6%) T2DM in people with morbid obesity. ( See "New Developments in Obesity Intervention," MedtechInsight , October 2009 [A#2009400079].)Bariatrics And T2DM: Expanding The MarketAs the evidence continues to mount, the movement toward using bariatric surgery as a potential primarytreatment for T2DM is gaining momentum, and leading the way toward this goal are some prominent diabetesExpanding Role In Less Obese Patients 8
  11. 11. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTsocieties.One of the most exciting developments discussed at this years ASMBS, was the position statement released inApril by the International Diabetes Federation (IDF). The statement, which recommends bariatric surgery asan appropriate treatment option for certain people with T2DM and obesity, marks the first time any majorinternational organization has issued recommendations on the use of bariatric surgery as a therapy for T2DM.The IDF statement follows a 2009 update to the American Diabetes Association clinical practice guidelines,which now include a recommendation that bariatric surgery be considered for adults with a BMI of 35 orgreater and T2DM, especially if diabetes is difficult to control with lifestyle and pharmacologic therapy.According to the IDF position statement, "Surgery should be an accepted option in people who have T2DMand a BMI of 35 or more and should be considered an alternative treatment option in patients with a BMI of30 to 35 when the disease cannot be adequately controlled by a medical regimen, especially with other majorcardiovascular disease risk factors." ( See Exhibit 5.) The IDFs conclusion is that current approachesincluding lifestyle modifications and medical methods often fail to adequately manage T2DM in manypatients and that surgical intervention should be considered complementary to medical therapies in thetreatment of T2DM and not reserved as only a last resort option. The IDF position statement did notrecommend any bariatric procedure over another, although it did limit the recommendation to currentlyaccepted procedures, including RYGP, LAGB, biliopancreatic diversion (BPD), BPD with duodenal switch,and sleeve gastrectomy. IDF did, however, note that the RYGP, BPD with duodenal switch, and sleevegastrectomy address diabetes in unique ways compared to LAGB.Although much more work is needed before bariatric surgery, in practice, becomes a primary treatment forT2DM, the IDFs position statement could potentially have huge ramifications for the device industry,particularly in terms of new product development and market potential. The IDF that there are 285 millionpeople with T2DM worldwide, a number that is expected to increase to 438 million by 2030, with another halfbillion people at risk. ( Editors Note: For a more in-depth look at metabolic surgery and how the IDFposition statement will impact bariatric surgery and the medical device industry, look for our interview withFrancisco Rubino, MD, in the September 2011 issue of Medtech Insight) .Bariatrics And T2DM: Expanding The Market 9
  12. 12. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTExpanding Role In Other Chronic DiseasesIn addition to treating T2DM, bariatric surgery could also have an expanding role in the management of otherchronic diseases, including heart disease, stroke, cancer, high blood pressure, sleep apnea, high cholesterol,infertility, and migraines. For example, obesity has long been known to increase the risk of heart attack andstroke, the number one and number three leading causes of death in the US, and new research shows bariatricsurgery can cut the incidence of heart attack, stroke, or death by as much as 50%. In a study presented at thisyears ASMBS, researchers from Greenville Hospital System University Medical Center analyzed datafrom 9,140 morbidly obese patients in South Carolina ages 40 to 79 treated with bariatric, orthopedic, orgastrointestinal (GI) surgery between 1996 and 2008. The orthopedic (joint replacement) and GI (hernia orgallbladder) surgery patients served as the control groups for the study because of their similar health and riskprofiles. Data for the study were obtained from the South Carolina Office of Research and Statistics (SCORS)database, and included 4,747 bariatric surgery patients, 3,066 orthopedic surgery patients, and 1,327 GIsurgical patients.All patients had similar health status before surgery and no medical history of heart attack or stroke. Fiveyears after bariatric surgery, the estimated incidence of heart attack was about 50% less and the incidence ofstroke was 30% to 50% less when compared to the control groups. An estimated 85% of the bariatric surgerypatients were living heart attack– and stroke-free fiveyears after surgery, compared to 73% in the orthopedicgroup and 66% in the GI group. These findings further validate previous studies that compared bariatricsurgery patients to nonsurgical patients in terms of risk reduction from heart