In 1988, after a successful presentation at the 1987 North American Spine Society (NASS) annual meeting, George Bagby, M.D. and Steven Kuslich, M.D. formed a new company, Spine-Tech, to bring the BAK intervertebral body fusion system to market.
Eventually, Spine-Tech’s BAK Interbody Fusion System would become the first cage device to receive FDA approval. Its first champion was a Twin City venture capitalist named David Stassen and Stassen’s first key hires were an engineer, Doug Kohrs and a PhD pharmacist, administrator named Rich Jansen.
Spine-Tech went public in 1997, nine years after its start, and was sold to Sulzer Medica in 1998 for $595 million. Eventually, Spine-Tech, then a subsidiary of Sulzer Medica, would become part of Zimmer Corporation, later Zimmer Biomet and, today, it is part of the Zimmer-Biomet’s ZimVie spin off.
But, most importantly, Bagby’s and Kuslich’s invention, in the hands of a surprisingly small team of engineers, researchers, managers and salespeople, would establish two essential pillars of Modern Spine Surgery: intervertebral body spine surgery and minimally invasive spine surgery.
All that, however, was barely a wisp of a notion when, in 1989, Bagby and Kuslich found themselves sitting in the board room of a young Twin City-based orthopedic company, Orthomet. Orthomet was a venture backed, recently public manufacturer of hip and knee arthroplasty products, “hot” young med-tech company in frigid Minnesota.
In 1989, Bagby’s and Kuslich’s Spine-Tech licensed their BAK cage to Orthomet. Fortunately, Kuslich put performance clauses in the contract stating, if Orthomet didn’t perform (design instruments, recruit clinical study sites, and so forth) he and Dr. Bagby got the BAK cage back.
Unfortunately, even as the ink was drying on their contract, unbeknownst to Kuslich, Bagby, or even Orthomet’s senior management, Orthomet was about to get the worst possible news—its flagship knee arthroplasty product was running into serious problems in the field.
Orthomet Crashes, BAK Finds a Champion
Orthomet, founded in 1974, was likely the first U.S. company founded solely to capitalize on the emerging market for large joint arthroplasty products.
The first of the majors to enter large joint reconstruction was Zimmer, which licensed the Swiss-based Mueller hip in 1968. The last was Stryker Corporation…in 1979.
Large joint arthroplasty is sneaky, complex. Issues may not reveal themselves for years, even decades. Orthomet was about to learn that lesson the hard way.
Doug Kohrs, the talented DePuy engineer who had helped design the successful DePuy PFC (posterior cruciate sacrificing/cruciate retaining) knee, was, in 1988, one of Orthomet’s marketers.
“I went to Orthomet because I had convinced myself that I wanted to get the Scarlet E (for Engineer) off my chest.” He talked his way into a marketing job at Orthomet, but, as luck would have it, he soon would find himself in the middle of a manufacturing and QC screw up that almost destroyed the company.
Kohrs was assigned to sell Orthomet’s total knee—which, as a former DePuy engineer for the PFC knee, he understood well.
“So Orthomet’s total knee project was having some problems in the field. I was in the field a lot and I was going into surgeries, and I could see what the problem was.”
It wasn’t, Kohrs discovered, the design (the knee had been selling well for a couple years and surgeons liked it). Instead, it was a manufacturing problem that did NOT show up in quality control.
“When the Cobalt Chrome femurs were manufactured originally they were fine and performed well in the field,” remembers Kohrs. But then, “there was a small manufacturing change to change the location of the flow strut (they were investment cast ) that went across the back of the condyles and in essence held the posterior condyles of the implant even. When that was moved, it caused all femurs from that point on having a medial and lateral condyle that were out of alignment.”
“The confounding part was that one day it worked and the next lot it didn’t fit the cut bone correctly,” recalls Kohrs.
When the time came to elevate the problem to the Orthomet’s board, Kohrs drew the short straw.
“It was my job to present the bad news about the knee to Orthomet’s board,” remembers Kohrs today. “I had to tell them that we should pull the knee product off the market because it’s gonna hurt people and also explain, in detail, the QC flaws. That knee represented about 90% of Orthomet’s sales.”
