Just 14 years. Between 1985, when a struggling Memphis-based Danek Medical, founded by Alan Olson, was folded into an equally struggling Warsaw based Biotechnologies, Inc. (Miles Igo, L.D. Beard and George Rapp) to 1999 when the re-named Sofamor Danek, Inc. was purchased by Medtronic for $3.7 billion—the foundations were laid—by this company—for what we know today as the modern spine surgery practice and industry.
Fourteen years to bring:
- The first comprehensive anterior and posterior spine surgery instrumentation and implant system to spine and neurosurgeons;
- The first bone morphogenic protein to be used as a bone graft and adjunct to spine fusion surgery;
- The first surgical navigation system for spine surgery;
- The first decisive mass tort win in medicine (the pedicle screw mass tort litigation);
- The evidence to down classify pedicle screws—which the FDA did;
- The winning argument at the U.S. Supreme Court that enshrines the right of all physicians to use their medical judgement to treat patients, even to the extent of using products off-label; and
- The first allograft intervertebral body spacer.
And, on a purely commercial basis, the first multi-billion dollar spinal implant, instrumentation, and biologics company.
Fourteen years.
The Sofamor Danek team, led by Pickard and Beard, confronted truly novel business problems and made the best decisions they could at the time. With the benefit 20/20 hindsight, investing in bone morphogenic proteins, surgical navigation, and taking settlement off the pedicle screw litigation off the table, were clearly the right decisions—not only for Sofamor Danek but, more consequentially, for generations of future spine and neurosurgeons.
To use another old saw: these managers were up to their neck in alligators but did not forget their prime objective of helping spine and neurosurgeons improve spine patient treatment.
Here, then, is the heretofore untold story of the first commercial bone morphogenic protein, the first musculoskeletal surgical navigation system, and how Medtronic came to buy Sofamor Danek for a record (at the time) $3.7 billion.
Urist, the Father of Bone Morphogenic Proteins
Dr. Marshall Urist is credited with hypothesizing (correctly) that the source of the body’s ability to self-repair bone was a particular protein, and he was the first to both isolate that protein and design a reproducible test to demonstrate the protein in action.
Along with his collaborator, Dr. Franklin McLean, Urist initially studied and published papers which analyzed and explained the process of calcification and ossification in fracture healing. The two researchers went on to study the effect of estrogen on bone formation for which Dr. Urist and his colleagues, Drs. Budy, and McLean received a Kappa Delta award in 1950.
In 1955 Urist published the seminal and foundational article for all of musculoskeletal healing, “Bone: An Introduction to the Physiology of Skeletal Tissue“ in collaboration with Franklin McLean, which was revised and reprinted in 1961 and 1968.
Dr. Urist continued to move down this particular research pathway and ultimately identified an inductor agent for bone. His initial disclosure of this research discovery came in the journal Science in 1965, titled “Bone: Formation by Autoinduction” and this was designated as a landmark publication.
In 1982, Urist submitted his second landmark paper also to the journal Science, published in 1983, titled “Bone Cell Differentiation and Growth Factors: Induced Activity of Chondro-osteogenetic DNA.”
In this paper, Urist demonstrated conclusively that bone morphogenic proteins existed and that they could induce de novo bone formation—even when implanted in, for example, muscle tissue.
“Urist literally took roomfuls of bone and distilled out the essence that enabled cells to lay down new bone,” remembers Michael DeMane, former president of Medtronic Spine (formerly Sofamor Danek Group). “But it took more than 20 years of research to figure out a way to make a pure form of the protein.”
Urist’s newly discovered bone morphogenic protein repeated all the biology of bone formation. When a BMP infused material was implanted, again whether native bone was present or not, undifferentiated mesenchymal cells would colonize the BMP implant, then differentiate into chondrocytes, continue differentiating into osteoblasts and osteoclasts ultimately reaching de novo bone formation.
Dr. Urist published more than 400 papers and gave more than 200 lectures on the subject of bone repair and the roles of bone morphogenic proteins in that repair.
