Materials and implant company Oxford Performance Materials, Inc. (OPM) is working with Fuse Medical so that the latter can make lines of cervical and lumbar spine interbodies, as well as soft tissue fixation implants. The devices are specifically for sports medicine, as well as other foot and ankle implants. Using the OPM’s intellectual property, the implants will rely on its OsteoFab PEKK technology and OXPEKK material.
The firm states that OXPEKK´s advantages are “bone like mechanics, bone ongrowth, radiolucency, and antibacterial + antiviral properties.” Formally, Fuse will be the original equipment manufacturer, but the parts will be made by OPM.
“As OPM focuses on providing advanced implantable polymers and contract manufacturing services, we look to work with industry leaders that are dedicated to innovative solutions that drive medical device technology forward in ways that reduce system costs and improve patient outcomes. Fuse clearly fits this mold, and we are extremely pleased to be making this important partnership announcement,” OPM CEO Scott DeFelice said.
“This new collaboration with OPM continues our mission to develop unique, differentiated products and technologies with breakout potential. Over the past year, Fuse has developed a deep scientific understanding of OPM’s OsteoFab PEKK technology, and our team is extremely excited about developing new product lines in spine, sports medicine, and foot and ankle that feature OsteoFab’s unique set of clinical benefits,” Fuse CEO Chris Reeg stated.
OPM´s PEKK formulations are high-performing and feature specific coatings for implants. OPM also manufactures its own line of implants across a number of areas. Fuse is focused on ortho and spine implants as well as wound care. Both firms would seem to complement each other well in this deal.
It would be tempting for OPM to hog all of the opportunities in PEKK implants for itself. However, it would at the same time also be very costly for the firm to do this. It must make the choice between not commercializing some implants and prioritizing some over others—thus giving up some territory somewhere—or seeking new funding through investment or loans. By giving up territory, the firm can make use of a partner’s capital and distribution, without taking on more risk or losing equity.
I’ve told friends that if you give away 20 percent of your company to an investor, then every Monday you’ll be working for him. Every Monday forever. if you want to play a patient long-game, that’s a lot of Mondays to accumulate.
PEKK is an extremely high-performance material and OPM has worked hard on the material, developing IP in the process. Its main direct competitor is Victrex, which supplies PEEK, another material from the PAEK family. In addition to selling PEEK, Victrex acts as a contract manufacturer for implants, reserving that space for itself. OPM is a smaller business but goes further developing its own implants with its materials. So, something has got to give eventually.
In that sense, this is an excellent partnership for OPM because the deal will give volume to its contract business while providing them a slice of a bigger opportunity that would otherwise be cost-prohibitive for them to exploit immediately anyway. Volume is especially important in this case because the cost of quality is so high with implants. Since OPM is using powder bed fusion (PBF) to make these devices, a lot of their costs are batch-based as lots of parts leave machines, are transferred, depowdered etc. Therefore, optimal batch sizes and high machine utilization are very beneficial to the firm.
At the same time, PBF with PEEK and other PAEK materials also have an inherent problem: recyclability rates are near zero for these materials. PEKK is more recyclable. In PBF, unused powder acts as a support for parts. Usually, this material can be recycled, but generally about half of it is discarded. Generally, recycling powder for implants is not tolerated, so only virgin material can be used. Specifically for PAEK materials and PBF, recycling is technologically problematic. As a result, unused powder cannot even be used for industrial parts, even as support.
This means that hundreds of dollars per kilo of this unused, expensive material has to be thrown away. Every millimeter of unused powder in the bed is prohibitively expensive. Any optimization in that regard would bring down costs and boost profits for all operations on the material and implants. Machine utilization and build optimization is nice everywhere, but it is crucial when it comes to PAEK implants. OPM therefore has an advantage due to its materials´ better recyclability and its now compounding this advantage through getting more volume.
In this way, OPM could be giving up a lot of territory and margin with the Fuse deal. At the same time, this may very well be free because it helps them optimize current builds and work towards greater profit per build. In that light, this is a great deal for Fuse and OPM both.
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