The Wider View: Transatlantic merger gives GTX stronger leg to stand on in virtually unpenetrated spinal cord injury market

Two start-ups specialising in spinal cord stimulation technologies are joining forces to bring effective solutions that restore functional movement in para- and tetraplegics. The clinical demand is high and the market is notable for the dearth of competition - does this provide a clear runway for the newly bulked up GTX medical?

 

What’s happened

Dutch-Swiss start-up GTX medical is merging with US development-stage company NeuroRecovery Technologies (NRT) to bring together their respective neuromodulation technology platforms aimed at improving functional recovery in people with spinal cord injuries.  

The combined entity, which will take on the GTX name, will have two products in development: one is the Targeted Epidural Spine Stimulation (TESS) system, an implantable spinal cord stimulation (SCS) system with real-time motion feedback to restore locomotion in paraplegics, and the other is the tSCS system, a noninvasive SCS technology that delivers stimulation transcutaneously to restore upper limb movement and hand function in tetraplegics. 

Both companies are venture-backed and investors in NRT - which include the Christopher and Diana Reeve Foundation (CDRF)  - and in GTX Medical will all hold an equity stake in the merged entity. 

 

The market opportunity

Figures for the incidence and prevalence of traumatic spinal cord injuries (SCIs) are hard to pin down and can vary widely from source to source. The most recent figures for the US alone, published in 2018 by the National Spinal Cord Injury Statistical Center (NSCISC), show that there are about 17,700 new SCI cases each year and an estimated 288,000 people with SCI currently living in the US. 

While these numbers are not in the millions like with other medical conditions, the healthcare costs and living expenses directly attributable to SCI easily run into the millions of dollars over a patient’s lifetime; the NSCISC estimates that lifetime costs for a 25-year-old SCI patient can range from roughly $1.5 million if they have the lowest level of motor function disability, to $2.4 million if they are paraplegic, to nearly $5 million if they are a high-level tetraplegic. 

Aside from high healthcare costs, the SCI patient population also has a significantly lower-than-average life expectancy, with mortality rates notably higher during the first year after injury and for persons with the most severe neurological impairments.

As these figures illustrate, there is a very clear unmet clinical need and the SCI community "deserves a more concerted effort [by the researchers and industry] to develop solutions that can help them," GTX’s CEO Sjaak Deckers told FirstWord MedTech.

According to Deckers, the SCI market is vastly underpenetrated. While there are a lot of academic groups working on techniques to improve rehabilitation of SCI patients, these are not focused on developing a commercial product - so "SCI patients are not benefitting from their research." 

On the other hand, there are several companies working to bring to market solutions for SCI, but the majority of these are products for assisting, rather than treating, patients. One example, and probably among the more well-known, is ReWalk Robotics, which offers an FDA-cleared customisable, robotic exoskeleton worn by SCI patients with lower limb disability to help them walk. There was another company, Sigmedics, which had gained FDA approval for its Parastep device, which takes a similar neurostimulation approach to GTX and NRT. Parastep worked by delivering noninvasive electrical stimulation to the legs of paraplegics, to evoke a peripheral nerve action potential, which in turn causes a skeletal muscle response that, over time, enabled patients to stand and ambulate. However, Sigmedics shuttered down in 2014. 

 

The technologies

GTX’s TESS and NRT’s tSCS systems are different from assistive technologies like the ReWalk exoskeleton, and are designed to have a longer-lasting therapeutic effect by stimulating the spinal cord and retraining the neurons so that voluntary movement can be restored. 

Compared to Sigmedics’ Parastep, the way TESS works is far more complex in that it doesn’t just stimulate to evoke a muscular response from the limbs, but its aim is to retrain the brain so that the patient can learn to control these muscles again voluntarily. GTX’s system comprises a paddle stimulation lead implanted epidurally in the spinal cord and controlled by an external device. This device communicates with the sensors in the patient’s shoe, worn during 4-5 months of intensive rehabilitative therapy, and receives motion data from the sensors using this feedback to stimulate the right muscle at the right moment to get the desired movement from the limb.

NRT’s tSCS system has the same advantage of noninvasiveness like Parastep, but the stimulation is applied to the spinal cord like TESS, not to the legs, and again the aim is to retrain the brain to have control over the movement of the limbs. The tSCS system is reported to be about a tenth of the price of implanted neurostimulation system and consists of hydrogel electrodes placed strategically on the lower back so that stimulation can be delivered transcutaneously to specific neurons along the spinal cord. The stimulation therapy is designed to be paired with an intensive course of rehabilitation exercises. 

 

The wider view

The absence of significant competition in the SCI market would be a boon for GTX but it also signals how tough the terrain is to conquer, the shuttering down of Sigmedics - even though it got as far as FDA approval - being a case in point. 

Which is why Deckers pointed out that bringing together the complementary capabilities of GTX and NRT would give the combined entity the critical mass it needs to not only accelerate the path to market for both the TESS and tSCS systems, but also ensure that they are putting out the best product that would be well-received and adopted by the SCI community.

"By merging the two companies, we are creating a larger network of collaborators, on the academic and researchers side, which we can steer in the right direction…[We] can focus, as a single organisation, on getting the right feedback from the SCI community - from the clinicians, from the physiotherapists, from patients - and we can really make sure we are developing the right products to take through clinical trials and ultimately enter the market and make available to SCI patients," he said. 

IP is another important factor in the rationale for the merger. Deckers said that the combined IP portfolio of the companies’ complementary technologies extend beyond the current TESS and tSCS systems as well as the current indications, with the potential of helping to restore other autonomous functions such as bladder and bowel control and sexual functions, for example. Having a solid IP portfolio also puts a company in a good position for future financing or for an exit, whether it is a trade sale or IPO, added Deckers.

The CEO said the combined GTX will maintain its current transatlantic arrangement, which was one of the draws of merging with NRT: "we want to go to the US with our clinical trial for TESS and NRT wants to come to Europe with tSCS.  We are now building up a clinical team in the US that will initially help NRT with the clinicals for their tSCS system and then they can help us with TESS when we bring it over. And when tSCS comes to Europe, they can use GTX’s existing European clinical/regulatory team." 

Decker is hoping that having US operations will attract institutional investors from that country to GTX. Prior to the merger, three years ago, GTX had raised €26 million ($29 million) in series A funds from its syndicate of European venture capitalists, including familiar names such as LSP, Gimv and Wellington Partners. Decker said there are still enough funds to last at least a year but with the expanded operations post-merger burning through cash at a faster rate, there will likely be the need for a series B financing next year. "We have a strong consortium of European investors already and I would like to see one or two US VCs in that syndicate as well."

Both the products have some way to go before they arrive on the market, with more product development work and clinical trials to go through. Decker estimates that TESS will be able to start feasibility clinical trials of the fully developed closed-loop system in 2021, whiles tSCS will be a bit more advanced and start US pivotal trial that year. Nonetheless, with seemingly little competition on the way, the newly bulked up GTX could very well attract investors looking to play the long game. 

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