The Race to Isolate and Purify Bone Morphogenetic Proteins (BMPs)
Urist, however, never cracked the code for mass producing bone morphogenic proteins.
Solving that particular puzzle required John Wozney, Ph.D. at Boston-based Genetics Institute Inc.
Wozney along with Elizabeth Wang, Ph.D. and Vicki Rosen, Ph.D., filed a patent in 1991 which disclosed how he and his team had cultured a particular cell line into which they’d inserted a DNA sequencing code to express the BMP-2 protein.
Their process worked with mammalian cells (Chinese hamster ovary cells, for example), with bacterial cells, such as E. coli and yeast cells. In short, Wozney and the Genetics Institute team figured out how to “ferment and brew” BMP-2—and other forms of bone morphogenic proteins—which they simply labeled—BMP1, BMP2, BMP3, and so forth.
Genetics Institute, Inc., along with Genentech on the West Coast and Creative Biologics, also in Boston, represented a revolution at the time in biotechnology research and development. Started in 1980 by two Harvard molecular biologists, Genetics Institute would grow to be a legendary and historic incubator of revolutionary biologic products like recombinant BMP2, but also a generation of individual biotech superstars.
In 1997, Ron Pickard had heard rumblings from Edgar G. Dawson, M.D., a spine deformity surgeon practicing in Los Angeles, that Stryker had reached an arrangement with Boston-based pharmaceutical company, Creative Biomolecules, for a recombinant bone morphogenic protein. Remembers Pickard today, “I had a kind of general idea of what BMP was and if, indeed, Stryker was successful in acquiring BMP, then they could fundamentally change the whole spine fusion market.”
With Dr. Dawson’s help, Pickard made contact with Tuan Ha-Ngoc, Genetic Institute’s executive vice president for corporate development. “I called Tuan,” remembers Pickard, “and became pretty good friends with him. He was a Ph.D., and this was before the company was acquired by American Home Products (later renamed Wyeth Pharmaceuticals).”
“We began to negotiate for BMP2 with Genetics Institute. Rick Treharne was very instrumental in that. Both from the regulatory perspective and the ability to educate a number of us on what BMP actually is. Later, his right hand, Bailey Lipscomb, became very much involved in it.”
Negotiating With Genetics Institute in the 1990s
“The negotiations seemed to go on forever.”
“We thought we had a deal and then another wrinkle would come up. I remember, everything was done, we were ready to sign the deal. A $50 million deal—$10 million up front and the rest over 5 years.”
“All that was negotiated and Tuan, that rascal, called me and he said, ‘One more change.’ I said, ‘Oh yeah? What’s that?’ He said, ‘My superiors want control of the clinical trial.’”
“I said, ‘No, I have to walk away from that. We can’t do that.’”
“He said, ‘Why? We’ll bear the expense.’”
“I said, ‘I’m sure you will. But, Tuan, you don’t know our customer. You don’t know the people you’re going to depend on to do the trial. We do. We know them very well. We know who to get.’”
Pickard was betting an incredible amount of money, $50 million, which—truth be told—he did not exactly have. It was, in retrospect, a difficult call, but he, Treharne, and other Sofamor Danek execs understood the competitive risk of not having a BMP—particularly with Stryker pursuing what would later become OP-1, a BMP7.
“We really didn’t want to turn the regulatory process over to someone that didn’t have any experience with our customer base. So, I told Tuan that we were going to walk away from the deal.”
“And we did, for about a month,” recalls Pickard.
Everyone at Sofamor Danek assumed the deal was dead.
Until it wasn’t.
Genetics Institute was also in a competitive race—not only with Creative Biomolecules in Boston, but Genentech in San Francisco as well—and was burning through buckets of cash. They needed that $50 million.
Just a few weeks after walking away, Pickard received a call from Tuan. His terms were acceptable. The deal was back on.
Controlling the Clinical Study
“I think that is what really separated us from Creative Biomolecules (and Stryker Corporation) was that their clinical study of BMP (BMP7, aka OP1), as we learned, was so darned complicated that they couldn’t enroll patients,” recalls Pickard.
