Innovative Spinal Technologies Jilted, Now Bankrupt, Source Says

Share this story with your network

Last night we reported that Mansfield, MA-based Innovative Spinal Technologies, a maker of implants to correct degenerative spinal disorders, had gone dark—the company’s website was down and phone calls were going unanswered. A former employee who left the company in December now tells Xconomy that IST shut its doors on Friday, filed for bankruptcy protection, and let the last of its employees go after a planned sale of the seven-year-old startup to another medical device company fell through.

The source identified the potential buyer as Biomet Spine of Parsippany, NJ. IST was “in the process of selling” but Biomet backed out for unknown reasons, the source says. “They had no more options and were out of money,” hence Friday’s closure.

If all this proves right, IST used up almost $75 million in venture and private equity funding before its demise. That funding included a $6.2 million Series A round raised shortly after the company was spun out by the Texas Back Institute in 2002; a $39 million Series B round in 2005, the same year the company moved from Plano, TX, to Mansfield; an $18 million Series C round last September; and a previously undisclosed $10 million venture debt deal.

5 Comments

  1. Wow! That is not good for the entire industry. Why do you think they went bust?

  2. The strategy of building a Direct Sales force was misguided. They burned through money too fast and the sales were too light to offset the burn. If your company lacks true innovation, you can’t be successful selling through a direct sales model. As frustrating as selling through distributors is, at least your sales costs are fixed. This was a sad case of copying the Kyphon sales model without a “kyphon-like” product to support it.

    Their CEO is a very talented guy, who unfortunately lacked the necessary experience in spine to avoid the $75MM mistake.

  3. I agree that this is an isolated incident, and not indicative of the spine industry as a whole. The spine industry will continue to grow (though perhaps not at their current double digit growth levels), and there will continue to be room for innovators in the spine implant space. That said, companies like IST, that only have “me too” products and limited or no Intellectual Property coverage for their devices, will continue to be squeezed out of the market. This bodes poorly for the vast majority of small “me too” pedicle screw companies (there are currently over 250 different pedicle screw systems, I believe) that have been presenting at the SAS and NASS meetings over the past few years…

  4. As I stated, during the Wall Street heyday investors were throwing money at companies with no rhyme or reason. At best, IST had a “me too” product portfolio that was conceived in vitro in Plano, Texas. The expectations for the Axient DSS were hopeful at best. Based on the current market conditions and questions from the FDA on DSS, where was this company going? Look at what has happened with Applied Spine, Raymedica and Disc Motion Technology. Who will be next? Maybe this will be an antidote for the “Entrepreneurial Fever” that has become so pervasive within our industry? Just because someone has the wherewithal to sell a company or raise capital doesn’t qualify them to run a company, yet, there are many of those people in our profession. All of us can sit back and play Monday morning quarterback. Why hasn’t anyone questioned the Board of Directors, the Surgeons involved, and the Investors on who was monitoring the actions of the Executive Management Team if there were so many signs? Having launched products over the last ten years, building forecasts and revenue models I can only ask; What were they doing with this money?

  5. As I stated, during the Wall Street heyday investors were throwing money at companies with no rhyme or reason. At best, IST had a “me too” product portfolio that was conceived in vitro in Plano, Texas. The expectations for the Axient DSS were hopeful at best. Based on the current market conditions and questions from the FDA on DSS, where was this company going? Look at what has happened with Applied Spine, Raymedica and Disc Motion Technology. Who will be next? Maybe this will be an antidote for the “Entrepreneurial Fever” that has become so pervasive within our industry? Just because someone has the wherewithal to sell a company or raise capital doesn't qualify them to run a company, yet, there are many of those people in our profession. All of us can sit back and play Monday morning quarterback. Why hasn't anyone questioned the Board of Directors, the Surgeons involved, and the Investors on who was monitoring the actions of the Executive Management Team if there were so many signs? Having launched products over the last ten years, building forecasts and revenue models I can only ask; What were they doing with this money?

Leave a Comment

Your email address will not be published. Required fields are marked *

*