Orthomet’s board really had no choice. The knee was gone. Its stock plunged from $22 to $2. “It was a whole shit show,” recalls Kohrs, “but at least I figured out what was happening, and no patients got hurt.”
When Kohrs revealed the depth of Orthomet’s problem most of the board’s members went into kill the messenger mode. Except one. The local venture capitalist and Orthomet board member, David Stassen.
“After I delivered the bad news, I go back to my office. It was a little office with a door and a little window,” remembers Kohrs. “A few hours go by, I’m just sitting there thinking, ‘that didn’t seem like it went too well.’ My boss comes and says, ‘how did it go?’ Because he wasn’t in the board meeting. I say, ‘Man, I dunno.’”
“So anyway, I look up and through my window I can see this Dave Stassen guy walking towards my office. I’m thinking I’m gonna be fired.”
“My wife and I had a 15-month-old son, my wife was pregnant with our daughter, who was due in like two to three months.”
“And Dave Stassen is walking down the hall to my office and I’m thinking, ‘It’s gonna be a bad night.’”
Stassen walked into Kohrs office, closed the door behind him and sat down. He complimented Kohrs on his board presentation…then said… “I want to talk to you about something else.”
Turns out, at the same meeting where Orthomet’s board pulled its knee implant off the market—effectively cancelling 90% of its sales and inviting the plaintiff’s bar to pick through the bones of whatever was left—the board also decided to give the BAK cage back to Bagby and Kuslich.
Stassen looked right at Kohrs, “I think there is something here in the BAK cage and St. Paul Venture Capital (where David was a partner) is gonna put up some money.”
It was June 1991.
“I’d like you to be the lead engineer on the project and the first employee. What do you think?”
Kohrs, who figured his job marketing knees at Orthomet was over anyway, said, “Maybe, but I want to talk to Dr. Kuslich first.” For a full month, Kohrs went into surgery with Kuslich, learning everything he could about the BAK, degenerative spine disease and interbody fusions.
Kohrs emerged a convert and, on a personal level, grew to admire Kuslich. “Dr. Kuslich was one of the most energetic guys you’d ever want meet. Didn’t drink, didn’t smoke. Super active spine surgery practice. Great hands. And he was pretty young, in his forties. I was young too, 32 years old.”
Kohrs started work at Spine-Tech on August 10, 1991. The office was on Hennepin Avenue, just walking distance to Kuslich’s operating room at the Metropolitan Medical Center, in Minneapolis, since renamed Fairview Riverside Hospital.
Spine-Tech had no CEO. No President. Just four worker bees. Rich Jansen ran the clinical side of things. Marilyn Wagner was the administrative assistant. A former nurse, Cindy Ulstrom (later Bulwicz), worked with Rich Jansen. And Doug Kohrs was the lead (and only) engineer.
David Stassen put in the money and Keith Eastman, who worked with Stassen, kept the books.
“We were just kind of thrown together. Dave was very gung-ho about the BAK. I don’t think his partners were that gung-ho. The initial funding was $1 million. That’s all we had,” recalls Kohrs.
Orthomet Postscript
After Orthomet’s board pulled the knee product and jettisoned BAK, they hired 37-year-old Jim Hawley, the former 3M Pharmaceutical and Dental Products Group controller, to restructure and reorganize the company—which, between 1991 and 1994, he and CEO Richard Nikolaev did.
In 1993 a reporter asked Hawley if he had to do it all over again, would he have left 3M?
Hawley answered: “If I had known at the time how much trouble Orthomet was in, I probably wouldn’t have had the courage to leave 3M. I was a little naive at the time. I have learned more about running a business and have been exposed to more situations over these past few years than I ever could have at 3M. I can’t recommend—or not recommend—my decision to anyone. A decision like the one I made depends on the individual—it depends on how adverse you are to risk…. Management’s responsibility is to create an environment where people are challenged and can succeed, and customers (in the broadest sense) can be served well.”