Treharne, who led Sofamor Danek’s R&D and regulatory together with Pickard decided to require a head nurse attend every meeting with physicians where the clinical study was being designed.
“We made it mandatory that the surgeons included their head nurse in the room where we hammered out study protocol. We would ask the head nurses ‘With this protocol, how many patients would your surgeon have enrolled in our study?’ In the beginning, doctors would say, for example, ‘I can see maybe five of those a month.’ In reality, as the head nurse knew, it was closer to five in a year based on the hypothetical protocol.”
Treharne, Pickard, and the surgeon advisors kept modifying the BMP2 clinical study protocol until they arrived at one that not only passed muster at the FDA, but also generated the requisite number of patients, fast.
“I don’t know that our product was any better than Stryker’s, but I think the way we put the clinical study together led to our approval years before it did for Stryker. Again, I don’t know that it had to do with the quality of the product, I think it had to do with the structure of the clinical study.”
Integra LifeSciences and the FDA
There was one other company involved with Sofamor Danek in the clinical study—it was New Jersey-based Integra LifeSciences, headed up by former Goldman Sachs partner, Stu Essig. Integra specialized in a number of regenerative biologic products including engineered collagen forms. BMP2 was a liquid and because it had this osteoinductive ability, it needed to be contained in a carrier of some sort.
As future clinical studies would well document, if BMP2 leached out of its implant location, it could trigger unintended and dangerous bone growth.
Integra had a collagen fiber sponge which absorbed the liquid BMP2 and held it in place.
Drug or Device?
The other major uncertainty was whether the FDA would categorize BMP as a drug or, as Treharne was arguing to the FDA, as a device.
“At the time we purchased the rights to BMP, it was not settled if the FDA would consider BMP a device or pharmaceutical,” recalls Pickard, “Genetics Institute wanted rhBMP-2 to be a drug because they understood drugs better than devices. Genetics Institute’s two previous IDE [investigational device exemption] submissions (alveolar ridge augmentation and long bone fractures) could not get through the FDA Device bureau for different reasons.”
“In our case the rhBMP-2 was on a device (the Integra sponge) inside another device (the LT-Cage),” remembers Treharne, “So, the argument was the rhBMP-2 had a short residence time in the human body, was gone within days and, therefore, the device bureau should be the lead reviewer.”
“In the end we dealt with all three branches of the FDA: Biologics for the rhBMP-2, Device for the sponge and cage, and Drugs for the water for injection used to reconstitute the rhBMP-2. To distribute the water, we had to have a pharmacist on staff.”
Then, behind the scenes, as the agency was going through the approval process, they somehow decided that, in order to approve INFUSE, it had to be packaged with a cage.
“At first we scratched our heads and said, we don’t know about that,” remembers Pickard, “But the more we thought about it, we finally said, ok, if that’s what you want to do, we can do that.”
Sofamor Danek branded the new product INFUSE Bone Graft and positioned it as an alternative to iliac crest bone graft harvesting—a painful, risky, and expensive (as much as $5,000 per case) procedure in its own right.
The July 2002 FDA approved (PMA) of INFUSE as a bone graft intended for use in lumbar posterolateral spinal fusion procedures. In practice, surgeons added INFUSE to Integra’s absorbable collagen sponge which was then contained and held in place within an Sofamor Danek’s LT-CAGE Lumbar Tapered Fusion Device.
Patients treated with INFUSE and the interbody cage, were typically able to leave the hospital one day after the operation, in contrast to conventional spine surgery which required several days in the hospital. The procedure was intended to supersede that second iliac crest harvesting operation. The implanted BMP2 induced the body to grow its own bone to ensure a complete spine fusion between the diseased levels.
It is not an exaggeration to say that the launch of INFUSE was a seminal milestone in the history of modern spine surgery. Patient outcomes improved and the risks of spine surgery declined—significantly.
