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Raymond Cohen: Creating a Medical Device Unicorn

Raymond Cohen says he knew the moment when Axonics Inc., which he co-founded in 2013, would become a success.

It was 2016, when the Irvine-based medical device company completed its animal studies and then implanted its incontinence devices into 51 humans in a clinical trial in Europe.

“When you get a product into humans and it works, that is great,” Cohen recalled.

“We had excellent efficacy. Everything worked well. It was the first confirmation that we had a product that really works.”

Cohen’s foresight was correct. Axonics was named the fastest-growing company in America by Deloitte in 2021 and by the Financial Times in 2022.

Axonics was also the fastest grower on the Business Journal’s annual list of publicly traded companies in 2021, when it reported a two-year growth rate of 4,509%.

Sales have continued booming, as analysts expect 32% growth to $362.3 million in 2023 and an additional 22% jump in growth in 2024.

The company’s stock has increased more than fourfold since its initial public offering in 2018; Axonics now sports a $3.2 billion market cap (Nasdaq: AXNX).

Another sign of growth: last April, the company inked a nearly 145,500-square-foot deal to relocate its headquarters to the Sand Canyon Business Center. It was the largest new local office lease of 2023.

For all these reasons, Cohen was named the Businessperson of the Year in Orange County’s health industry by the Business Journal.

“For me, Axonics is the crowning achievement,” Cohen said during an interview at his company’s current headquarters. The company currently leases about 75,000 square feet at four buildings in the area, according to regulatory filings. Axonics is set to move to its new location this year.

“I’ve worked my entire life to create a company like this. It’s been a unicorn situation.”

Sunny Days

Cohen, who grew up in Queens, N.Y., earned a business management degree at New York’s Binghamton University. As soon as he graduated, he immediately left because of the “miserable weather.”

After arriving in Southern California 40 years ago, he started selling consumer electronics to physicians, a job that introduced him to the medical device industry.

In 1996, he took the reins at cardiac defibrillator maker Cardiac Science Corp., which became among the fastest-growing company in the U.S. He earned an Excellence in Entrepreneurship Award from the Business Journal in 2002.

In 2010, he restarted Vessix Vascular, a device maker of products that treat hypertension, and sold it to Boston Scientific for more than $200 million two years later.

After he sold Vessix, he stayed active on the boards of a variety of companies while looking for his next big project by reading scientific papers and talking to engineers and doctors.

He had the sense that the nervous system could be the key to unlocking better health for individuals.

“Back in 2013, there weren’t many clinical applications for neurostimulation. It was nascent at the time,” he said.

“It was clear that this would be a bigger part of medical therapy in the future.”

He came across sacral neuromodulation for the treatment of incontinence, learning that the market size was $500 million and had only one participant—medical device giant Medtronic.

He noted Medtronic’s product lasted only four to five years in the body and couldn’t be subjected to MRIs, meaning the implant often had to be removed during hospital procedures.

“When I looked at it, I saw one player, not the greatest product, full reimbursement that was already established, and physicians already trained on how to use this technology.”

“That was the genesis” for Axonics, which name is based on the nerve called axon, he said.

Explosive Growth

After the initial successful trial in Europe, Cohen didn’t deviate from Axonics’ game plan, knowing that other companies stumbled by rushing into sales. Instead, he limited sales to a couple markets in the Netherlands and the United Kingdom to get more experience and win Food and Drug Administration approval, which granted it in 2019.

He also had to raise cash, including over $100 million in venture capital and then another $120 million when Axonics went public in 2018.

The medical device industry “is a big money game,” Cohen said. “You cannot rub nickels together and be successful in the medical device industry.”

Along the way, Cohen had offers to buy Axonics but turned them down because he “felt this would be a special project.”

Sales at first were difficult because surgeons were reluctant to implant devices into their patients if they weren’t sure Axonics would survive. Medtronic, which has several business units that are based in Orange County, in 2019 filed a lawsuit that has been stayed indefinitely.

