In 2001, Technion robotics laboratory manager Prof. Moshe Shoham founded a small company in the Technion incubator. "I still remember how we whitewashed the walls," he says now, when the company, Mazor Robotics Ltd. (TASE:MZOR), is about to be sold to Medtronic for $1.6 billion - the highest-ever exit for an Israeli medical company.
By 2005, Mazor Robotics already had its first product on the market with impressive performances - the use of a robot it developed almost completely eliminated complication in back operations. It took almost a decade, however, before Mazor was completely safe and it was clear that the company had been successful. Only in 2016, when it launched its 3G product, Mazor X, and then signed a marketing agreement with Medtronic could it heave a sigh of relief.
Prof. Shoham was the company's chief scientist and worked closely with its management to develop new generations of the product, while also doing his job at the university. "It took much longer than we expected," he says today.
"Globes": How did it all begin?
Shoham: "I've been working in robotics for my entire career. When I returned to Israel from Columbia University, where I founded the robotics laboratory in the mechanical engineering faculty, I decided to work in medical robotics because precision and tasks that a human hand cannot perform are really important in medicine. I started developing a product for knee surgery, but I eventually decided to focus on the back. Because it involves more complicated surgery, the challenge is greater, but the result is visible immediately, for better or for worse. In knee surgery, on the other hand, it sometimes takes two years before the difference between a successful and a less successful operate is discovered.
"Eli Zahavi, who founded the company with me, was a senior executive at Elscint at the time and left it all in order to join me. Over the years, he went on promoting it from inside as chief operations and development officer, and recently as chief advanced technology officer."
What was the state of the medical robotics market when you founded the company?
"There were no medical robots in the world at the time. The pioneer in this area was a company named ISS, which developed a robot for replacing the hip joint, thereby opening the market, but eventually failed to obtain FDA approval. The company closed down in 2005, exactly when Mazor got its marketing approval."
An accessory, not a replacement for the doctor
Two other companies began working in the market simultaneously with Mazor: MAKO Surgical, which dealt with knee operations and was acquired by US company Stryker in 2013 for $1.65 billion, and Intuitive Surgical, whose current market cap is $63 billion and which performs prostate operations, gynecological operations, and heart valve corrective surgery. At the time, however, both of these companies, like Mazor, were just beginning.
Mazor made another interesting decision in 2000 - to position its product as a "surgeon's accessory," rather than a "replacement for a doctor." The feeling was that it would be easier for both regulators and doctors themselves to endorse an "accessory" product. Mazor was founded as Mazor Robotics, but omitted the word "robotics" from its name, and restored its original name only in 2010, when its robots were already a big hit in medicine.
What changes did the product undergo along the way?
"Our first robot, SpineAssist, was smaller than a soft drink can. It was very important to make the robot very small; otherwise, it would have been impossible to connect it to one vertebra in the back. The direct connection to the vertebra was necessary in order to make possible the system's great precision; otherwise, it would have changed its location with respect to the vertebra when the patients breathed.
"Smallness also had a disadvantage, however, because the doctor had to move it manually from one place to another in larger operations. The new robot covers a larger area and is also easier to calibrate with the patient's real body at the beginning of the operation. These two changes, plus others, greatly shorten the time taken for the operation, and that's important for the doctor, who runs from one operation to another, and also to the anesthetized patient."
You now have more competitors.
"And that's great. Instead of doctors asking whether they should use a robot for a back operation, they ask which robot they should use. The competitors came after a decade in which we were alone in the market. I don't hold them lightly, but I feel that they haven't yet come close to what we know about both planning and designing the product and in the complexity of the market.
"One of the things that investors don't like hearing is that a company wants to educate the market. They immediately become negative about the product, but I like to be in these places, because that's where you can exert influence. Maybe it's naïve on my part, but I'd like our story to deliver a message to investors: educating the market is tough, but it pays off."
Your results were already good when you launched the product in 2005 - 100% accuracy instead of less than 90% in manual operations, but we've already seen clinically successful products fail in business.
"True. The patient, of course, wants to operated on in a system with 100% success. The hospital keeps statistics. It will balance between the risk that several patients will suffer nerve damage and the costs of the system, training time, installment, and so forth."
Together with a robot for spinal column surgery, the company has developed a robot for brain surgery. "There are competitors in this area who are able to carry out a brain biopsy, while we are able to plant an electrode precisely in the brain for a treatment called DBS for deep stimulation of the brain for Parkinson's Disease and epilepsy, for example. This brain product was developed as secondary to the spinal column product, because for business reasons, we didn't want to dilute the focus. Medtronic has a DBS system, and I'm sure that it will want to continue developing this robot, too."
A robot that cleans devices inside the body
What other products are you working on today?
"Two more advanced companies that I founded are Microbot Medical and XACT Robotics." Both companies belong to the MEDX Ventures group, controlled by Harel Gadot. Microbot Medical (Nasdaq: MBOT), which has a $20 million market cap, has developed a system that sounds a little like science fiction - miniature robots for internal cleaning of an implanted medical device, including devices implanted in the brain. In the future, the product is likely to also prove suitable for cleaning blood vessels in order to prevent heart attacks and strokes. The company has completed animal trials.
XACT is a private company that has developed a robot for navigating medical devices within the body. This technology is suitable for a variety of types of operations requiring penetration by a narrow instrument to a precise point deep within the body, such as biopsies, injections of drugs into internal organs, ablation (precise searing of tissue within the body), drainage from within the body, etc.
Diagnostic Robotics is developing a robot designed to meet us in the hospital emergency room before a doctor is available and assess the urgency of the case of people waiting in order to decide which of them should receive priority in treatment. Shoham does not reveal what the robot can do, so it is possible that it can already perform several physical examinations even before the doctor. "There are several companies developing artificial intelligence systems for this purpose, but without a robot," he says.
How do you see the robotics field developing?
"I'll quote Bill Gates, who recently said that robotics is now where computers were in the in the 1980s. I believe like he does - that in the not-too-distant future, everyone will have his or her own personal robot, just like everyone has a mobile phone and a PC. It will help us with all of our tasks, and we'll even develop emotions towards it."
Published by Globes [online], Israel business news - www.globes-online.com - on September 25, 2018
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