Investing in Surgical Navigation – A Quarter Century Ago
Today, there are easily two dozen computer-driven surgical navigation systems for any spine surgeon or spine surgery department to choose from.
But the very first one came to market more than 25 years ago, in 1996, courtesy of Ron Pickard’s Sofamor Danek. They called it Stealth Station. And it would take nearly two decades for the next spine surgery navigation system to come to market.
The birth of modern spine surgery navigation started quietly in a 1982 Yale University classroom when a young Nebraskan with neurosurgery ambitions was learning how to navigate the human brain.
Everywhere else in the human body, navigational markers are clear—bones, muscles, arteries, nerves. Learn your anatomy and you can read these markers as you move through a surgical procedure.
But the gelatinous tissue blob with incomprehensible fold patterns known as a human brain—was an entirely different navigation problem.
Here is how that young neurosurgery student, Richard Bucholz at Yale University’s medical school in 1983 learned the answer to that question.
“I learned a technique back at Yale which was to bolt a thing to the head of the patient and then bolt two other things on either side of the head to create three points of reference for an x-ray scan.” Recalls Dr. Bucholz, “Then, to X-ray the patient’s brain, we set up two x-ray machines—one 16 feet in one direction and another 16 feet coming from a different direction. The trick was to line them up so that you’d get parallel x-ray beams. Then, we’d combine the two different X-rays and, because of the three markers on the patient’s head, which were visible on the X-rays, we could come up with precise estimates of specific points in the patient’s brain.”
“It was not a true 3D image; it was a pseudo-3D target locator.”
The system was called stereotaxis. And a few, very few, neurosurgeons used it, typically, for implanting electrodes into the epileptic brain.
“When I started out, stereotaxis was only used by about 2% of people. It was a real pain working with these 2D images. The frames were just bothersome and very few neurosurgeons took advantage of it,” Bucholz remembers. “The interesting thing was, neurosurgeons were notorious for their anal compulsivity, and yet here they’d had this technique for accurately accessing their targets and they weren’t using it simply because the economics and fiddle factor were so damn bad.”
And then computed tomography, which had been invented in England in the early 1970s, began to migrate into some the larger academic centers in the U.S.
“The remarkable thing about computed tomography (CT) scanners is that they take multiple picture slices. That stack of slices combines into 3D volume in the digital realm. For the first time, we had true 3D dimensional imaging and a virtual head to work with.”
Then, Richard Bucholz came up with the idea of tracking the instruments in 3-dimensions and bringing those images into operating room. In short, frameless stereotaxis.
Bucholz envisioned a future where CT images of the patient and the location of surgical instruments as they were being deployed, would be visible to the surgeon during surgery.
“It became apparent to me,” recalls Bucholz, “that we could use these CT scanned images for the surgical intervention itself.”
But, to do that, he needed better images.
Finding a Better Imaging System for Neurosurgery
It was now 1987, 1988. Bucholz was now on the faculty at St. Louis University.
And he got his hands on an IBM PC. Bucholz had always tinkered around with early computers and with the PC, he had enough computing power to depict at least a single CT scan slice.
“I was still using a stereotaxis registration technique, but I also wanted to be able to track my surgical instruments during surgery.”
There were, however, a limited number of image digitizers available—magnetic, sonic, and mechanical. Buchholz rejected magnetic digitizers because they were hyper-sensitive to any metal in the OR. The mechanical system had movable joints like a kind of a dentist drill, but it was cumbersome. Bucholz decided to give the sonic system a go.
“The sonic system had a sonic wave emitter, and we used an array of four microphones to pick up sonic signals within a one meter radius.” Remembers Bucholz, “I built the array in my basement, put it on plywood and programmed it to measure sonic flight time to each of those microphones.”
By measuring the flight time, Buchholz’s system could tell where the sound emitter was—and, for example, the forcep had two emitters on it. By registering the forcep in the IBM PC, Bucholz was able to extrapolate and figure out where the tip imaging was in the anatomy.