attack, stroke, or death. In March,the American Heart Association (AHA) issued its first statement on bariatric surgery, further validatingbariatrics impact on heart disease. The AHA statement concluded that "Bariatric surgery can result inlong-term weight loss and significant reductions in cardiac and other risk factors for some severely obeseadults."Two new studies presented at ASMBS also suggest bariatric surgery impacts morbidly obese patients withmigraines and infertility. In one study, researchers at the University of Iowas University of Iowa Hospitalsand Clinics found bariatric surgery can lead to total or partial alleviation of migraine headaches in nearly 90%of morbidly obese patients diagnosed with migraines. In another study, University of Iowa researchers foundthat among morbidly obese patients who had polycystic ovarian syndrome (PCOS) and PCOS-relatedinfertility, 100% were able to get pregnant within three years following gastric bypass surgery.A Tough But Potentially Lucrative Road AheadThe potential market for a safe and effective weight loss surgical treatment is substantial–estimated at almost$500 million in annual revenues in the US alone–and bariatric surgical device companies are dedicatingsignificant research and development, sales and marketing/advertising, and surgeon training efforts towardadvancing revenues. Despite the current economic conditions, this lucrative market holds promise for treatinga patient population in dire need of safe and effective weight-loss solutions. And although larger, randomizedclinical trials (RCTs) evaluating existing and emerging bariatric surgical technologies and procedures are stillneeded to determine safety and feasibility, this area holds much promise in providing weight-loss alternativesto millions of obese people in the US and worldwide.Much of the market growth in bariatric surgery will be driven by expanding indications for bariatric surgery,new minimally invasive bariatric surgical technologies, and emerging transoral incisionless weight lossdevices, which are expected to grow in acceptance and utilization over the next decade. These includeimplantable gastric stimulation/vagal blocking systems, intragastric balloon systems, minimally invasivebariatric surgical instruments, LAGB systems, and emerging transoral incisionless weight-loss devices. ( SeeExhibit 6.) Companies with current and emerging minimally invasive devices for bariatric surgery includeCovidien Ltd., Ethicon Endo-Surgery, Apollo Endosurgery Inc., Intuitive Surgical Inc., ReShape MedicalInc., BaroSense Inc., EndoGastric Solutions Inc., GI Dynamics Inc., ValenTx Inc., Obalon TherapeuticsExpanding Role In Other Chronic Diseases 10
  13. 13. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTInc., Allergan, TransEnterix Inc., and EnteroMedics Inc., among others.Start-Ups: Wheres The Innovation?At the same time, some of this growth depends on new technologies getting to market, and its clear start-upsride a tough road these days. At this years ASMBS meeting, there were only a handful of device start-ups inthe exhibit hall. In an interview with Medtech Insight, the CEO of one of these companies, DennisMcWilliams of Apollo EndoSurgery, discussed some of the challenges that start-ups currently face insustaining innovation and bringing products to market in the US and provided insights on how to persevere inthis market."The obvious challenge is in finding the capital to build the clinical data that will prove efficacy and achieveregulatory clearance," says McWilliams. "We know we need robust clinical data for the FDA as well as foradoption in the surgical community. But its challenging and even risky to raise capital for expensive, large,multicenter trials. Even if the product is successful, there is no reasonable certainty of FDA clearance intodays environment. Theres not a lot of money available for that type of risk. Its a challenge we have tomanage as an industry. We have to continually refine the innovation model so that new technologies haveroom to grow and risk can be mitigated. That will help with financing and allow companies to collect thenecessary clinical data."As an example, McWilliams pointed to the recent conundrum faced by Satiety. After the companys PMAtrial, investors were in a challenging situation, he says. They had a great device and compelling data, but werefaced with the expense of another PMA study. The alternative was to gain market approval in Europe, butthen the company would be investing significant capital to drive margin out of that product and buildcommercial infrastructure, McWilliams explained. "Couple this with a moribund IPO market and uncertainacquisition prospects, and Satiety and its investors wondered whether they could achieve a sensible returnprofile."Its this kind of scenario that had everyone at ASMBS wondering how, in the face of such limitations, USstart-ups can afford to innovate. Will innovation be relegated to markets outside the US, such as Europe,A Tough But Potentially Lucrative Road Ahead 11
