Initial focus on the GI Endoscopy market
Although the company’s approvals span a variety of indications and organs the initial commercial focus will mainly be in the GI endoscopy market, which is what the Speedboat products, with the first launch in Q419, are approved for. And within the GI endoscopic market, the focus of the company is to increase penetration within the ESD and peroral endoscopic myotomy (POEM) procedures.
ESD is a relatively new up-and-coming outpatient procedure (most patients go home the same day) to remove early-stage cancerous tumours or polyps from the GI tract. A typical ESD procedure involves marking the perimeter of the lesion, use of a lifting agent around the perimeter of the lesion, the mucosa around the lesion is cut, the submucosa beneath the lesion is dissected and any intraprocedural bleeding is managed with a water jet and haemostatic devices.
Historically, endoscopic mucosal resection (EMR) procedures have been the most used technique for removing early-stage tumours and polyps in the GI tract but it has difficulty in reducing adenomas larger than 2cm. Meta-analysis comparing the procedures indicate that ESD has a much higher rate of en bloc resection (where the entire tumour is taken out) than EMR, 91.7% versus 46.7%, respectively. Additionally, the rate of recurrence is much lower in patients who receive ESD at only 0.9% versus the 12.2% recurrence rate for patients receiving EMR.
Two aspects of the procedure although have limited adoption despite the higher rates of efficacy. First, the procedure time is much longer than EMR, with EMR generally taking 30 minutes on average while ESD can take between one and two hours likely due to the need for precision as well as the need for frequent instrument changes. The extra time is generally worth it for the patient but financial considerations at hospitals and outpatient surgical centres (time per procedure is higher due to the longer procedure time and a surgeon can perform fewer per day, affecting revenue) make this a more difficult sell. That said, an ESD is still significantly cheaper than more traditional surgical colectomy (€3190 vs €8,490).
Complication rates are also higher with ESD procedures, with a perforation rate of 5.7% versus 1.4% for EMR although most perforations are small and can be identified/treated during the procedure using a clip. Procedures to treat distal colorectal cancers (involving the descending colon, sigmoid colon, rectosigmoid and rectum) appear to have fewer perforations that proximal colon cancers (involving the cecum, ascending colon and transverse colon). There is also a higher bleeding risk of 4.8–5.7% compared to 0.9–1.4% for EMR.
Creo Medical’s Speedboat can help with both drawbacks of the ESD procedure, which may increase its use. It uses a bipolar RF energy blade, while typically commonly used ESD cutting instruments use monopolar RF. Monopolar RF knives use significantly higher voltages and direct current and heat across the bowel wall, increasing the risk of injury. With the Speedboat, the current is restricted to a specific area, which should help reduce complications. Also, as the Speedboat incorporates cutting, coagulation and fluid injection devices in one product, procedure times are shorter due to less frequent instrument changes.
With regards to the market size, there are approximately 19m colonoscopies performed annually in the United States with approximately 1.5m procedures performed on US Centers for Medicare & Medicaid Services (CMS) patients that involve removal of polyps, growths or tissue from the large bowel, according to the federal agency. As these numbers are just for Medicare and Medicaid patients, the total number of procedures such as these performed in the US is likely double. While the incidence of new cases of colorectal cancer are approximately 150,000 per year, a large number of people have polyps or adenomas. Adenomas are found in 20–53% of the US population over the age of 50 (approximately 33 million to 62 million people in the US alone).
The Speedboat is also being used in POEM procedures, a minimally invasive procedure for the treatment of achalasia, an incurable condition that is marked by a failure of the smooth muscle fibres to relax, impairing a patient’s ability to squeeze food down into the stomach, causing an inability to swallow, regurgitation/vomiting, heartburn, gas, chest pain and progressive weight loss. Achalasia can happen at various points along the GI tract such as the myoenteric plexus of the oesophagus, lower oesophageal sphincter, the vagal trunks and the dorsal vagal nucleus. Prevalence of the condition appears to be around 10.82 per 100,000, which would indicate around 36,000 cases in the United States.
