HOLLAND — Shoulder Innovations Inc. intends to use $2.2 million in capital raised from investors to support the launch of a new shoulder implant device that recently received regulatory approval, plus develop new products.
The Holland-based medical device company earned U.S. Food and Drug Administration approval in December for the InSet Plus augmented glenoids, the cavity in the shoulder. The product is headed to market in the next few weeks and allows surgeons “to treat some particularly complicated anatomy potentially more effectively,” Shoulder Innovations Executive Chairman Rob Ball told MiBiz.
The device is part of the company’s InSet Total System now on the market and “essentially provides a surgeon with a much broader set of tools with which to treat the patient in the operating room,” Ball said.
Shoulder Innovations also expects to launch another shoulder-replacement product later this year. The new product is currently undergoing FDA review.
The two new shoulder devices give Shoulder Innovations a product portfolio that covers 85 percent of the shoulder surgeries performed by specialists, “which gives us a platform on which to continue building a broader and deeper distribution network in the United States,” Ball said.
“We’re transitioning from a development company to a commercial company,” he said.
Shoulder Innovations raised the Series B capital round from 31 investors, according to a recent filing with the U.S. Securities and Exchange Commission. Ball said the capital round involved existing investors and was led by Cultivate(MD) Capital Fund II LP, a venture capital fund operated by Grand Rapids-based Genesis Innovation Group LLC whose portfolio companies include Shoulder Innovations.
As Shoulder Innovations prepares the next product launch later this year, the company will need to raise another $7 million to $10 million in Series C capital to build a larger distribution network. Shoulder Innovations will look for financial backers from outside of its existing investor base, Ball said.
“We’ll seek additional new investors,” he said.
Investors ultimately will seek an exit, Ball said. That could mean the sale of the company in the years ahead.
“We’ve had significant inbound strategic interest and we expect that to continue, and wouldn’t be surprised if something happened over the coming couple of years,” Ball said.
Contract medical device manufacturers in Michigan, Indiana and Oregon produce the shoulder devices for Shoulder Innovations. Sales of the first device that hit the market in 2016 have reached into “thousands” of units, Ball said.
In a December announcement on the FDA approval of InSet Plus, Shoulder Innovations Chief Commercialization Officer David Blue noted that there are now more than 100,000 total shoulder surgeries annually in the U.S. and that demand for the procedure grows about 10 percent per year.
The company’s products are designed to meet that demand with a system that simplifies shoulder replacement technology, according to the announcement.
“Surgeons are seeking implant systems that can help to reduce implant loosening and revision rates, therefore increasing patient satisfaction and reducing overall healthcare costs,” Blue said.