Medtronic to market Alpha Omega neurosurgery system

Yaron Itzhari Photo: Inbal Marmari

Alpha Omega system guides Medtronic's brain stimulation electrodes to the correct location.

Nazareth-based Alpha Omega has signed a cooperation agreement with international medical device company Medtronic, which will market Alpha Omega's products for surgical navigation inside the brain, sources inform "Globes." The deal will generate millions of dollars a year in revenue for Alpha Omega in the first stage, and could produce considerably more in the future. Alpha Omega already has over $10 million in annual revenue and nearly 100 employees, mostly in Nazareth.

The deal clearly involves synergy between Alpha Omega and Medtronic, because Medtronic is the world's most prominent marketer of intra-brain stimulation systems using electrodes, while Alpha Omega's system is designed to guide these electrodes to their location.

Relations between the two companies are reminiscent of those between Medtronic and Mazor Robotics, which developed robotics systems for guiding spinal column surgery, while Medtronic developed the implants for the spinal column. Mazor's systems provide more precise guidance for Medtronic systems. Medtronic eventually acquired Mazor for 1.64 billion, and Mazor's system is now fully integrated in Medtronic's products.

Up until now, Alpha Omega's products have not been sold as part of a treatment package marketed by large companies; they are an independent product marketed to hospitals. In Israel, all of the medical centers that perform DBS surgery use Alpha Omega's product. Medtronic previously marketed its electrodes system together with a guidance system, making it a competitor of Alpha Omega in this area, but Medtronic no longer operates by itself in this field.

Medtronic, the world's largest medical devices company, has been growing bigger and bigger in recent years, following a wave of acquisitions, the largest of which was its medical devices competitor Covidien, acquired for $43 billion. Medtronic's current market cap is $114 billion. The company focuses on implanted devices. It has expanded to almost every type of medical device, with an emphasis on minimally invasive surgery, which it acquired from Covidien.

Medtronic CEO Omar Ishrak told "Globes" several months ago, "The areas that we are interested in are both engineered products and digital health using artificial intelligence. The challenge of the coming years is the use of information, and these are areas in which Israel stands out."

Medtronic Israel country director Yaron Itzhari hinted when his company acquired Mazor that there were several more deals in the pipeline. "Medtronic invests in innovation in order to achieve medical progress for the needs of patients and health systems, and regards Israel as a means for doing this," he said. Medtronic is already nearing 10 acquisitions in Israel, including Odin Medical Technologies, Given Imaging, Ventor Technologies, superDimension, Visionsense, Orbotech, and Mazor, making it one of the most active companies in acquisitions in Israel. Itzhair previously emphasized that Medtronic had retained almost all of its acquired activity in Israel, some of which had grown substantially.

Doing it themselves

Imad and Reem Younis, husband and wife, founded and manage Alpha Omega. The company established itself without external financing. The company's story is interesting, because it overcame many obstacles encountered by similar Israeli companies, even without external investment.

The company was founded in 1993 as a subcontractor for designing and manufacturing medical devices, based on Imad Younis's training in electrical engineering. The company gradually specialized in designing and manufacturing products for brain surgery and treatment.

In the late 1990s, Alpha Omega combined with two inventors: Prof. Hagai Bergman from the Hebrew University of Jerusalem, who was among the first to identify areas of the brain whose stimulation could contribute to treatment of Parkinson's Disease, and Prof. Alim Benabid from the Grenoble University hospital in France, who was among the first researchers to apply Bergman's approach in actual hospital treatment through electrical simulation of the brain using external electrodes. Bergman and Benabid are leaders in DBS treatment.

DBS is now an accepted treatment for diseases like Parkinson's Disease, epilepsy, and non-Parkinson's tremor. The treatment involves implanting permanent electrodes in the patient's brain in a complicated brain operation. The electrodes themselves and the entire treatment are marketed by companies like Medtronic, Abbott Laboratories, and Boston Scientific. Alpha Omega is in the less critical area of guiding the electrodes to the right place using both planning software and physical tools that guide the electrode to its location.

Imad Younis previously told "Globes," "We have investment offers every so often, but we don't need investment right now in our main activity. Had we gotten an external investment at the beginning, we might have speeded up our activity even more, but we're satisfied. We were always making progress, even if it was moderate."

Only in 2018, after already posting substantial sales, did Alpha Omega get its first external financing of $7 million from the Guangzhou Sino-Israel Biotech Investment Fund (GIBF), headed by Dr. Yehoshua Gleitman and Avner Lushi. This financing round was also not necessary for current activity, which is financed from sales; it was aimed at increasing activity in China, in addition to activity in Europe, the US, and Israel. The investment and setting up the joint venture were aimed at expanding this activity.

Alpha Omega is the leading and oldest Arab-owned medical device company in Israel. Imad and Reem Younis previously took pride in having managers who came from the company. They have already founded four more companies owned and managed by Arabs.

Published by Globes, Israel business news - en.globes.co.il - on April 18, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Yaron Itzhari Photo: Inbal Marmari
Yaron Itzhari Photo: Inbal Marmari
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