“Medtronic has a history of filing lawsuits against new entrants in markets that they control,” Cohen said. “They will do anything to slow down a new competitor.”

In the first full quarter of sales in 2020, Axonics executives planned for $20 million worth of products sold.

“We had demand for $30 million. We managed to get $26 million out the door.”

Then COVID hit, causing a temporary slowdown.

“We managed to sell $110 million in the first year, even though we were on the sidelines for three months. It was pretty cool.

“We had a unique product, people in need. We had an exciting alternative to the incumbent.”

TAM

Overactive bladders affect an estimated 87 million adults in the U.S. and Europe, Axonics said. About 40 million adults are reported to suffer from fecal incontinence and accidental bowel leakage.

Axonics says its sacral neuromodulation systems sends electrical signals to the sacral nerve to help regulate the bladder and bowels. Axonics’ typical patient is a 55-year-old woman suffering from bladder incontinence.

In 2021, Axonics paid $200 million to acquire Contura Ltd., a maker of a hydrogel-based injection called Bulkamid to help treat stress urinary incontinence. Cohen said Bulkamid alone is already generating more than $75 million in annual sales.

Nowadays, Axonics features two implantable devices: one with a rechargeable battery that needs to be charged for one hour every six to 12 months and a larger device that doesn’t need recharging.

Each product can last 17 to 24 years or more in a body and has 90% efficacy. Its key advantage is the longevity and efficacy over Medtronic, which has a device that lasts eight to 10 years, Cohen said.

“It is clear to the most casual observer that we have better products. This stuff just flat-out works.”

Golden Bachelor Clients

Last year also saw another breakthrough for Axonics; its first year of profitability.

“It’s a big accomplishment because at sub-$500 million, it’s almost impossible to make money in the medical device business,” Cohen said. “It’s because of infrastructure costs. We’re the most highly regulated industry in America.

“Quality is so important. These are devices designed to last a long time in people’s bodies. They cannot fail.”

Cohen knew he couldn’t just rely on doctors’ word of mouth to spread the news on Axonics.

The company undertook a $15­ million annual advertising campaign called “Find Real Relief.” Its website attracts 250,000 unique visitors monthly, 6% of whom fill out an online symptom survey.

It’s advertised on hit shows like “The Golden Bachelor,” which “really spiked up the response,” Cohen said.

The campaign has been “incredibly successful.”

“We tell them that you don’t have to live with incontinence. We can treat you. And it’s covered by insurance.”

Currently, about 4,000 physicians in the U.S. are trained to implant the devices. Axonics estimates it has a 35% market share with about 1,500 doctors who are customers.

“We have a huge team. We’ve got good momentum. We’ve got great products. It’s just a matter of time before we’re the market leader.”

The Key to a Successful Business

Raymond­ Cohen has one word for making a successful business: employees.

“The key to success is surrounding oneself with the highest quality people that you can enroll in the vision,” the Axonics Inc. chief executive said.

“I’ve come into contact with phenomenal technical people. I have relationships with a group of three to four dozen technical people here in Orange County that I’ve worked with for 25 years. That’s the key—it’s all about the people.

“Products don’t invent themselves. They don’t engineer themselves. They don’t manufacture themselves. And products also don’t sell themselves.”

Axonics pays 100% of its employees’ healthcare costs so employees know that the company cares about them and their families, Cohen said.

“People always ask me what I’m most proud of—the fact that 815 people have great jobs. We pay them well. We give them great benefits. The company’s been successful, and people are making money and taking care of their families. In the end, that’s what it’s all about.

“As an entrepreneur, that’s a big part of what drives a lot of us.”

OC Pride

Cohen is also bullish on Orange County’s medical device industry, pointing out other giant companies with operations here, such as Edwards Lifesciences and Axonics’ main competitor, Medtronic.

“Orange County is the center of the medical device universe in America. We have more medical device companies here than anywhere else in America. We have the talent. We have the universities.

“If you’re going to start a company, you should be here in Orange County.”

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