Kostuik Plus Two Majors – K2M

The Minerva Plaster cast, the Harrington Rod and osteotomy of the spine—these were the elements of an advanced spine surgeon’s armamentarium when John Kostuik entered medicine in 1961. In that decade roughly 80% of all peer review spine papers were about spinal stability, adolescent scoliosis, dwarfism or deformity.

Steffi, Cotrel, Dubousset, Campbell were not yet publishing. Parallel rod instrumentation which could be bent pre-operatively, attached to hooks and placed on the laminae or pedicles and which would progressively straighten mal-curved spines was still 15 years off.

The most advanced DDD (degenerative disc disease) technology mentioned in the literature in the mid-60’s was Chymopapain.

This was the spine world that Dr. John Kostuik entered in the 1960s. Over the ensuing years, Dr. Kostuik would teach the craft of spine surgery to upwards of 200 fellows through the ’60s, ’70s, ’80s, and ’90s and then in 2003 added it all up and came up with a new way to design a spine company—a way that was both a throwback and a throw forward.

“I was looking for something to do.”

Dr. John KostuikIn 2003, Dr. John Kostuik, former President of North American Spine Society (NASS), Scoliosis Research Society, (SRS) and Chief of Orthopedics at Johns Hopkins, was in his 69th year and contemplating life after academia when he sat down with one of his former fellows, Tom Errico, M.D., and said; “Tom, I’m looking for something to do.”

Dr. Errico thought about it, asked a few questions then strung together these five fateful words; “Maybe we should start a company.”

Physicians starting companies is not really a good idea. It’s like putting sharp objects in the hands of businessmen. Nine times out of ten they’ll hurt themselves. But Drs. Kostuik and Errico de-risked their notion by calling a friend—the former CEO of American Osteomedix and sales executive for Interpore Cross, Aesculap and Synthes Spine, Eric Major. 

Eric, like Kostuik, was also looking for something to do. 

Eric Major had just sold his supplier of VCF (vertebral compression fracture) products to Interpore Cross. So he knew a thing or two about starting, running and selling businesses. In those days spine was a hot area for investment. Lots of entrepreneurs were throwing up shingles offering spinal implant products for sale. 

But Kostuik and Errico didn’t want to start a spine business like other guys. They had something else in mind. Eric Major (later with his brother Lane Major) liked what they heard. 

Surgeon-Focused, Education-Centered

“I insisted that our company’s product development be surgeon focused. Right from the start Tom and I insisted that we have a large scientific board and that we put them to work. Our initial scientific board was 16 surgeons, half from academia and half from private practice. Later we grew it to 20 surgeons and we made them come to our offices four times a year and hold conference calls with us every two weeks!” remembers Dr. Kostuik.

“The other thing I insisted on was an educational forum. I’d always been an admirer and active participant in the AO spine educational programs and I felt that an educational forum combined with a strong data acquisition program was essential.”

Eric and Lane MajorWith that, Kostuik and the two Majors (Eric and Lane) went to work under the banner “K2M”. 

That first year the scientific board swamped the employees—16 to 5. The first product was no surprise, a pedicle screw. It took ten months to get it through the FDA and ready for market. Ten million in seed money came from family, friends and a few surgeons. While it was a great start, there was one critical question remaining—what would be the company’s product platform? 

Back to the Future

“I had always been involved in adult deformity.” – Dr. John Kostuik, former president of SRS.

In 2004, deformity was old news. Scoliosis? Is anyone still doing those surgeries? No, the action in 2004 was intervertebral body implants—cages or motion preserving implants like Charité and ProDisc. In 2003 and 2004, Synthes, DePuy, Stryker and virtually every private equity firm on Wall Street laid hundreds of millions of dollars on the table to pay for motion preserving implants to treat degenerative disc disease.

Deformity? Who does deformity?

So while innovation to treat spine disease was zigging to DDD, the small team assembled by the Majors and Kostuik zagged. Relying on their scientific advisory board, they realized that the issue wasn’t deformity, per se, it was the complexity of the surgery itself. And there had not been a significant new innovation in this area since Cotrel-Dubousset. 

K2M became the company dedicated to making complex spine surgery less complicated, more consistently successful and less morbid. 

Innovations for Complex Constructions

Between 2004 and 2010, K2M introduced a series of major innovations for spine surgeons who are tackling particularly complex constructions. 

The first platform system from K2M was the Denali system which was a top-loading spinal system featuring off-axis screw height adjustment and offering a complete array of screws, rod connectors, and hooks, coupled with easy-to-use instrumentation.