Under Hawley and Nikolaev, Orthomet increased sales 40% to $22 million in 1993. Most importantly, Orthomet earned $2.1 million on those sales, compared with a $1.8 million loss the year before.
In 1994, Orthomet was sold to Memphis-based Wright Medical for $59 million.
Building Spine-Tech and Launching the BAK Cage
Kohrs, Jansen, Wagner and Ulstrom were starting from scratch. Everything was ‘for the first time’. Making the cage, machining the titanium, threading it, desk-toping tubes, drills, taps and other instruments for, initially, a posterior approach—which matched Kuslich’s preferred method.
“When we got in surgery, we saw how things were used and realized that the central issue was patient safety,” remembers Kohrs. “Avoiding, for example, wrapping up the nerve root with the drill, or putting something into the nerve root or whatever.”
Kohrs and Jansen started thinking about the anterior approach. One St. Paul, Minnesota-based surgeon, John Dowdle, M.D., argued to the team that an anterior approach might be easier—fewer potential complications with nerves, nerve roots and the spinal cord—to say nothing of the powerful back muscles and the major vessels.
After working with Dowdle, recalls Kohrs, “We decided to go anterior, it was all about staying away from the major vessels. We were advancing science. But I gotta tell you, I did get scared a few times.”
In the early days, the Spine-Tech team always made sure there was a vascular surgeon in the operating room to open the abdomen and move organs and other structures out of the way for the spine surgeon.
One case in particular sticks in Kohrs’ mind from those early days. “We were doing a bunch of anterior approaches and one of our surgeons put a hole in the patient’s vena cava. It was the scariest thing I’ve ever been involved in. Because the abdomen just went. The spine surgeon was calm. His vascular surgeon, and we always had a vascular surgeon in the OR when we did anterior approaches, just stuck his finger in there and stopped the bleeding somehow and sewed it up. And then we completed the case.”
Kohrs and the entire team learned a lot through those first 100 cases.
Smith & Nephew (Richard Medical in Memphis) Invests
From the end of the first 100 BAK cases all the way to its initial public offering in 1997, the small Spine-Tech team burned through about $7 million. Five of those millions came from Memphis-based Richards Manufacturing (then owned by Smith & Nephew).
“We didn’t know if we were gonna go public or not, but we wanted to get going on building our U.S. salesforce. We were trying to raise like $5 million,” remembers Kohrs. “Smith & Nephew [Richards Manufacturing] had come to us and they were really interested in partnering. We did a license agreement European rights to sell the cage. We’d received European approval before we got FDA approval.”
The European rights never amounted to anything. But as part of the deal, Smith & Nephew received Spine-Tech stock, which, when the company went public was worth multiples more than the original $5 million.
“We were pretty frugal,” remembers Kohrs.
And smart.
Rich Jansen and the BAK Clinical Study
Rich Jansen, Ph.D., Spine-Tech’s head of Operations and Regulatory Affairs, holds one of the first doctoral degrees granted in the United States in pharmaceutical science. And that, improbably enough, was why he became one of Spine-Tech’s first four employees.
Jansen was, in the early 1970s, part of the second class to graduate from the University of Minnesota’s new pharmaceutical doctoral program. His first job, at 24 years old, was with the old Swedish and St. Barnabas hospital which had recently merged and been renamed the Metropolitan Medical Center in downtown Minneapolis.
Jansen’s title was assistant director of pharmacy in charge of clinical services. He spent a lot of time in the hospital’s intensive care unit, providing drug information, dosing, monitoring but also participating in clinical studies.
As he remembers today, everything in the mid-1970s was new. “There were no role models at that time for clinical pharmacists. There had never been one before.”
But Jansen and the other newly minted pharmacists figured out roles and function as time went on—including, for Jansen, the process of vetting clinical studies and unapproved pharmaceuticals.
Metropolitan Medical Center did not, for example, have an institutional review board (IRB).