  14. 14. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTSouth America, or Asia? It appears the FDA has realized this is a problem in bariatrics and the agency iscurrently soliciting input on how it can work with the medical community and industry to find better methodsfor bringing technologies to the market and provide better predictability to the investment community.Challenging The Traditional Venture ModelSince its inception, Apollos focus has been to improve surgery fundamentals broadly versus niche clinicalapplications. Its a strategy that McWilliams says is serving Apollo Endosurgery, its customers, and itsinvestors well in the current market. "The traditional venture model has been focused on building one specifictool for one specific clinical application. Thats contrary to how surgical procedures evolve. Surgeons usetools, and these tools allow them to safely resect and manipulate tissue. If you look at Covidien and EthiconEndo-Surgery, their empires were built by developing the best tools for tissue apposition, tissue cutting,surgical access, and hemostasis, and by allowing surgeons to apply these tools to existing procedures or fornew procedure development. We are following the same strategy, but instead of disposable rigid tools, we aremaking disposable flexible tools that fit on existing capital equipment in the OR [operating room]," he says."Additionally, typical venture companies, particularly in bariatrics, have focused on building for an earlyexit–reaching a clinical or regulatory milestone–and then turning over the project to the acquirer for broadercommercialization. Little focus has been put on business-building essentials, including product margin,commercial footprint, training, reimbursement, and supply chains. For acquisitions today, you have to beaccretive to the bottom line quickly. Youve got to build products that can fit into sales forces. Its important tobe agile when you see an opportunity or good fit. Thats how we approach things at Apollo."Apollos endolumenal surgical tools include the OverStitch Endoscopic Suturing System and the FlexShearsEndoscopic Scissors. Since Q4 2010, the company has been in a market pilot with its first-generationOverStitch and has been building its registry of more than 200 patients to date to gain clinical experience withthe device and to understand its applicability. Apollo is planning a broader market launch in Q4 2011 of thesecond-generation OverStitch with an improved user interface. Apollo secured $11.5 million in Series Afinancing in 2007 and is looking to close a new financing in the next several months for the second-generationlaunch. [W#200730734]Despite the current investment climate, McWilliams believes the firm will not have trouble securingfinancing. "Were confident in our ability to gain funding. We have FDA cleared products that are being usedby physicians for a variety of clinical procedures with large market potential. Data from our recent clinicalprogress is generating venture and strategic interest. Like most companies, we walked through the deserts ofthe financial crisis. We survived and are stronger for it."In addition to Satiety, another start-up that has faced its challenges in coming to market is St. Paul, MN-basedEnteroMedics, manufacturer of the Maestro System. This neuromodulation device is surgically implanted inthe abdomen and delivers intermittent high-frequency, low-energy electrical impulses that block signals fromthe vagus nerve (VBLOC Therapy) to the stomach and pancreas, affecting feelings of hunger, fullness, andsatisfaction. In 2010, the companys EMPOWER trial of almost 300 patients did not meet its primary endpoints–at 12 months there was virtually no difference in excess weight loss between those who used theMaestro device and the control group–and the company did not receive FDA PMA approval. However, theFDA encouraged EnteroMedics to conduct another clinical trial that addresses some of the issues encounteredduring EMPOWER. The companys poststudy analysis of EMPOWER suggests the control subjects actuallyreceived a form of therapy during the systems electrical impedance, safety, and diagnostic checks, whichmight have contributed to weight loss in the control group. Researchers also noted that weight loss waslinearly related to hours of device use, with greater excess weight loss among those who used the device morethan nine hours per day.Start-Ups: Wheres The Innovation? 12
