2021-12-08
Cardiac rhythm management ("CRM") is a hot topic in clinical practices, an investment hot spot in capital markets, and a "strategically important business" for listed companies in the medical device field. Medtronic and Abbott, the global medical device giants, have both attached great importance to the cardiac rhythm business to fully fulfill their development potentials in the cardiovascular market, while MicroPort, a domestic medical device company, has expanded its scope of services through the acquisition of LivaNova's CRM business.
CRM refers to the diagnosis, treatment, and management of arrhythmia and cardiac failure. The main devices include pacemakers, defibrillators, and cardiac resynchronization devices. CRM R&D, with extremely high requirements of industry access, integrates ECG physiology, bioengineering, materials science, electronic engineering, and other frontier technologies. Foreign manufacturers have long monopolized China's CRM market, and domestic brands have yet to make breakthroughs.
Suzhou Singular Medical Device Co., LTD. ("Singular Medical") started its R&D on an implantable cardioverter defibrillator ("ICD"), the most challenging technology in the CRM field. Now the company has owned the full-line products of CRM, with independent intellectual property rights in ICD, implantable cardiac monitor ("ICM"), and double-chamber pacemaker. Since its inception in 2017, Singular Medical has successfully filled the gaps in domestic ICDs, and the ICD products under research have obtained the biological testing report from the Jinan Institute of Testing and Inspection.
Under the circumstance where domestic substitutes are flourishing in the CRM market, how did Singular Medical pave a new way of development? What is its product mix strategy? How will the ICD market develop while the automated external defibrillator ("AED") is getting a lot of attention? To answer the above questions, VBData.cn has conducted an exclusive interview with Ping Lichuan ("Ping"), co-founder of Singular Medical, to explore the way of domestic innovation for small and medium-sized CRM enterprises in an industry dominated by magnates.
Innovation - Great potential for domestic substitutes in the high-threshold CRM market, with R&D emphasis on ICD
VBData.cn: Why did Singular Medical plan to enter the CRM market? How do small domestic enterprises make breakthroughs in a CRM market monopolized by foreign competitors, and where can large enterprises quickly break into the market through mergers and acquisitions?
Dr. Ping: Arrhythmia is a prevalent cardiovascular disease. The number of sudden cardiac deaths caused by arrhythmias accounts for half of all cardiovascular disease-related deaths worldwide and 15% of all global deaths. It is calculated that the number of annual sudden cardiac deaths in China is as high as 544,000, and 1 person passes away due to sudden cardiac death every minute. However, far less than 1% can be rescued.
As represented by pacemakers and ICDs, CRM products are the earliest predecessors of the third category of active implantable medical devices. The products, with huge market size, boast a long history and sufficient clinical evidence. According to GlobalData's analysis, the global CRM market was expected to reach approximately $14.3 billion in 2018. Industry giants like Medtronic and Abbott continued to expand their CRM businesses.
In the United States, the number of patients with bradycardia implanted with cardiac pacemakers has long remained stable at 200,000 per year; the number of patients with tachycardia implanted with cardiac defibrillators has also remained basically stable at 200,000 per year.
But in China, the CRM market is far from developed. When I founded Singular Medical with Dr. Hong Feng, the company's co-founder, in 2017, the annual number of patients implanted with cardiac pacemakers in China was 40% of that in the United States, and domestic pacemaker brands only accounted for 2% of the total market share. The number of patients implanted with cardiac defibrillators annually was only 5 percent of that in the United States, and no domestic defibrillators could be found in the market.
Undoubtedly, the domestic substitutes of CRM products have a promising future, which will attract many market players. Foreign competitors have long monopolized the Chinese CRM market, and no domestic ICD can be found there. ICDs are recommended as the "only effective" device in domestic and foreign guidelines or expert consensus to prevent sudden cardiac death. Even today, we haven't seen any medical devices or drugs that can be included in the class I guidelines' recommendations or expert consensus.
After comprehensively evaluating clinical evidence, market potential, and domestic and international market players, we chose to enter the CRM market through ICDs. The ICD products, which integrate the functions of defibrillators and pacemakers, are the most challenging ones in R&D in the CRM field. We hope to build a CRM technology platform with the facilitation of our self-developed ICD products.
On May 11, 2017, Hong Feng and I obtained the official ICD project approval and started our business. At that time, there were only two full-time members of our team.