“Some of the physicians, particularly oncologists, were bringing investigational drugs into the hospitals,” Jansen recalls. “The nurses would call up and say, ‘do I mix this with normal saline or something else?’ And when I asked them what they had, I’d learn that these drugs had no approval. So, I went to the head medical staff and said, ‘we need an IRB.’”
“The IRB is the local eyes and ears of the FDA. While the FDA can approve a study, a study sponsor can’t implement the study in a hospital unless their IRB approves it and the patient consent forms. The hospital IRB actually has override capabilities to the FDA.”
Hospital IRBs are nearly ubiquitous today. But in 1976, Jansen had to initiate the first IRB at Metropolitan Medical Center. Jansen would spend ten years at the hospital, taking a position in administration and chairing the IRB he helped launch.
As head of the IRB, Jansen reviewed lots of drug and device research. As administrator, he oversaw Metropolitan Medical’s orthopedic service and knew the hospital’s orthopedic surgeons well. They, in turn, were setting up a group practice and asked Jansen, in the mid-1980s, if he wanted to join their group as an administrator.
“The doctors knew I wanted to get on the for-profit side of medicine. Hospitals are not-for-profit. I wanted an opportunity to get into the business side of medicine. So, I said ‘yes.’”
The group of seven orthopedic surgeons included Dr. Stephen Kuslich, who, along with Dr. George Bagby, had invented the BAK cage and founded Spine-Tech.
Shortly after Jansen joined the group, Dr. Kuslich approached him about Spine-Tech. “He said, ‘you know, if this Spine-Tech thing ever takes off, would you be willing to work with me on it?’ I said, ‘yeah, absolutely’”.
Three years later, June 1991, David Stassen committed $1 million to the BAK project.
“Dave Stassen had a great reputation in the Twin City area,” remembers Jansen, “and probably around country. He was known as a real sharp entrepreneur and venture capitalist, mainly in medical devices. On a personal level, very engaging, a straight shooter.”
With funds committed, the call came from Stassen to meet and very soon thereafter, Jansen was asked to head Operations and Regulatory Affairs for Spine-Tech.
Of course, operations consisted of just three (not counting himself) experienced employees, but regulatory affairs…well, Jansen would write a remarkable chapter on how to design a successful FDA approved interbody implant clinical study.
The BAK Clinical Study
Rich Jansen, Cindy Ulstrom and Steve Kuslich drafted the first ever patient inclusion, exclusion criteria, success definition, study endpoints, adverse reaction definition, follow-up period and more for interbody fusion devices.
“If you go to the FDA’s guidance document today on interbody fusion devices,” explains Jansen, “much of the language is word for word out of that very first document we submitted in 1991.”
As a general proposition, clinical patient enrollment is driven by statistics. Depending on how Jansen and his team defined success, then that would drive the number of patients they would need to enroll in order to, theoretically, achieve a statistically significant result as compared to some control arm.
“So, I can’t remember exactly how many patients we said we would need in the study in our statistical plan, but what we did,” recalls Jansen, “was ask the insurance companies to reimburse us for the implants used in the clinical study—which most insurers agreed to do. We were implanting two BAK cages in most patients. That was $4,000 per case.”
It didn’t take long for Jansen and everyone else at Spine-Tech to realize the economic benefits from charging for the implants during the study. It was a funding bonanza.
“So, we just kept adding arms to this study. We had one- and two-level posterior, then one- and two-level anterior, then we started laparoscopic and several more. We didn’t have to prove safety. It was a feasibility study.”
The result of Jansen’s design essentially guaranteed that Spine-Tech would be a hugely successful company and initial public stock offering.
First: It generated a lot of cash.
Second: By the time the FDA approved the BAK in September 1996, Spine-Tech had 44 investigators already trained and ready to go.
The FDA approval “was like the starter’s pistol going off at the Kentucky Derby,” remembers Jansen. “The company went from zero sales in August of 1996 to a hundred million a couple years later. We had 44 surgeons using the device and training other surgeons.”