  15. 15. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTIn May 2011 the company started the RECHARGE trial, a randomized, double-blind, parallel-group, pivotalmulticenter study that is expected to enroll 234 patients at up to 12 sites in the US and Australia. Although thetreatment group will also be compared to a sham group in this new study, there are some importantdifferences between the EMPOWER and RECHARGE trials. In the RECHARGE study, patients will beimplanted with the companys second-generation Maestro RC2 System, which, unlike the first-generationdevice, has a battery on board that only requires patients to wear the device 30 minutes a day and to charge it20 minutes a day. In the EMPOWER trial, the first-generation Maestro device required patients to charge thedevice continuously and wear it 10 to 12 hours a day—a requirement that led to some patient complianceissues with the device. Also, the RECHARGE trial will use a functional but nonactive sham device that doesnot have electrodes attached to the vagus nerve, which means the control group will not inadvertently receiveany VBLOC therapy during the impedance and safety checks. By the end of 2012, the company hopes to haveall patients in the RECHARGE trial fully implanted and followed for 12 months in a state of blind, with plansto do another PMA submission after that. In addition to the RECHARGE trial, EnteroMedics also has anongoing trial called the VBLOC DM2 ENABLE, a feasibility trial to test the RC2 device in people withobesity and T2DM.In terms of its finances, EnteroMedics raised $30 million in December 2010 and has a burn rate of about $1million a month, not including the cost of the clinical trials, which will add about $8 million over the next 12months, according to the company. [W#201030559] In markets OUS, the company is making progress tocommercialize the Maestro System in Australia, where the company plans to file an application for approvaland listing with the Australian Therapeutic Goods Administration, and is exploring potentialcommercialization in select markets in Europe. EnteroMedics reported $27.4 million in cash and investmentsat end of Q2 2011 and hopes to start international commercial sales by years end.Regulatory ChallengesFor many obesity start-ups, the road to market has been challenging, and there have been increasing concernsamong both industry and academia regarding the current FDA review process. Some say the FDA has raisedthe bar on science, and on obesity devices in particular, since the PMA approval of Ethicon Endo-SurgerysREALIZE band and Allergans LAP-BAND, and there is an increasing focus on sham-controlled, RCTs. TheFDA required both Satiety and EnteroMedics to undergo sham-controlled RCTs, which experts say is verydifficult to do in the field of bariatrics. Shams are notoriously inaccurate, they contend, saying the bariatricsham is never a true sham because all patients get medical management, usually diet, exercise, andcounseling. Critics also say it is unclear what delta (percent difference between the control arm versus thetreatment arm) the FDA is requiring for obesity devices and drugs that will suffice in order to achieve FDAapproval. Because the FDA balances the potential risk of a new therapy with the benefits, many say obesitydrugs and devices are being held to a higher standard than, say, therapies for cancer or Parkinsons disease,because the perception is that the risk of the disease obesity is often not sufficiently high to merit the risk ofthe therapy. At the same time, many perceive an inconsistency in how the FDA balances risk and applies thesestandards.For investors, the biggest challenge right now in funding a device is the inconsistent and unpredictableregulatory process, which can translate into higher costs, longer time to market, and slower and lower returnson investment. Given this environment, many start-ups are first going OUS to bring their devices to marketbefore attempting market approval in the US, or are going offshore to seek commercial traction in othercountries.In May 2011, researchers at Northwestern University released the results of an opinion survey that sought toidentify opportunities for improving the FDA 510(k) clearance process. The study, entitled "A ComprehensiveAnalysis of the FDA 510(k) Process: Industry Practice and Implications for Reform," involved 356respondents who participate in the 510(k) process, including entrepreneurs, academic physician-inventors, andfederal regulators. In the study, 49% of respondents (n = 201) said the major reason their company chose toChallenging The Traditional Venture Model 13
  16. 16. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTbring a product to market OUS first was because of unpredictable 510(k) requirements. Other reasons citedfor bringing a device OUS first include the cost of clinical trials (22%), quicker process (9%), and easierprocess (5%). ( See Exhibit 7.) Survey respondents also perceived a significant difference between the FDAsguidance documents and FDA review, with 87% (n = 216) saying that the FDA asked for information beyondthat required by the guidance. ( See Exhibits 8 and 9.) Other complaints about the FDA centered oninconsistent implementation, unclear regulatory guidelines, and the rapid turnover of reviewers assessing anew medical device.Regulatory Challenges 14