During our startup, we encountered many challenges and incalculable doubts. I didn't know anyone in the ICD field when the initial funding was raised. To my great surprise, many investors were willing to meet me. Once, an investor said he wanted to see me just out of curiosity to know the one making such a difficult device as ICD but had no intention of investing in my project.
I received many negative feedbacks from the investors at that time. Most of them questioned me about what I wanted to do: How can you make an ICD even without the experience of making a pacemaker? How can a startup like Singular Medical, even with its own completed ICD products, compete with large enterprises, which can launch their products very quickly by acquiring mature foreign companies or cooperating with multinational giants?
In the development process, Singular Medical firmly believes in two points of view. First, startups like Singular Medical should set a target in one area and strive with all their efforts toward the target with patience. After that, they can make their own products without bottlenecks. Second, small enterprises can concentrate their efforts on developing products and still have competitive advantages against industry giants with the facilitation of raised capital. I have witnessed this in several cases of the localization and market expansion of the third category of active medical device manufacturers.
R&D - Starting R&D from the most technologically difficult ICD, with five "traceable" iterations
VBData.cn: ICD is the most technologically tricky product to be developed in the CRM field. What do you think are the difficulties in its R&D? Singular Medical has upgraded its ICD devices many times. Are there any milestones in the R&D process?
Dr. Ping: From 2007 to early 2017, Hong Feng and I were both engaged in the R&D and localization of cochlear implants and also involved in the R&D of some nerve stimulator products. In the United States, It's common to see standardized hardware platforms, including electrode leads, in the nerve stimulator sector. The key to enterprises' progress lies in the research on diseases by neuroscientists and clinical doctors. However, we didn't see ready-made hardware platforms for pacemakers or defibrillators.
At the time, we had no existing technology to draw on and no accumulated knowledge in the cardiac disease field. Therefore, our work of making ICDs had to start from scratch.
ICD-related technology can be compared with a complex system composed of many complicated individual technologies, including high-efficiency charging and discharging modules with high voltage, drug sustained-release systems of leads, and program-controlled UI design, all of which require constant research and improvements in the R&D process. In the next part, I will share the process of developing the ICD product in chronological sequence. From that, we can conclude several milestones during the R&D of ICDs.
In the early days of our work, we had an immediate priority to solve the problem of high-voltage charging and discharging. In December 2017, we made our first high-voltage module. It was about the size of a palm and had very similar circuits with that in the AED.
We purchased implantable cardioverter-defibrillator leads to match our own circuits and did the first animal experiment on large dogs in Shanghai. After implanting the leads into the beagle's heart chamber via its vein, the doctor connected it with our circuits and successfully eliminated the ventricular fibrillation of the beagle.
As an afterthought here, we have kept improving the module even though having encountered discontinued production or supply failure, which resulted from industry giants' pressure on suppliers, of key bare dies in high-voltage modules five times in the following four years. Now, Singular Medical's high-voltage module has changed from the size of a palm to that of just a thumb cap, and almost all critical components in the module have been replaced. The core control systems are all sequential control ones made by ourselves. Now it's safe to say that we have truly taken ownership of R&D and production.
After that, we built the second-generation prototype entirely by hand in a garage with simple equipment like lathes, small stamping machines, and small injection molding machines. We hoped to verify a simple "full set of the implantable system" on the prototype.
In August 2018, we achieved two advances in the second animal experiment. First, we realized 400MHz wireless communication, received the ECG signals from the ICD device, and showed them on our own software interface. Second, we conducted two successful experiments of ventricular fibrillation induction and defibrillation on the experimental dogs, with the simple electrode leads made in the garage and the purchased electrode leads, respectively.
In September 2019, we completed a third-generation ICD prototype, which seemed more like an ICD product regarding circuit architecture, shell, and technology. This year, we gave our R&D priority to the ICD's pacing functions.
In the third animal experiment, we completed the fibrillation induction in multiple ways and tested the critical functions of VVI (ventricular pacing, ventricular sensing, and demand pacing) and some advanced functions, such as low-current testing on defibrillation impedance. We also attempted to complete a defibrillation threshold testing (DFT testing) and several external defibrillation tests.
Thanks to the past three years of "ignorant and fearless" explorations, the ICD design of Singular Medical has taken a different technological path different from that of foreign companies, particularly in the technology of high-voltage charging and discharging, pacing, and sensing systems. Most of the core designs of large companies were developed years ago and applied in dedicated chips, while Singular Medical's system, based on current semiconductor technology, was developed by using mature commercial chips as much as possible.