One surgeon who’d used K2M’s products wrote this on an anonymous blog a year ago: “The system is incredible. I am a deformity surgeon and I ‘gave it a go’ to see what all the talk was about. I thought I would use it once and that it would be a joke. How wrong I was. It is incredibly powerful and fast. I can do monster reductions very quickly, far easier that the previous system that I used. I had to do a revision using my old system last week—what a nightmare. It reminded me what a frame-shift this pedicle screw is.”

Gil Tepper, M.D., who is the founder and President of the Spine Institute at Miracle Mile Medical Center in Los Angeles, characterizes K2M this way: “At K2M spine surgeons from diverse backgrounds and interests collaborate extensively and work closely with engineers to facilitate innovations as well as improvements in the logistics and approach to various spinal surgical techniques. The collaboration involves didactic sessions and cadaver workshops. It’s truly cooperative patient and procedure centered and data driven."

By 2010, K2M’s sales had grown to, we estimate, well over $100 million, K2M was the most successful private spine company in the industry, Eric Major was CEO, Lane Major was Senior Vice President of Global Marketing and Dr. John Kostuik was ready to retire—this time for real.

Welsh-Carson

“When we first started out we thought we would do a couple of innovative things and then get bought out.” – Dr. John Kostuik.

It didn’t quite happen that way. None of the major orthopedic companies bought K2M—although they did come knocking. No, the firm that finally convinced the Majors, Kostuik et al to transfer majority ownership was Welsh-Carson (WCAS)—the largest private equity firm in medicine.

At a time when hospitals are demanding lower prices, Medicare (Centers for Medicare and Medicaid Services-CMS) is cranky, the FDA is flailing around, several small spine technology firms have left the pitch and one of the most important new technology initiatives—motion preservation implants—was mugged in the alley, Welsh-Carson decided to invest in spine.

Either these guys were smart or they weren’t paying attention to the headlines. In fact, WCAS had built its business by laying shrewd bets on strong jockeys who knew how to ride a thoroughbred company to the finish line.

WCAS’s purchase of a majority share of K2M closed in July 2010. 

Kicking in the After Burners

With Welsh-Carson on board, K2M has kicked in the after burners. Since 2010, K2M has added 100 new employees, opened up the international market and pushed hard on the new product gas pedal.

K2M presented NINE new technologies at this year’s NASS meeting:

• EVEREST Degenerative Spinal System, a top-loading pedicle screw system featuring the ability to accommodate titanium and CoCr rods of two different diameters and a screw thread pitch designed to maximize both osteoporotic and dense bone fixation

• CHESAPEAKE Anterior-Lumbar Stabilization System, a unique interbody device designed for stabilization of the spine through an anterior approach and manufactured from both biocompatible PEEK polymer and titanium

• ALEUTIAN Transforaminal-Lumbar (TLIF) II Interbody System, with a full range of unique bulleted PEEK interbodies for posterior lumbar applications. The ALEUTIAN TLIF II includes the Adjustable Inserter, which allows for variable angulation of the implant from 0° to 55° in situ, helping the surgeon to insert the TLIF implant with precision and ease

• ALEUTIAN Anatomically-Narrow (AN) Oblique Interbody System is a full range of unique and anatomically designed PEEK Interbodies for oblique implant placement through a transforaminal-lumbar approach

• SERENGETI Complex Spine Minimally Invasive System, is a next generation instrumentation to perform controlled reduction, manipulation, and above skin compression and distraction using the revolutionary SERENGETI Retractor

• CHESAPEAKE Cervical-Ti Stabilization System is a multi-screw titanium construct providing stability to the anterior column, while reducing the need for supplemental fixation in the cervical spine

• PYRENEES Translational Cervical Plate System is a unidirectional ratchet mechanism at each level to allow for controlled settling of the patient’s anatomy. Featuring tifix Locking Technology, the system does not require an additional locking mechanism, as each screw head forms an autogenic lock to the plate upon insertion

• RAVINE Lateral Access System is a dual flat blade platform for a true muscle splitting transpsoas approach that offers rigid fixation to the spine and an option for both a third and fourth blade. This is a design departure from tubular retractors, while providing tremendous adaptability to both patient anatomy and surgeon technique

• ALEUTIAN Lateral Interbody System is designed to work in concert with the RAVINE Lateral Access System, ALEUTIAN Lateral provides anterior column support, bridging the disc space, and includes a full line of instrumentation designed specifically for the far lateral transpsoas approach.

What’s next? With Welsh-Carson on board and K2M’s now well established management capabilities, the next announcements from K2M, we expect, will be strong international expansion, more new products and, at some point, entry into the broader degenerative disc disease market.

DDD? Who is expanding into DDD?  Don’t these guys read the headlines?

It’s like déjà vu all over again.