The Top Medtech Stories of 2022
What did 2022 hold for medtech? Here are some of the top stories that made medtech headlines this year.
It was a big year for the medtech industry. There were huge trials, resignations, approvals, recalls, and layoffs. Oh yeah there were also some key laws passed, too!
In a massive restructuring effort, Invitae announced in July 2022, that it would lay off more than 1,000 employees, exit some of its underperforming businesses, and reduce the number of countries it serves from more than 100 down to a dozen. CEO Kenneth Knight said the downsizing alone is expected to generate $152 million in savings, and the entire restructuring will deliver about $326 million in annual cost savings by the end of 2023.
In March, Adaptive Bioscience cut about 12% of its workforce due to a reorganization of the company to focus on Immune Medicine and Minimal Residual Disease. The company will deprioritize projects and programs that are no longer aligned with the goals of these two business areas. In June, Cue Health reduced its manufacturing workforce by 170 people. Illumina trimmed its global workforce by 5% and Pear Therapeutics announced its second round of layoffs to eliminate 59 employees. Philips also cut about 4,000 jobs, amid declining sales, supply chain issues, and a massive recall of its sleep apnea and ventilator machines.
3M to Split
St. Paul, MN-based 3M is set to spin off its healthcare unit into a publicly traded business, which is expected to be completed by the end of 2023. The new $9 billion diversified healthcare technology company will focus on wound care, healthcare IT, oral care, and biopharma filtration. This split follows several other companies that spun off units into publicly traded companies, including Becton Dickinson & Co., Zimmer Biomet, Johnson & Johnson, and GE. 3M’s spinoff announcement came just as it filed Chapter 11 for its Aearo Technologies subsidiary, stemming from litigation Aearo faces over its Combat Arms Earplugs.
The End of the SPAC
Market volatility was why a couple of notable companies announced the termination or scaling back of a special purpose acquisition corporation (SPAC) merger this year. The mergers between Memic Innovative Surgery and Medtech Acquisition Corps and Heartflow and Longview Acquisition Corp. were both mutually ended and LumiraDx reduced the terms of its SPAC with CA Healthcare Acquisition, taking the valuation from $5 billion to $3 billion because of declining COVID-19 testing. However, Pear Therapeutics, which went public through a SPAC combination with Thimble Point Acquisition Corp. now has a combined equity value of $1.6 billion, with an expected $400 million in gross proceeds. Another merger between Vicarious Surgical and D8 Holdings was valued at $1.1 billion for its surgical robots that combine human-like mechanical arms with virtual-reality technology. And Better Therapeutics went public through a SPAC merger with Mountain Crest Acquisition Corp. II. and raised a total of $110 million in proceeds.
Biden Signs CHIP Law
In August 2022, President Biden signed the CHIPS and Science Act (Creating Helpful Incentives to Produce Semiconductors for America Act) into law. The law will open access to more than $50 billion in research and manufacturing of semiconductor chips and aims to help the United States regain a leading position in chip manufacturing by bringing more facilities back to this country. The Act will invest $39 billion over five years to expand domestic manufacturing, providing companies incentives to build, expand, and modernize facilities and equipment. It will also create a new 25% tax credit for companies that invest in semiconductor manufacturing equipment or the construction of manufacturing facilities while restricting them from expanding certain chip manufacturing in China for 10 years.
J&J to Acquire Abiomed
Johnson & Johnson announced in November that it plans to acquire Abiomed in a deal valued at $16.6 billion. Abiomed makes the Impella heart pumps, which are considered a breakthrough technology and are FDA approved for patients with severe coronary artery disease. It has a monopoly in the mechanical circulatory support market, with an 18-year track record of profitable growth and significant expansion opportunities in indication, geography, and product. After the deal closes, Abiomed will operate as a standalone business within Johnson & Johnson Medtech.
Boston Sci Falls Short at TCT
Results from Boston Scientific’s PROTECTED TAVR study showed that its cerebral protection system failed to meet its primary endpoint of reduced stroke. The Sentinel device was designed to capture and remove embolic debris stemming from transcatheter aortic valve replacement (TAVR) before it can reach the brain and potentially cause a stroke. The randomized trial evaluated periprocedural stroke reduction and neurologic outcomes in patients with aortic stenosis treated with either the Sentinel to provide cerebral embolic protection during TAVR, or TAVR alone. The data demonstrated a non-significant trend toward a lower rate of stroke in patients treated with Sentinel, however a secondary analysis showed a statistically significant 60% relative risk reduction in disabling stroke through 72 hours or time of hospital discharge for patients treated with Sentinel.
Massive Turnover for Medtech Execs
Medtech has seen an unprecedented amount of top-level turnover at companies this year, especially when it comes to involuntary leadership exits. According to Pedersen’s POV, given the uncertainty that medtech companies faced during the pandemic, now might be the perfect time for boards to get rid of underperforming CEOs. A Bloomberg report states that the average tenure of CEOs on the S&P 500 Industrial Index will drop to 4.9 years, down from 5.5. years at the end of 2019, and about six years in mid-2017. Carla Kriwet, who took over at Fresenius Medical Care on October 1, 2022, is an extreme example of this trend, by announcing her departure on December 5, 2022, by mutual agreement.
Dexcom Finally Wins Clearance for G7
After a few delays, in December 2022, FDA cleared Dexcom’s G7 Continuous Glucose Monitor for use in people ages two and older with all types of diabetes. The G7 has an overall mean absolute relative difference (MARD) of 8.2% and it is clinically proved to lower A1C, reduce hyper- and hypoglycemia, and increase time in range. Delays in FDA approval were cited as being related to the pandemic, and then the agency requested Dexcom to make some subtle changes to the software. The delays may have given rival company Senseonics a longer runway into the market, as it received FDA approval in February for Eversense, its 180-day CGM sensor, which was launched in April.
Philips Recall Continues
Philips is facing a preliminary investigation into its respiratory device recall from French prosecutors. Reuters quoted a text from a Paris public prosecutor’s office spokesperson, which said, “as of June 20, 2022, complaints [have been] filed on the grounds of aggravated deception, involuntary attacks on physical integrity, endangerment of life of others, and administration of harmful substances.”
Also in June 2022, the company told FDA that reworked respirators from the June 2021 recall have two “new potential issues.” Philips said the first issue deals with the new silicone sound abatement foam, meant to replace the polyester-based polyurethane (PE-PUR) foam, may potentially separate from the plastic backing, possibly impacting the performance of the device because it could block the air inlet, thus lowering the inspiratory pressure.
The device also has issues with trace amounts of particulate matter that have been found in the air pathway of some reworked ventilators, which, when sent to a third-party lab for evaluation, showed PE-PUR and environmental debris in some samples, and in others only environmental debris.
Elizabeth Holmes Found Guilty, Sentenced
On January 2, 2022, a unanimous jury convicted Elizabeth Holmes on four counts of wire fraud and conspiracy to commit wire fraud. She was sentenced to 11.25 years in prison, plus three years of supervised release. Holmes was the founder and CEO of the now-defunct Theranos, which developed Edison, a diagnostic that was said to be able to test for multiple diseases with just one drop of blood. Holmes’s ex-lover, Ramesh “Sunny” Balwani was sentenced to 12.9 years in prison and three years of probation for his role in the Theranos fraud. Balwani was convicted on 12 criminal fraud charges.