“That was our first localization, which was late ‘88. We did our first clinical case, a brain tumor, in ‘89. With everything I did, I always had an escape plan in the OR. We had backup. But our damn system actually brought me right to the tumor. That was a good, good day.”
“The interesting thing with the Sonic digitizer is the sound, which is directed to the microphone, can also bounce off a wall. Depending on where people were standing, you would either be in the brain or you would be in the cafeteria underneath the operating room!”
“As a result, I designated one guy, whose job it was in the operating room to get a big blanket and use it to block the sound from bouncing off the wall and hitting the microphone. His name was McMann. We did eight cases with the Sonic system.”
“But we knew we really needed to find a better way. That’s when we came up with the optical system.”
Stealth Station and Spine Surgery Navigation Takes Form
In late 1980s, Bucholz wasn’t yet thinking about registering to the spine and accommodating the spine’s anatomy and geometry.
He was focused, still, on improving the image. “I went to the University of St. Louis mechanical department or fabrication shop, came up with a way of modifying the stereotaxis frame. That’s why we went with the sonic system, which we built up around 1988. It was clear to me, that this kind of system was going to change everything.”
“In the past, when we did cranial surgery, we would do this large opening and say, ‘There’s the front, there’s the back, there’s the side.’ I think the tumor is here. Routinely we would have neurosurgery dry wells—which is what we called going through the brain and missing the tumor entirely. I said, ‘Hell with that.’ It just was so apparent that this system was going to be a big help.”
Bucholz began attracting engineers and others to his little development team. Among the first was a biomedical engineer named Kurt Smith, who was the nephew of Buchholz’s department head, Ken Smith and was himself a St. Louis University assistant professor.
Kurt Smith had access to a Silicon Graphics computer and was using it to digitally encode soundtracks from different instruments, vocals and more and overlay them to create a unified stereo music track, which was revolutionary at the time. He named his sound board Stella Station.
“All I had was IBM PCs,” remembers Bucholz, “which were only powerful enough for one slice of a CT scan with a crosshair to show where the surgeon was anatomically.”
Bucholz made contact with Kurt. “So, he came over, driving a beat up pickup truck and when I told him what we were trying to do, he said ‘What the hell do you want the computer in the operating room?’ remembers Bucholz. “It took us about 30 minutes to talk him into letting us use the Silicon Graphics computer.”
Silicon Graphics computers were used to create the images in the movie Jurassic Park. Using a small team of undergraduate and graduate student programmers, Smith and Richard Bucholz put together the first stealth station.
“We were able to get a true 3D display with the Silicon Graphics system.”
The team formed a company, Surgical Navigation Technology (SNT), raised some venture funds and set up shop in, of all places, Marine, Illinois.
Kurt Smith became CEO.
In 1992, the Society of University Neurosurgeons held their meeting at the University of St. Louis. Among those in attendance was a Memphis-based neurosurgeon named Kevin Foley. He met Richard Bucholz and learned about his project.
Then, in early 1993, Foley visited Bucholz’s lab, which was in the attic of one of the University’s buildings. The team had transitioned from a sonic localizer to a powered light-emitting diode (LED) optical localizer. As Bucholz explained to Foley, the system had previously measured the different flight times of sound in order to localize surgical instruments.
But, it turned out, air temperature and humidity skewed sound time flights in the OR. So Stealth Station was now localizing instruments with powered LEDs, but only for cranial surgery.
Foley, a spine neurosurgeon, told Bucholz “I can make this work in spine” and he convinced the team at SNT to let him develop the spine application. For compensation, all Foley wanted was a small equity share in SNT.
Foley, then, began creating a spine surgery application and used as his first instrument Sofamor Danek’s Axis posterior cervical plate drill guide. He attached LEDs to the drill guide and had CAD files of the instrument added to the software so that the guide could be tracked in the OR and its position displayed on the Silicon Graphics monitor, superimposed on a CT scan of the subject’s spine.
His theory was that if he could guide pilot hole trajectories with the Stealth Station, he could more accurately place screws anywhere in the spine. But because the spinal segments could move, he needed a dynamic reference array so that the optical localizer could track and adjust for this movement. And he didn’t have one.