  17. 17. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTThe FDA process has been frustrating to many, making the agency an easy target in a market where regulationis only one of many factors that have been straining market growth in bariatrics. Indeed, the long-awaitedreview by the Institute of Medicine recommends that the entire 510(k) review process be revised. ( See"Institute of Medicine on 510(k) Review Program: Dump It," Washington Roundup, this issue[A#2011400056].)There is certainly no lack of opinions in this regard, and many are still blaming the FDA for a dearth ofinnovation right now. According to Robin Blackstone, "In terms of devices, I think the FDA has some directresponsibility for the lack of innovation in medical technology, because nobody wants to invest this kind ofmoney to be shot down over what is arguably a process that results in a seemingly random and arbitrarydecision. It takes so much time and money to bring medications and new devices to market, and the FDAbarrier as it is currently structured is huge."Blackstone says the government does not appear to be coordinating its efforts in the area of obesity, withMedicare on one hand paying for morbid obesity (National Coverage Decision 2006, expanded to includediabetes as an indication in 2009), while other agencies put up what some call "insurmountable" barriers toinnovation. But Blackstone also points out the government has a vested interest in supporting innovation inbariatric surgery. "Weve got a whole baby boomer generation that is going to be lost to obesity if we dontact. The treatment of obesity in this generation is prevention for obesity in the next. There needs to be a verystrong and clear signal from the government in the essential health benefits language that obesity should betreated."To the FDAs credit, the agency is aware of the issues and has been working with academia and industry toidentify best practices in how to do clinical trials and how to assess the effectiveness of drugs and devices in amore standardized and predictable way. In March 2011, representatives from The Obesity Society, theASMBS, and the American Dietetic Association met with the FDAs Center for Drug Evaluation andResearch, to discuss ways to provide safe and effective medical therapy for the disease of obesity. Accordingto the ASMBS, the meeting sought to establish the importance of treating Class 1 obesity as a serious medicalproblem and to shift the risk/benefit ratio in favor of including the benefit on comorbid disease in addition tothat of weight loss in the pharmaceutical treatment of obesity. Specific issues addressed included concernsregarding the lack of obesity experts in review panels, concerns over misinterpretation of the Guidance forObesity Drug Review and Approach, and the stifling effect of the drug discovery process for obesity. Infollow-up to the meeting, the group is planning to develop a white paper regarding pharmaceuticaldevelopment in obesity, led by the Department of Health Policy at the George Washington UniversityRegulatory Challenges 15
  18. 18. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CTSchool of Public Health and Health Services.On the device side, representatives of the ASMBS and the American Society for Gastrointestinal Endoscopyalso met with the FDA and presented a white paper outlining recommendations from these two societies. Infollow up to that, the FDA is working with these groups to develop a white paper regarding best practices andis putting together a public meeting and workshop in October, sponsored by the FDA, MassachusettsGeneral Hospital (MGH), and Dartmouth College, which will focus on clinical trials and bariatrics—ameeting that many device manufacturers are eagerly anticipating. ( For more on this topic, see sidebar,"Obesity Devices and the FDA Review Process: An Interview with Lee Kaplan, MD," in this issue.[A#2011400053].)Innovation Through Basic ScienceOne company committed to driving innovation in bariatrics through an improved understanding of obesityand bariatric surgery is Ethicon Endo-Surgery. The company has invested more than $30 million to supportfundamental research into obesity and other metabolic disorders through its Metabolic Applied ResearchStrategy (MARS). According to the company, the goal of the MARS program is to help deconstruct,understand, and reinvent bariatric procedures at the tissue, cellular, molecular, and genetic levels. To this end,the company established a MARS scientific advisory board in 2007 and has been collaborating with theMetabolic Diseases Institute at the University of Cincinnati and the GI Metabolism Laboratory and WeightCenter at MGH.With improved understanding, EES hopes to develop novel therapies that increase procedure effectivenessand decrease risks and costs, and identify patient populations who will most benefit from them. The companyalso hopes to use this knowledge to develop less invasive, less risky, and/or less costly