Reimbursing a non-FDA Approved, Investigational Fusion Device
It is hard today to imagine insurance companies, who are notorious for denying payment for FDA approved interbody implants with no kidding, 10+ years of solid clinical data, actually shelling out $4,000 per case for a non-approved clinical study device.
But in the early 1990s, when pedicle screw lawsuits were terrorizing surgeons, hospitals, surgeon societies, manufacturers, and insurers, the BAK—which did not require a pedicle screw to achieve fusion—must have seemed like a Godsend.
Looking back, Jansen estimates, 80% or more of the insurers agreed to pay for the BAK implant during the clinical study.
How BAK Changed Spine Surgery Forever
“I first learned about the BAK in 1993 or 1994 from my ‘brother,’ Horas Hale, a med device rep in Toronto, Canada,” remembers Isador Lieberman, M.D. That year was his first year of practice in Toronto, Canada. “Horas was and I were really good friends. To this day, when we’re together and someone comes up to us, we introduced ourselves as brothers, same father, different mothers.”
“In the mid-1990s, Horas was very involved with Smith & Nephew, and somehow got wind of the BAK cage and Spine Tech.”
“He says to me, ‘Izzy, let’s go to Minneapolis and see what this is all about.’ We went and I think it was the first or second lab that Spine-Tech held. John Reagan was there, Paul McAfee, Hal Matthews, and I’m thinking, whoa, these guys are the giants.”
“We learned on pigs at the time. I got hooked pretty quickly. The novelty of the laparoscopic approach was what attracted me. I liked the novelty of being less invasive. The second thing I really liked was the way it addressed the biomechanics of the spine.”
Dr. Lieberman tends to view new technologies skeptically, so he recalls sitting down with Dr. Stephen Kuslich and really drilling into how the BAK worked. “I remember asking Steve, ‘How could this be a standalone? How is this really gonna work? And you’re digging into the annulus and this and that and the other? You distracted up, you’re tensioning the annulus by doing that, you are restoring the posterior ligamentous structures. And then we thread these cages in to maintain the tension?”
“Now obviously there’s a lot of technical issues with it. You gotta size it, right? You’ve gotta do all the things”, said Dr. Lieberman. “But then Kuslich showed me the data that they had and all of a sudden it made sense to me.”
“I understood that, while it was a standalone, mechanically it made sense. If you’re putting it into the patient’s cancellous bone, it should work. The issues of the stress shielding and this and that, all of a sudden were discounted. So it, it made sense.”
“In my hands, the BAK was a wonderful operation for single level end-stage disc degeneration, disc resorption at the L5-S1 level.”
“That was the preferred least invasive, most appropriate operation that I could do at that level. The alignment had to be good at the 4/5 level. Early on in my career I realized that at the L5-S junction, you need lordosis there—which was contrary to all the other things that we were doing at that time.”
“People were advocating at the time, posterior instrumented distraction across L5-S1—in effect, flattening the back. I knew with the femoral rings we were putting in—as good as we thought we were at creating a lordotic angle—our cuts were not that good.”
“Those rings never really fit well. We didn’t have the right sizers; we couldn’t get the annus tension like we could with the BAK distractors that we had at that point.”
“I realized that at L5-S1 the BAK can serve as a foundation and then going to my roots as a deformity surgeon, I thought, okay, if I do this right here and that patient eventually needs an operation, I’ve got the lordosis I need at 5/1.”
“And I was absolutely comfortable with the anterior approach. I had no hesitations going in the front. Throughout my whole residency, anterior spine surgery was, was the thing.”
“I ended up doing over 150 BAK cases at the Cleveland Clinic.”
Training Surgeons and Cage Rage
Spine-Tech brought BAK to market the old fashion way—hiring a head of sales and regional managers under a traditional direct sales organization structure. At the time there were a mere handful of spinal implant companies.
Spine-Tech recruited hip and knee implant reps—who knew little or nothing about the spine. Right from the start, Spine-Tech had to set up a comprehensive education and training rep program, which later expanded into a more rigorous program for surgeons.
