Image source: @Visual China
Text | vb Artery Network
Recently, the implantation of DBS (deep brain stimulation) electrodes as a "mood switch" to intervene in treatment-resistant depression has drawn public attention.
DBS Intervention for Refractory Depression Regulates Patients' Emotions and Stimulates the Neuromodulation Industry. This indicates that neuromodulation is expected to open the door to the blue ocean market of refractory psychiatric disorders.
After 2018, the field of neuromodulation experienced a boom, giving rise to several U.S.-listed companies. For instance, in 2018, Axonics went public on Nasdaq with its innovative sacral nerve stimulation product for treating urinary incontinence, achieving nearly 2 billion yuan in revenue in 2022. In 2021, Neuropace, which developed a closed-loop stimulation product for refractory epilepsy, held its IPO; the same year, CVRx, which uses neuromodulation to treat heart failure, was listed on Nasdaq.
This field is still bursting with innovative vitality, and there have been several financings around neuromodulation globally.Among them, Saluda Medical, a pioneer in the global neuromodulation field, secured over 1 billion yuan in its C+ funding round in May this year. Chinese neuromodulation company Neurolink has also completed IPO coaching and inspection.
Global Financing Events in the Field of Neuromodulation
The giants have also focused on neuromodulation. In September 2023, Boston Scientific acquired Relievant Medsystems for $850 million (approximately RMB 6.2 billion) to expand its neuromodulation product portfolio for treating chronic pain. Abbott is exploring the use of DBS to intervene in treatment-resistant depression. Medtronic has launched closed-loop DBS and SCS products.
Under the dense changes, it is not difficult to find that neuromodulation is in the midst of an industrial transformation.
Four Giants Dominate the Neuromodulation Market, Pain Management Market Sees Fastest Growth
The neuromodulation market is mainly composed of three major segments: SCS (Spinal Cord Stimulation), DBS (Deep Brain Stimulation), and VNS (Vagus Nerve Stimulation). In the global market share, Spinal Cord Stimulators (SCS) account for the largest proportion, representing nearly 55% of the total market in 2018; Deep Brain Stimulators account for 16%, Vagus Nerve Stimulators account for 14%, and other categories account for approximately 15%.
Neuromodulation Industry Map
The neuromodulation sector cannot bypass the four giants: Medtronic, Abbott, Boston Scientific, and LivaNova.In the SCS (Spinal Cord Stimulation) market segment, Medtronic, Abbott, and Boston Scientific each hold approximately one-third of the market share. In the DBS (Deep Brain Stimulation) market, Medtronic dominates with over 80% of the market share, while Abbott and Boston Scientific split the remaining market. In the VNS market, LivaNova captures more than 80% of the market.
From the financial reports of Medtronic, Abbott, and Boston Scientific, the neuromodulation market is showing rapid growth.According to the data disclosed in Medtronic's 2023 annual report, the revenue from neuromodulation in the 2023 fiscal year was $1.693 billion, a year-on-year increase of 2.4%, mainly driven by pain management products. Abbott’s Q2 2023 neuromodulation revenue was $423 million, a year-on-year increase of 13.2%. Neuromodulation is the fastest-growing medical device business outside of diabetes care. Boston Scientific's Q2 2023 financial report shows that the revenue from its neuromodulation business in the first half of 2023 was $244 million.
How the three giantsLayoutNeuromodulation Market
How Are the Three Giants Planning Their Neuromodulation Products Amid Industrial Change?
Boston Scientific Expands SCS Portfolio Through Acquisition. In 2023, Boston Scientific acquired Relievant Medsystems, a company specializing in neuroablation treatments for discogenic pain, for $850 million.
Relievant Medsystems' core product, the Intracept system, treats chronic vertebral-origin low back pain through vertebral nerve ablation and is currently the only FDA-approved method for treating this condition. The acquisition of Relievant Medsystems has helped Boston Scientific expand its chronic pain solutions to meet the needs of different patients.
Shenluo Medical founder Wang Shou dong said: "For the chronic pain market, neuromodulation, decompression and radiofrequency ablation relieve chronic pain in different ways. Pain caused by compression needs decompression first. For example, some patients with lumbar disc herniation can relieve pain to a large extent after surgery. Radiofrequency ablation treatment is to treat pain by destroying nerves. SCS pulse current stimulates spinal nerves, blocking pain signals from transmitting to the brain through the spinal cord, and relieving intractable pain. All three methods have certain clinical needs. SCS, as a safe 'green therapy', is increasingly valued clinically."
