Axonics Modulation Technologies Inc., a urology-focused medical device maker, is growing in size and reputation, along with its market.
The Irvine firm (Nasdaq: AXNX), which went public two years ago at $15 a share, saw its stock hit an all-time high of $50.95 last month before settling around $45 apiece at press time with a $1.8 billion market capitalization.
Sales are expected to hit $112.5 million by year’s end, up from a couple million the previous year, and jump to $157 million in 2021, according to the consensus estimate of the nine analysts who follow its stock. Eight have given the company a “buy” rating.
“I’ve been around a long time, and I can’t count the number of companies on more than one hand that made $100 million in their first year of sales,” Chief Executive Ray Cohen told the Business Journal.
Axonics has hired more than 100 local employees since the start of the pandemic, and it could make as many as 100 additional good-paying jobs with healthcare available in OC next year, Cohen said.
The company designs and manufactures its main product in its two-building campus at the Irvine Spectrum.
“Since we’re manufacturing our products here, you can imagine, there’s demand for more people as volume grows.”
The company currently employs about 419 people, including 230 in OC.
Higher Expectations
Axonics’ main product, the r-SNM, is a sacral neuromodulation device: it sends electrical signals to nerves in the spinal cord to help regulate the bladder and bowels.
There isn’t a single person who came up with the idea for the device, Cohen said.
Instead, the company worked with some 20 physicians to figure out what to build and licensed some initial patents from the Alfred Mann Foundation in Santa Clarita. It also conducted design research by gathering input from a large group of patients with various implanted neuromodulation devices, he said.
“Most medical devices are designed by engineers. They are not designed in this way that I’ve described, with a nod toward the human aspect,” Cohen said.
Physician and patient-informed studies led Axonics to create the first rechargeable sacral neuromodulation device, which lasts up to 15 years in the body and doesn’t have to be removed when a patient needs an MRI scan.
“Medical device consumers are educated. They have a higher expectation for usability today,” Cohen said.
The design process also inspired a patient-friendly programming remote that even a three-year-old could use, he said. It looks like a key fob, fits inside of a women’s purse and is green because it was Pantone’s color of the year in 2017.
Highly Underpenetrated
About 3 million patients take medication for overactive bladder disorders every year. Among those patients, about 80% drop off their medication in 12 months, the company says.
Therapies are particularly ineffective for Axonics’ typical patient, which is a 55-year-old woman suffering from bladder incontinence, and yet medical devices have taken a backseat to therapeutics, Cohen said.
“If you were to ask a room of 100 women, ‘Have you heard of an implantable device that can improve the quality of your life?’ maybe two out of 100 would know about it.”
The market has been plagued by wives’ tales such as ‘You’re just getting older, it’s normal’ and a general lack of awareness and enthusiasm among physicians, he said.
Before Axonics, the only sacral neuromodulation device on the market was made by Medtronic; Axonics and Medtronic are currently entangled in a patent infringement lawsuit that is expected to continue throughout 2021.
Patients who make it to a urologist will start to hear about third-line therapy options, which include Botox injections and sacral neuromodulation. Those patients are the persistent ones, he said.
“Until Axonics entered the market, sacral neuromodulation was perceived as a therapy of last resort.”
With greater choices and a greater willingness to recommend sacral neuromodulation to patients, the physician community has stated the market will grow 15% to 30% per annum over the next few years, Cohen said.
Future Trajectory
Axonics isn’t taking a breather. Since gaining U.S. market clearance for its device last year, it’s scored three additional approvals for product enhancements.
The company continues to push out the amount of time between recharging; the device currently requires recharging once a month for one hour.
“That’s not burdensome,” Cohen said. “And in the future, it will only require recharging once a year for one hour.”
The ability to decrease time to recharge is very appealing to patients, and the company will use direct-to-consumer channels next year to increase patient awareness on r-SNM features like that one, he said.
It’ll be a busy 2021 for Axonics. It expects to unveil its third-generation r-SNM and a nonrechargeable implantable device.
Cohen said he believes having a nonrechargeable device, which will last longer than the current Medtronic option, is part of the key to taking the market leadership position.
“We’re going to continue to push the envelope and raise the bar in terms of what is possible with these devices.”
Once an Entrepreneur …
Axonics Modulation Technologies isn’t Ray Cohen’s first venture.
After some 20 years selling medical devices, he took the reins at cardiac defibrillator maker Cardiac Science Corp. in 1996, when the company was based in Irvine and counted just two employees.
As he raised funds, scored regulatory approvals and scaled the business, he earned an Excellence in Entrepreneurship award from the Business Journal in 2002. Cardiac Science was ranked the fourth-fastest growing company in the U.S. in 2004.
Cohen left Cardiac Science the next year and proceeded to run several other local medical device upstarts. In 2010, he restarted Vessix Vascular, a device maker of products that treat hypertension, and sold it to Boston Scientific for $425 million two years later.
“Then it was a question of what’s next,” he said.
“Well, I wasn’t an expert in hypertension. I was involved with a heart failure project, and I wasn’t an expert in that either. And when I became interested in sacral neuromodulation in 2013, I wasn’t an expert in that either.”
“When you’re in this business, you learn how to ask the right questions and gather the experts together so that you can become educated for yourself and your team,” he said. “The fallacy is that to somehow create a company you have to be an expert in the topic. I think there are so many other things you need to be expert in—hiring people, raising capital, having a vision for the future.”