“We required every prospective BAK surgeon to pass a hands-on cadaveric training course before we allowed them to use the product,” remembers Kohrs. “We built our own center in Minneapolis. It was a brilliant decision. Surgeons could see our labs and we just put our arms around them.”
The dilemma for Stassen and Kohrs was finding someone to do the training.
“We found the guy that did all the original training and education for Ethicon Endosurgery when they were introducing laparoscopic surgery to the world. It was Dave Stassen’s idea.”
The “guy” Stassen found was Dwayne Leinenkugel, who’d been a helicopter pilot in the Army. “Dwayne was a very precise guy,” remembers Kohrs. “Not only that, but Leinenkugel brought with him to Ethicon and later to Spine-Tech, his U.S. Army helicopter pilot team.”
Stassen hired Leinenkugel first, then Leinenkugel’s entire U.S. Army team. “They were phenomenal, recalls Kohrs. “They were super serious people. We didn’t want anybody to get hurt.” Training and Leinenkugel and his team were a key component to Spine-Tech’s success and eventual sale to Centerpulse.
“Just because you came to training did not mean we would let you use our BAK cage,” remembers Kohrs. “There was about a 15% fallout rate. Fifteen percent of the doctors who came to be trained were NOT allowed to use the product.”
“We also used a clinical specialist model that could be in the operating room for each new surgeon’s first five cases or whatever.”
In 1998 Spine-Tech was sold to Sulzer Medica for $595 million. Dave Stassen, the CEO, and Keith Eastman, the CFO, were gone immediately after the transaction.
Doug Kohrs stayed on for a year and during his tenure, BAK sales nearly doubled, going from $53 million to $101 million.
The End of the BAK – “Just because it worked in horses, didn’t mean it was gonna work in humans.”
The BAK cage would become so widely used, after Centerpulse purchased Spine-Tech that that era is often referred to as the ‘Cage Rage’ era. Kohrs had left Centerpulse before ‘Cage Rage’.
“I remember those times. BAK was a big thing. We thought, ‘okay, we have a metal cage that we can put into the disc space,” recalls Richard Guyer, M.D., co-founder of the Texas Back Institute and Director of its Fellowship Program. “We can put graft in the middle of it and we’ll get it to fuse. The big flaw in everybody’s thought process was that we were making a hole into the strongest part of the bone, the endplate superior and inferiorly and we had these two cages, and we were hoping that they would hold.”
“Of course, all these reports started coming out showing a high degree of pseudoarthrosis and that sort of killed the BAK.”
“In retrospect and in light of everything we know now, it was a poorly conceived device, just because it worked in horses didn’t mean that it was gonna work in humans.”
The other issue was that the BAK’s modulus of elasticity was far from that of natural bone, which in turn resulted in a problem with subsidence (the cages were sinking into the softer bone).
While the BAK, as a device, might have had its flaws, the concepts it popularized of using the intervertebral space to create space in the spinal canal, restore structure and, potentially, mobility, were winners.
In the 1990s, Brantigan et al., and Charles Ray, M.D. introduced interbody cage devices made out of carbon fiber and titanium respectively which had a modulus of elasticity more similar to that of bone, mitigating the problem of subsidence.
Epilogue
So much of what spine and neurosurgeon’s take for granted today, was established by the BAK and the minimally invasive procedure it fostered. As the 1990s gave way to the 2000s, the experience from the BAK established anterior lumbar intervertebral fusion (ALIF), transforaminal lumbar interbody fusion (TLIF) and posterior lumbar intervertebral fusion (PLIF) as the definitive procedures for treating lumbar disc disease.
Biomechanically, lumbar interbody fusion offered patients maximum stability while also eliminating the disc segment as a further source of pain.
Over the next two decades, the intervertebral body implant would be transformed into a complex, elegantly engineered, multi-functional implant which delivered one or more of the following outcomes:
- Segment stabilization
- Motion preservation
- Expansion in situ
- Intervertebral stress and load measurement
- Electrical signal generation
- Fusion
- Infection resistance
And, most importantly, become, as a category, the second most implanted device (after the pedicle screw) in the History of Modern Spine Surgery.