Although this acquisition did not directly involve a neuromodulation company, it can enhance Boston Scientific's competitiveness in the chronic pain relief market. It forms a product portfolio of neuromodulation + Indirect Decompression System (IDS) + Radiofrequency Ablation (RFA), covering more patient needs and also driving the penetration of neuromodulation.
In the DBS field, Boston Scientific has introduced directional electrodes to achieve targeted stimulation, thereby addressing the shortcomings of traditional DBS ring electrodes. By adjusting the stimulation direction of the directional electrodes, precise stimulation of the target neural nucleus can be achieved, avoiding adverse reactions such as language disorders and visual impairments in patients.
Medtronic's strategy is to launch closed-loop products in the field of neuromodulation.In 2020, Medtronic launched the Percept PC DBS product, the first DBS product with the ability to "sense" deep brain neural activity to receive FDA approval.
In 2023, Medtronic launched Inceptiv, its first closed-loop SCS product. The highlight of Inceptiv's closed-loop stimulation is the use of ECAP as the feedback signal for stimulation, continuously sensing each individual’s unique biological signals and adjusting the stimulation as needed.
Abbott explores the unknown territory of depression in the field of neuromodulation.Abbott's application of DBS in treating refractory depression received FDA Breakthrough Device Designation in 2022. Evidence suggests that implanting electrodes in parts of the brain responsible for mood regulation can help alleviate symptoms of refractory depression.
DBS Application in Refractory Psychiatric Disorders Becomes a Key Exploration Area. Relevant experiments are being conducted in the fields of depression, Alzheimer's disease, tic disorders, addiction, anorexia nervosa, and schizophrenia.
Explorers are not limited to Abbott. In China, Jingyu Medical's DBS intervention for refractory depression has conducted clinical research at Ruijin Hospital, affiliated with Shanghai Jiao Tong University School of Medicine. Currently, 23 patients have completed the implantation, with an average improvement of 60% in depressive conditions.
Two Major Development Trends in Neuromodulation:Miniaturization, Intelligence
The layout direction of the three giants shows that neuromodulation is developing towards two major directions: expanding indications and creating closed-loop products.
Neuromodulation technology, once limited to interrupting neural signals associated with chronic pain and movement disorders, is now expanding into new fields. Urinary incontinence, heart failure, stroke rehabilitation, treatment-resistant depression, and obsessive-compulsive disorder have all become areas of exploration for neuromodulation.
In terms of technological change, a significant trend in the field of neuromodulation is the move towards miniaturization and closed-loop stimulation.
Miniaturization reduces product volume, decreases power consumption, and brings a better implantation experience for patients.
Closed-loop stimulation is a revolutionary change to the open-loop stimulation model.The previous generation of neurostimulators (DBS, SCS, VNS) were primarily open-loop stimulation systems. Open-loop stimulation systems fix the stimulation intensity and interval, emitting electrical pulses at a constant frequency.
Taking SCS implant surgery as an example, during the operation, effective stimulation parameters are selected based on the patient's paresthesia and pain relief level, and the parameters are fixed once determined. After a period post-operation, it is necessary to adjust the stimulation amplitude via remote control to reduce the possibility of over- or under-stimulation, but this carries the risk of diminished treatment effectiveness.
Closed-loop stimulation, on the other hand, adjusts the intensity and frequency of electrical stimulation by real-time sensing of neural signals.Representative products approved globally include the Responsive Neurostimulator (RNS) developed by NeuroPace for the treatment of refractory epilepsy and Medtronic's Percept™ PC, a brain stimulation device with sensing capabilities.
NeuroPace's RNS Stimulator and RNS System can collect EEG signals through electrode plates placed near the patient's epileptogenic focus, identify abnormal electrical patterns specific to the patient before a seizure, and the stimulator is equipped with several sets of stimulation parameters. When abnormal EEG activity is detected, the stimulator automatically activates and delivers the corresponding stimulation program through the electrodes to the cortex or target brain region, suppressing excessive synchronized neuronal discharges, thereby achieving the goal of seizure suppression.
At the same time, the product design moves the pulse generator from the chest site of VNS and DBS implantation to the brain, reducing skin and flesh trauma and the risk of surgical complications. The RNS system provides personalized treatment for different patients, performs feedback stimulation, reduces power consumption, and offers better therapeutic effects.
Medtronic's Percept™ PC, a brain sensing stimulator, features 16 independently adjustable stimulation channels and 6 sensing channels. While delivering electrical stimulation therapy to the patient's brain, it senses specific brain signals associated with disease symptoms and analyzes them using intelligent algorithms, providing objective data for doctors to develop treatment strategies, thereby offering personalized and precise treatment for patients.