So, Foley went to the neighborhood Handy Dan hardware store, walked up and down the aisles until he spotted a miniature vice grip. Not ideal, but, he thought, it would work well enough. He bought one, took it back to his lab at MERI (Medical Education and Research Institute), attached LED markers and made a CAD image of it for the Stealth Station system.
And bingo! Stealth Station was programmed for spine surgery. Foley presented his new system to the SNT team and other neurosurgeons at the 1994 American Academy of Neurological Surgery meeting at Sea Island, Georgia.
EARLY STEALTH STATION —1998
It was about that time that the SNT team, who had lived on fumes throughout the development period, decided they needed to find a buyer for the business. Still thinking that Stealth Station was, effectively, a next generation, frameless stereotaxis product, they made the rounds to stereotaxis manufacturers, including the JNJ business, Codman.
The only indication of interest came from JNJ’s Codman, and it was an extremely low-ball offer. Crestfallen, Kurt Smith and Richard Bucholz relayed to Foley what had happened. And Foley said, “I know a guy.” He was thinking of Ron Pickard, CEO of Sofamor Danek.
Foley invited Pickard to his lab at the MERI in Memphis, showed him the system and immediately, Pickard saw its potential and wanted to bring it into Sofamor Danek.
For an undisclosed amount, Pickard bought 19.5% of SNT in 1994. Two years later, when the FDA approved Stealth Station’s commercialization, Sofamor Danek bought the rest—also for an undisclosed amount. Rumors, however, were that the purchase price was less than Stealth Station’s first year sales, post FDA approval ($14 million).
The first Stealth Station for spine and neurosurgery cost about $300,000. It gave surgeons localization and real-time tracking of their surgical instrument using infrared light and other technologies.
Stealth Station transformed data into several three-dimensional images that are displayed on a high-resolution monitor in the operating room. On the computer screen, a red “X” pinpointed the location and movement of the instruments in real time. The Stealth Station was accurate to less than one millimeter.
It made spine and brain surgery faster, safer, and less invasive. It sped up brain surgery by up to 40%, reduced recovery time, and could cut hospital stays in half.
It never replaced the skill and expertise of a good surgeon but made a good surgeon much better.
Sofamor Danek sold $14 million worth of Stealth Stations year one after FDA approval. Thirty million in year two.
Sale to Medtronic for $3.7 Billion
Medtronic had started out in 1949 as a medical equipment repair firm, but by the 1960s it had become a major player in the biomedical market, primarily through its battery-operated pacemaker. Over time, it brought to market new products and acquired other companies, and in 1989 its total sales were above $1 billion. It was looking to expand into other implant markets by purchasing an orthopedic manufacturer. And not just any orthopedic manufacturer.
There were at least two reasons for Medtronic’s interest. First, with the bone screw litigation winding down, Sofamor Danek was probably in its strongest position ever. In fact, its sales and income growth were remarkable. Second, Medtronic wanted to expand into the neurology business, and spinal implants seemed a logical platform on which to build. It also did not hurt that Sofamor Danek had withstood a litigation storm that would have swamped a less ably lead company.
The situation was far different from what it had been when Medtronic had first taken a look at Sofamor Danek. Ten years earlier Medtronic’s leadership had met with L.D. Bear to explore options, but nothing moved beyond the talking stage. As L.D. later phrased it, “I think we were just a little too small for them at that time, and they didn’t know what to do with it.”
Sofamor Danek was an entirely new company now. Larger. Strong. Highly profitable. One day Pickard’s secretary called L.D. to ask if she could give someone from Medtronic his phone number. L.D. said okay and shortly the president of Medtronic’s neurosurgery division was talking with L.D. from his Minneapolis office. He told L.D. that Bill George, Medtronic’s CEO, wanted to get to know Sofamor Danek and its leadership, notably Ron Pickard and L.D himself.
