Medical Device Daily Associate

Most venture capitalists (VCs) in the healthcare sector are continuously on the hunt for the next big thing in medicine. While many of these VCs like to focus on a multitude of different specialties in hopes of discovering the often-elusive big prize, some have found success by narrowing their focus almost exclusively to a single field.

One company taking the mostly single-track route is Viscogliosi Bros. (VB; New York), a closely held venture capital/private equity and merchant banking firm whose investment eye is focused primarily on developing and financing musculoskeletal/orthopedic technologies, a device sector that it estimates is currently worth roughly $26.4 billion.

The company recently disclosed the official launch of Spine Motion (also New York), the fifth spine non-fusion company founded or invested in by VB since its inception in 1999 by brothers Marc, John and Anthony Viscogliosi.

Spine Motion, founded in 2004, is a company focused on providing indication specific posterior non-fusion solutions for orthopedic spine surgeons and neurosurgeons focused on treating spinal conditions and diseases.

“The launch of Spine Motion at the Spine Arthroplasty Society (SAS; North Palm Beach, Florida) meeting in New York [last week] signifies a very important day for VB and Spine Motion,” said Marc Viscogliosi, a principal partner at VB as well as chairman and CEO of Spine Motion. “Our arrival here today is the culmination of many months of collaborative efforts by VB, Fixano and Spine Motion,” he told Medical Device Daily.

Spine Motion’s initial foray is focused on two non-fusion technologies. One is the coflex, a posterior, non-fusion, interspinous, dynamically functional implant, which has a clinical history of more than a decade of use and has been implanted in more than 10,000 patients suffering from low back pain and lumbar spinal stenosis.

The second technology that the company is involved with is the Orthobiom, a device developed to treat adolescent idiopathic scoliosis, a condition in children which causes severe curvature of the spine and which is usually surgically treated with a spinal fusion procedure.

Orthobiom, another piece of technology that has been in development for more than a decade, is a non-fusion alternative designed to preserve the motion and growth of the child’s spine.

The coflex, Spine Motion’s core technology, is based upon the Interspinous U invented by Jacques Saman, MD, in 1994, which was acquired by VB in its recent acquisition of Fixano (BourgenBresse, France) (MDD, May 5, 2005).

Fixano, established in 1987, manufactures a range of devices and instrumentation for surgical repair of disease or traumatic injury to the bones and joints. This includes spine arthroplasty and spine fusion systems; internal and external fixation systems for the fingers, hand, wrist, elbow; shoulder systems; foot, small-bone and long-bone trauma products.

Another recently formed VB company, Small Bone Innovations (SBI; New York), also benefited from the Fixano buy. Devices and systems that target bones from the fingers to the shoulder and from the toe to the mid-calf developed by that company will become products marketed by SBI.

Viscogliosi said he envisions Spine Motion becoming a “full product portfolio” business “that is indication-specific for the use of various non-fusion technologies.” In other words, he said, this is a platform technology company. “It’s not just one product. It’s the concept of really listening to the surgeons about what their clinical challenges are and developing a full range of products to address those challenges.”

Concurrent with the founding of the company, Spine Motion established international operations in Wurmlingen, Germany, and formed Spine Motion GmbH.

In addition to Spine Motion, VB has been involved in the founding and management of such companies as Spine Solutions, maker of the ProDisc artificial disc system – acquired by Synthes-Stratec (Oberdorf, Switzerland) in 2003 for $350 million – and prosthetic nucleus device developer Raymedica (Minneapolis). VB was also a leading investor in spinal implant maker Spine Next (Bordeaux, France), purchased by Abbott Laboratories (Abbott Park, Illinois) in October 2004 for $60 million and Orthonics (Atlanta), a company developing new biomaterials for spinal disc repair and regeneration.

While VB was initially started by the brothers in 1999, Viscogliosi said that the roots of the company go back quite a bit further. He said that his brother Anthony began specializing in the orthopedics industry in 1988, and he and John also began to focus on the sector in about 1992.

He said during that period before the inception of VB, “we worked together at various Wall Street firms following the orthopedics industry as analysts and bankers.”

From the onset, VB focused most of its attention on the orthopedics sector because, according to Viscogliosi, the sector offered a compelling and diverse investment and business creation opportunity. “It’s really going to be one of the classic long-term growth industries in healthcare,” he said.

He noted that the brothers’ interest in the sector also is a personal one. As a child, Anthony was involved in a bicycle/auto accident in which he was seriously injured and suffered significant orthopedic trauma injuries requiring a life-long recovery process.

“[Anthony has] always had a personal interest in looking to finance and develop life-changing technologies in orthopedics,” Marc said.

Since its inception, VB has led or participated in more than 40 transactions in the musculoskeletal/orthopedics industry. VB has sponsored five venture capital and single-purpose investment vehicles and, in January 2004, funded Orthopedic Investment Partners with $2 million, the first hedge fund dedicated exclusively to investing in publicly traded medical device companies with a primary focus on musculoskeletal companies.