The difficulty in achieving a true closed-loop in neuromodulation lies in the interpretation of signals. The realization of sensing technology has been hailed by the scientific community as "hearing a whisper amidst the roar of an airplane." The primary challenge is identifying neural signals, with the further difficulty being the comprehension of these signals. Without precise signal judgment, many ineffective stimuli will be administered, failing to achieve accurate stimulation.
How can neuromodulation achieve more precise signal interpretation and accurate stimulation? Brain-computer interface technology might be the answer.
In a broad sense, NeuroPace's RNS system has formed a brain-computer interface. However, the RNS system collects coarse local field potential (LFP) signals or electrocorticography (ECoG) signals and does not analyze these signals. The new high-throughput neural electrodes aim to capture spike signals (action potentials), which are high-frequency pulse electrical signals released at the level of individual neurons. These signals can be analyzed and encoded, with the potential to bring breakthroughs in explaining disease mechanisms.
How Chinese Companies Break Through
Although neuromodulation is experiencing high growth globally, its penetration rate in the Chinese market has remained relatively low.
For example, neuromodulation for relieving refractory pain. More than 1.5 billion people worldwide suffer from various types of chronic pain, surpassing the total number of patients with cardiovascular diseases, diabetes, and cancer combined. Among them, over a quarter are afflicted with the most intractable neuropathic pain, urgently requiring better treatment options.
In China, the number of pain patients exceeds 300 million and is growing at a rate of 10 to 20 million per year. There are approximately 50 million patients with chronic intractable pain. SCS is mainly used to treat intractable pain, such as peripheral nerve injury pain, diabetic foot neuropathy, postherpetic neuralgia, post-amputation pain, and other painful conditions.
Although the patient population is large, the annual number of SCS implants in China is not high compared to the global annual volume of 100,000 SCS implants, due to the high cost of SCS.
Cost is the main reason for patients in China to "bear pain."
Shenluo Medical founder Wang Shoudong told Arterial Network: "The total cost of SCS implantation in China is about 280,000 yuan, with domestically produced products costing between 150,000 and 200,000 yuan. In terms of medical insurance reimbursement, only three or four provinces in China support reimbursement for SCS implantation. For most people, the cost of implanting a matchbox-sized stimulator is equivalent to that of a mid-sized car. The high cost exceeds the affordability of many patients."
The gap between domestic and international markets, along with numerous pain points in the clinical application of traditional implantable neuromodulation products, has given Chinese companies an opportunity to enter the market, with multiple enterprises securing financing.
In the field of chronic pain, ShenLuo Medical aims to launch SCS products with higher accessibility, independently developing two major systems: the SCS system and Peripheral Nerve Stimulation (PNS). The SCS is used for long-term implantation to treat intractable pain, while the PNS is designed for short-term implantation as a temporary, short-term peripheral nerve modulation system that alleviates both acute and chronic pain. This form of physical therapy has no drug-related side effects, filling the gap between opioid medications and expensive surgical neuromodulation procedures.
In the field of closed-loop neuromodulation, Epilcure, a responsive neurostimulator for refractory epilepsy developed and produced by NovoMed, a subsidiary of JiLiang Medical in collaboration with Zhejiang University, has officially launched a prospective, multi-center, controlled China registration clinical trial. This clinical trial is being implemented across eight top neurosurgical centers in China.
Exploring new fields is not easy, as even Axonics and Neuropace, the overseas benchmark startups in neuromodulation, remain in a loss-making state years after their IPOs.
Axonics has developed a sacral nerve stimulator to provide long-term and safe clinical treatment for patients with overactive bladder or fecal incontinence.
In 2019, Axonics' wireless-adjustable, rechargeable miniature r-SNM system was approved, with an expected lifespan of up to 15 years. In 2022, Axonics' total net revenue was approximately $273.6 million, representing a year-over-year increase of 52%.
Although its growth rate and scale are quite impressive, Axonics remains in a continuous loss, with a net loss of $47.1 million in 2022, compared to $36.1 million in 2021. Multiple analysts predict that Axonics is expected to break even by 2024.
Global closed-loop neuromodulation pioneer Neuropace is also in a loss-making state, with revenue of $30.98 million in the first half of 2023, a year-on-year increase of 43%, and a net loss of $19.49 million.
Even with breakthrough and innovative products, it takes years to reach the break-even point. While expecting disruptive innovation from neuromodulation, sufficient preparation for the long product commercialization cycle is also required.