When developing the algorithms of ICD sensing and identification, we adopted many expired patents. The method could avoid patent infringements and guarantee the clinical effects of these patents verified by many years of clinical practices. In testing the algorithm mix, we applied multiple tools, such as a cardiac simulator and database, and finally selected the best to achieve the most desirable results.
In early 2020, with the outbreak of the COVID-19 pandemic, some of our work in the United States and at home could not be carried out smoothly. It was initially expected to complete the validation process of the Suzhou clean workshop in February 2020. However, due to the influence of suppliers, the equipment gate-in and validation processes were not completed until the end of September 2020. The COVID-19 pandemic negatively affected the US R&D center, with heavily interrupted external cooperation and supply chain. The employees there could not work in the office for a whole year.
During that time, we could still develop the fourth-generation ICD prototype, which was manufactured independently in Suzhou. With the prototype, we planned to further test our ICD products in clinical application.
However, after discussions with experts, they believed the existing ICD could improve further. First, thin patients implanted with the fourth-generation ICDs will appear an apparent protrusion in their subcutaneous implanting positions, so the ICDs should be more circular in shape to match the physiological curve of the human body; Second, the ICD product should be equipped with Bluetooth, instead of the 400MHz communication technology applied before, following FDA's first approval of a Bluetooth-connection ICD product in July 2020. Third, we should upgrade the design of MRI, a particularly vital technology in clinical practices, to make it more compatible with ICD devices.
In this way, the board of Singular Medical decided to delay the clinical application for a year to further refine the prototype with higher quality.
Finally, we rolled out the 2021-version ICD, equipped with a streamlined design, MRI compatibility (to be verified), and Bluetooth. In 2021, we employed several retired experts specializing in CRM network security to construct our company's advanced network security system. The system boasted its consistency with leading international concepts in every aspect, including the special Wake-on-Bluetooth mode, exchange of keys, and encryption.
Moreover, we worked with an American law firm with rich expertise in intellectual property rights of medical devices in early 2021 to review the design (including exterior design) of the ICD. After comprehensively researching other companies' patents, we issued a written document of non-infringement products.
Singular Medical's product R&D process and breakthroughs are all traceable ones made step by step. The company has wholly owned independent intellectual property rights and reached a leading position to some extent from the perspectives of product R&D, validation, and manufacturing. Singular Medical has also built its own talent pool by expanding its team members from 2 at the beginning to 100 in two teams in China and the United States.
Subsequently, with the facilitation of a professional CRM team, we will make continuous efforts on product R&D and iterations based on ICD platform technology and strive to achieve high-standard commercialization.
Prospect - The past five years of hard work will usher in fruitful results in the next five years
VBData.cn: In recent years, domestic substitution has become a hot topic in China. In such a high-caliber and high-tech market, will the domestic ICDs be favored by clinical doctors and capital markets? The proposed concept of "Level 1.5 Prevention" of SCD (four high-risk factors of non-sustained ventricular tachycardia, frequent ventricular premature beat, low ejection fraction, syncope, or pre-syncope were added based on the internationally recognized indications of primary prevention) further defined the patients who need ICD implantation. Will the concept be helpful for the promotion and application of ICD products?
Dr. Ping: Firstly, we must clarify why domestic substitution is needed. The lowest requirements of doctors, patients, and medical insurance are to obtain cheap drugs or medical devices under the premise of safety and effectiveness. Domestic medical devices, which can benefit patients and satisfy their needs, will definitely be in demand. Secondly, a group of doctors mastering ICD technology have been trained because multinational industry giants such as Boston Scientific and Medtronic have been conducting business in China for many years, and academic institutes and enterprises have also been popularizing ICD technology and CRM knowledge at primary hospitals.
In China, first-tier cities always attract more medical resources, like high-end medical equipment and technology. Under such circumstances, few primary hospitals can perform pacemaker and defibrillator implantation operations. With medical resources sinking to the downward-reaching consumer market, central hospitals in first-tier cities will no longer be the market focus in the localization of high-end medical devices. The future CRM market will focus on small and medium-sized hospitals in second and third-tier cities. There is an old saying: "A single spark can start a prairie fire" Therefore, this is also the opportunity for middle and small-sized enterprises, like Singular Medical, to expand the potential market share in the CRM field.