approaches thatreproduce some or all of the therapeutic mechanisms of bariatric procedures without the need for surgery. Todate, MARS research has focused on the activity of various peripheral hormones in the central nervous systemthat regulate food intake and body weight and on the mechanisms of action in RYGB and the means ofreproducing those mechanisms.The Role Of GeneticsIn an interview at ASMBS, Duane Linenkugel, EESs director of worldwide franchise development, toldMedtech Insight that although much of the MARS research is still in the discovery phase, researchers havemade great strides in certain areas, especially in understanding the role genetics plays in obesity andpredicting success of bariatric surgery."Some of the work were doing in genotyping is to really understand what specific genes are eitheroverexpressed or underexpressed in certain patients and to be able to map that to predictive models," saysLinenkugel. "So when we compare patient As genotyping to that in our database of known results, we couldsay with a reasonable degree of confidence that patient will or wont respond to metabolic surgery. There aremany patients out there that have a BMI of 40 or 50 or 60 that have undergone these procedures, and theyrenot losing weight. So we believe its no longer about lifestyle. We dont think its about caloric intake. Wethink its based on genetics. And weve got some data that would substantiate that. Its our interim, if notconclusive, belief that genetics plays a strong role, which was previously not understood."In the future, the company hopes to go beyond binary predictions of who will and wont respond to bariatricsurgery, to reach a state of therapy personalization eventually enabling predictions of which patient wouldbenefit most from an LAGB, which would benefit most from an RYGB, which would benefit most fromgastric plication, etc.Innovation Through Basic Science 16
  19. 19. Obesity 2011: Back To Basics In Bariatrics (c) 2011 Windhover Information Inc., Norwalk, CT"Our research tells us patients dont want implants, so they dont necessarily like the band. They dont want tosee half their stomach excised, so maybe they dont like the sleeve. And they dont want to see their bowel ortheir GI tract permanently rerouted. So our goal is to try to figure out what are more patient-centric solutionsthat they would actually accept. We hope to personalize it such that we could predict with a certain familyhistory, comorbidities, and with a saliva-based DNA test, that not only would a patient benefit from thisoperation, but we can accurately predict if that patient will lose 40% of excess weight, 30% of excess weight,etc."Alternative Approaches To SurgeryAccording to Lee Kaplan, MD, PhD, the primary investigator for the MARS program at MGH, in addition toidentifying predictive markers, MARS researchers have made enormous progress in understanding howdifferent obesity surgeries work, the hormones that they elaborate, the neural changes that occur, as well as awhole variety of physiological changes that occur in the brain, liver, pancreas, and in the fat itself. Armedwith this information, researchers have already begun to develop novel therapies that capitalize on thesenewly understood mechanisms that are in the early phases of evaluation and testing.For example, one area of MARS research is in T2DM resolution. Researchers have been studying ilealtransposition in animals and evaluating the role of the distal ileum and bile acids in resolving T2DM.Currently during ileal transposition, surgeons take the last 10 cm of the terminal ileum and move it proximallyand see almost immediate glucose regulation after surgery. But MARS researchers are moving the terminalileum more distally in hopes of having a similar effect but perhaps with fewer comorbidities and mortality.According to Linenkugel, "In animals, when you move the terminal ileum distally, they drop fat but dont droplean mass. So it has something to do with the way we absorb fats. That last 10 centimeters of the terminalileum really does a lot to absorb the bile acids, and we believe bile acids mediate some of the response tosurgery."Linenkugel says EES is interested in seeing how the MARS program progresses because it might serve as anew model for understanding other disease states as well. Regardless, providing funding for such basicscience research is unprecedented for a surgical device company. "Were not trying to say prove that ourstapler is better than somebody elses stapler. Were saying help us understand. But its amazingly excitingbecause what it causes us to do is question the traditional paradigm that its just not about restriction andmalabsorption anymore. And thats kind of the aha moment for us. Now what do we do with that informationand how do we further refine that to get to logical devices or logical solutions?"Anne Staylor is Senior Editor for Medtech Insight (E-mail: A.Staylor@Elsevier.com).The Role Of Genetics 17