Historically, this condition was treated with non-surgical approaches including Botox, balloons and pharmacologic therapy (muscle relaxants). Each of these have significant weaknesses. Botox tends to not have a long-lasting impact on the condition. Symptomatic improvement is 78.6% at one month but then degrades to 40.6% at one year. A second treatment is required in 46.6% of patients.. Endoscopic balloon dilation (EBD) has a similar issue, although it is typically more efficacious. Symptom relief has been shown to be 84.8% at month one and 68.2% at one year with 25% of patients requiring subsequent dilations. This procedure also has some side effects such as a 1.6% risk of perforation as well as a significant increase in heartburn episodes (approximately one-third of patients studied).
Pharmacologic agents such as nitrates have been used but efficacy tends to be of very short duration (as low as 30 minutes) and have a high incidence of headache and hypotension. Calcium channel blockers have also been used with some efficacy in 50–90% of patients. However, up to 30% of patients experience significant side effects such as peripheral oedema and headaches. Pharmaceutical agents are only typically used in mild disease and when more invasive procedures are inappropriate.
There have been a variety of different surgical approaches used, with laparoscopic myotomy being most popular. 89.3% of laparoscopic myotomy procedures in patients with achalasia were successful. In total, 6.9% of patients treated with this procedure have had perforations, with another 6.3% having further complications. As with EBD, there can be a significant number of heartburn episodes (31.5% without an anti-reflux procedure and 8.8% when this preventative procedure is conducted).
POEM procedures, unlike ESD (but similar to laparoscopic myotomy), is performed under general anaesthesia and requires a hospital stay (median of one day). In the procedure a flexible scope is inserted through the mouth to avoid cutting the chest or abdomen. It involves a submucosal injection of saline to create a mucosal bulge, followed by a cut to the oesophageal mucosa. Then a submucosal tunnel is made followed by dissection of submucosal fibres to weaken the sphincter so that food may pass. The success rate of 91.5% at two months and 88.5% at three years is comparable to laparoscopic myotomy. However, procedure length tends to be shorter than for laparoscopic myotomy (120 minutes versus 149 minutes) and hospitalisation tends to be shorter (one day versus two days). Complications of the procedure are broadly similar.
Use of Speedboat in POEM procedures has similar benefits to use in ESD, reduced procedure time due to less need to switch instruments and less risk of injury through the use of bipolar RF. Procedure durations are usually around an hour and some of the procedures can be completed in as little as 25 minutes. As procedure times can be a major component of a decision whether to use a certain approach, we would expect both Speedboat use in POEM procedures and the overall share of POEM of the achalasia market to increase.
Commercial penetration assumptions
Our assumptions are focused on the market for ESD procedures as POEM procedures are treating a relatively niche market with generally poor data sources. As mentioned, there are approximately 19m colonoscopies performed annually in the United States, with approximately 1.5m procedures performed on US CMS patients that involve removal of polyps, growths or tissue from the large bowel, according to the federal agency. As the median age of people who receive EMR and ESD procedures is around retirement age, the total number of procedures such as these in the US is likely double that, at around 3m per year.
We do not have these data for the other major markets but assume a per-capita reduction of 40% in the EU and Japan as they typically perform fewer colonoscopies. We assume peak penetration of around 9% as although Speedboat has advantages, ESD will be one of several potential approaches. Additionally, following discussions with the company and in reviewing the market environment, we assume Creo Medical will book approximately £730 per procedure. There is also a fee for the CROMA energy platform device (approximately £22,000) but the future economics are uncertain. Often medical device companies will give these types of permanent-use devices away for free or for nominal amounts to accelerate penetration of their single-use devices (such as Speedboat). Based on these assumptions, our 2026 sales estimate (which is when we forecast the products reaching maturity) is £347m for the US, EU/UK and Japan (representing approximately 475,000 procedures). Any sales outside these regions would provide upside to our estimates. Note that achieving these estimates would likely require significant additional investment in the US sales and marketing team (as assumed in our model) to drive growth in that important market among gastroenterologists.
To give a reference point for this peak sales estimate, Conmed, a major surgical device supplier, estimates the GI endoscopic technologies market is approximately $3.0–3.2bn with the RF energy-based surgical device market valued at $2.7–2.9bn per year.
Additionally, Creo Medical has a vast patent portfolio. As of 31 December 2019, it had 188 granted patents and another 599 pending applications around the world. With this in mind, we are modelling patent protection until 2040.