The two men quickly arranged to meet in New York City and the three of them, Pickard, Beard and George met and held a low-key, very general conversation. Medtronic was getting a feel of these guys who had created the #1 company in the fast growing, lucrative spine surgery medical market.
“We actually had a cup of coffee in their suite. And they chatted a little bit about the company and how we were kind of on the periphery of the spine and neurosurgery business over here. Anyway, nothing really came of it.”
A few weeks passed before George called Pickard again to ask if Pickard would be able to come to Minneapolis, a kind of “follow-up” to their New York meeting. Pickard agreed, and at this second meeting George told Pickard what he wanted: namely, Sofamor Danek. George also wanted Pickard’s views on how the rest of Sofamor Danek’s management, particularly L.D., would respond to the idea. Pickard thought he knew but was noncommittal: “I think L.D. is a shareholder, and he’ll do what’s right for the shareholders.”
Pickard was more direct when he met with L.D. after his return from Minneapolis. He wanted L.D. to take the lead on any negotiations, partly because Pickard had acquired various stock options over the years, and he felt it would be inappropriate for him to be involved in negotiations. L.D. met with senior Medtronic managers in the summer of 1998. L.D. went to New York alone.
Because the negotiations had to remain secret, L.D. used an assumed name, and both sides immediately agreed on one goal: any merger must not negatively impact shareholders in either company.
As usual, L.D. had done the math in advance:
‘I had already looked at their numbers and everything, and I said, ‛Well, I know what the price should be.’ And it was about $40 or $50 dollars more than we were selling for at the time, I think, something like that. We were in the $75 to $80 range, and it looked like [the purchase price] was going to be somewhere in the range of a $120. And I just named off that number.”
And L.D. had other one other condition. He was determined that Sofamor Danek would not end up on an auction block. “If you are all interested, don’t send a corporate jet loaded with accountants down to swarm all over the place. We both have the same accounting firm, so it will be easy to do your due diligence. I want it done quickly and quietly, and I don’t want the company to be in play.”
Both sides knew a good deal, and the following January the deal was finalized. L.D. had celebrated his 66th birthday a month earlier, and now he could leave on his own terms. And he never doubted that the merger was a good idea:
“I thought the timing was right. We had an opportunity to sell to a good company, a highly regarded company, and a company we were somewhat familiar with from past dealings, and we were at the point ourselves where we would need to become probably more aggressive in our management staff.”
It was a task that L.D. was more than willing to leave to others. It had been an exhausting five years not only for him and Pickard, but for so many Sofamor Danek board members and executives.
As for Pickard, he and Bill George had reached a key understanding between them. “Bill [George] and I had a lot of discussion about, you know, the future of Sofamor Danek as part of Medtronic. George said, ‛Clearly, you’re not going to be a public-traded company. You’re not going to have your own board of directors. But, you know, we really don’t want to impede your growth. There are certain corporate rules and guidelines you’ve got to fall into, but they’re more financial than anything else.’”
And Medtronic, under Bill George’s leadership left Sofamor Danek and its Pickard-led management team to run the show in Memphis.
Then Bill George retired.
The new CEO invited Pickard up to Minneapolis to talk about Sofamor Danek’s future.
“We had dinner in his club that was closed that night,” remembers Pickard, “he had arranged for a dinner with just the two of us in the club restaurant. Over dinner I learned he did not support Medtronic’s acquisition of Sofamor Danek, but the deal was done.”
Therefore, he told Pickard, Sofamor Danek and its management team would no longer be allowed to chart its own course in the spine industry. Going forward, Pickard would have to fall in line with the Medtronic program as dictated from Minneapolis, period, no discussion.
Pickard thanked the new CEO for the dinner and discussion, made no comment about anything else, returned to Memphis and began to clear out his office.
Years later, Pickard was philosophical about the unwelcome changes: “I’d been around long enough to know that you may not think you’re exhibiting a negative attitude, but everyone around you will. And so I felt the best thing for me to do before that happened is to get out. I could get out, and my life could go on.”
Pickard was gone from Medtronic Spine (formerly Sofamor Danek) before the year was out.