Primary prevention is an internationally recognized method for high-risk people who never suffer from cardiac arrest. Secondary prevention aims at survivors who have already suffered a cardiac arrest. They starve for ICD implantation after experiencing cardiac arrest. Some experts believe that the indications for ICDs in the European and American guidelines are not targeted enough and that there may be some abuse in clinical practices.
The original intention of "Level 1.5 Prevention," proposed by Chinese experts, was to identify patients with the highest risks and implant ICDs for them as early as possible. In China, the number of patients eligible for primary prevention or "Level 1.5 Prevention" is much more than that for secondary prevention.
From the Chinese Expert Consensus on Implantable Cardioverter Defibrillator Therapy (2021), we can conclude three key points of view:
It's our mission to focus on Class I indications.
"Level 1.5 Prevention" of SCD via ICD was proposed by Chinese experts but can be shared around the world.
Single-cavity ICD has perfect functions.
Singular Medical's ICDs are designed to fit "Level 1.5 Prevention". China has a large population of patients with high risks of sudden cardiac death. We are very optimistic about the market prospect of our ICD products, with the implementation of a clear clinical guideline and DRG.
VBData.cn: In the broader defibrillation area, AED is undoubtedly a device with the greatest attention, and the wearable cardioverter defibrillator ("WCD") market also sustains a great development momentum. As far as I know, Singular Medical is also conducting R&D on WCD. So what do your think of the WCD market?
Dr. Ping: AED devices have been developing rapidly in recent years. Domestic AED producers have launched their business after obtaining approvals, with policy support from local authorities. From the US market, we can see that the development of AED can boost the growth of the ICD market and improve public awareness of sudden cardiac death and defibrillation. In other words, we can say that AEDs can address public health problems, while ICDs are "ambulances in the body" targeting individual health risks.
According to the latest AHA/ACC/HRS Guideline for Management of Patients With Ventricular Arrhythmias and the Prevention of Sudden Cardiac Death, the Guideline has made IIa recommendation of WCDs for patients who need to have their ICDs removed due to infection or other causes; the Guideline has also made IIb recommendation of WCDs for patients who are at high risks of SCD, but not suitable for ICD implantation, such as patients awaiting heart transplantation, and patients with post-myocardial infarction within 40 days, newly diagnosed nonischemic cardiomyopathy, LVEF≤35%, revascularization within 90 days, myocarditis, secondary cardiomyopathy, and systemic infection.
Currently, WCD products have not yet been realized in commercial clinical applications in China.
In my opinion, the most challenging problem of WCD is the clinical pathway. A patient at risk of sudden cardiac death, he/she entrusts his/her life to the applied WCD or the implanted ICD. Therefore, we must treat the clinical validation process with the utmost seriousness.
In 2001, FDA approved a commercialized WCD, the only device currently available worldwide. A check of the FDA's official website shows that the first WCD completed 289 non-randomized clinical trials at 16 centers in July 2001. In August, FDA approved Kestra's ASSURE WCD system and accepted the clinical results of 130+13 cases in two trial groups. However, Kestra was required to add more than 5,000 patients to the groups within 24 months.
Such a near-term and ready-made clinical pathway will be very instructive to our R&D of WCD devices. Meanwhile, the FDA's clinical experience on WCD and approval of the clinical design of S-ICD (subcutaneous ICD) will substantially guide our clinical application of ICDs.
Now, Singular Medical has three WCD products under development, including surface-mount WCD, shirt-mount WCD, and vest-mount WCD. The three can match different medical usage scenarios respectively. During the R&D of WCD, we have accumulated years of expertise in battery, capacitor supply chain, and CRM technology. Our mini-sized high-voltage modules are even smaller than that of Element Science.
In terms of product mix, we focus on the products applied to prevent individual sudden cardiac death, with WCD as a supplement to ICD.
VBData.cn: In the past five years of trials and hardships, Singular Medical has planted the "seeds" of patents and products, so what is your plan for the next five years?
Dr. Ping: In the next five years, we will continue to validate the clinical effectiveness of ICD products and improve the products to cater to the demands of clinical practices. Moreover, we will speed up the development of innovative pacemakers and ICM systems to build a full CRM product line. At the same time, we aim to accelerate the development of WCDs and arrhythmia-related neuromodulation devices through self-research and cooperation with partners.
In addition, we have been proactively exploring and operating in the digital healthcare field, including the technology of AI diagnosis and remote follow-up visits, since 2020. The products are expected to be launched in 2022.
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