Injeq - Smart needle for treating children with leukemia

The product and demand

The company’s first product is the IQ-Tip®️ spinal needle, which can be used to take a cerebrospinal fluid (CSF) sample and to administer intrathecal drugs into the CSF, for example, as part of leukemia treatment. These lumbar punctures are especially demanding for small children, and Nordic pediatric university hospitals in particular have expressed great interest in securing the product for their use. In the case of the most common childhood cancer, i.e. ALL-type leukemia, a lumbar puncture can typically be performed on a single patient approximately up to 20 times. The risks involved in the procedure could lead to tissue damage, increase pain and suffering and complicate treatment. According to a comprehensive Canadian study, hemorrhage into the spinal space from the effects of a traumatic lumbar puncture was associated with lower survival rates (Shaikh et al. 2014).

Besides cancer treatment, another typical reason for a lumbar puncture is suspected meningitis, which requires a high-quality CSF sample to diagnose. Left untreated or undiagnosed due to a poor sample, meningitis is always life-threatening. With newborns, obtaining such a sample is associated with problems that the Injeq IQ-Tip®️ needle is expected to resolve. According to studies, roughly 50% of punctures on newborns fail or cause tissue damage (Olowoyeye, 2019). Unsuccessful punctures, poor samples and the subsequent delays they cause in the patient’s treatment, not to mention possible return visits by the patient, cause not only pain and suffering but also additional costs as the child’s intensive care is unnecessarily prolonged.

We expect our product to also provide benefits in procedures performed on adults. Our goal is that once the smart needle has established its position in pediatric lumbar punctures, the method will then be used first for challenging lumbar punctures on adults and from there extended to everyday use covering all patient groups.

Our business model

The market potential in European pediatric hospitals is estimated at more than 50 million euros per year, based on the number of patients, procedures and hospitals, and estimated sales prices. The greatest need for the product is in the treatment of childhood leukemia and diagnostics and intensive care for newborns. These specialized fields account for around 60% of the medical procedures carried out on children. Our sales strategy is to cover each pediatric hospital’s total need for demanding lumbar punctures within a reasonable transition period to ensure consistent operating methods.

The potential available market (PAM) for Injeq’s smart needle can be considered to cover the global consumption of spinal needles used for all possible punctures. This naturally would amount to several billions of euros. The total available market (TAM) is substantially smaller. Since we are targeting the global market only in applications where IQ-Tip®️ technology brings a significant added benefit to the existing procedure compared to current products, the market shrinks further, with the serviceable available market (SAM) expected to be in the region of one billion euros, depending on the technology’s future price erosion.

Both the sales approach and pricing model will vary according to the target market and partly by distribution partner. The product system comprises a tissue analyzer, single-use needle and a cable that runs between them. The one-off sales of tissue analyzers will generate a faster income flow, and when the analyzers are sold to end customers, this will launch sales of smart needles as disposable items. Depending on the target market and the financing models adopted by our distributors, the analyzers will, however, often be placed to customers through lease financing or a leasing contract, which will lower the procurement threshold. Some may naturally be placed directly, in which case the procurement is limited to products sold as consumables. We will look at business and pricing models adapted to different target markets together with our distributors, also in terms of ensuring that the pricing, especially for opinion leaders and early users, supports faster market penetration. We aim to initiate local studies and subsequent publications in the target markets demonstrating the product’s efficacy and applicability also on the local level.

Sales, manufacturing and distribution

Sales and marketing of the products in Europe require MDR-compliant product approval and certification (CE marking) by the notified body, and for our smart needle also by the EU. The company expects to conclude its required registration-phase tasks at the end of 2020. With the notified body’s and the EU’s processes, we expect the final registration to take place in early 2021. 

Our first sales target is children’s hospitals in Europe, where our products will be used to improve the safety and success rate of lumbar punctures. Children’s hospitals operate in connection with university and maternity hospitals, and also as separate units. Sales efforts will initially focus particularly on leading university hospitals that will also serve as references and will promote the use of Injeq’s devices as part of the new European ALLTogether treatment protocol, especially for ALL-type leukemia and other demanding lumbar punctures.

Injeq owns the main rights to its products and acts as the manufacturer of the products, overseeing their safety. The needle and cable are manufactured in the company’s production facilities in Tampere from components procured from several different manufacturers. In summer 2019, the company moved to new premises in the area of Tampere University Hospital. These suitable premises enable increased production as sales grow. The products are sterilized by a European cooperation partner. The analyzers are made on a subcontracting basis by a Finnish contract manufacturer. 

Sales are implemented with local distributors, primarily with regional companies who already have established local operations with children’s hospitals. Injeq has identified approximately 450 potential operators/distributors around the world, among them several European distributors who have been selected for more detailed negotiations. Preliminary distribution agreements have been concluded in five European countries, and discussions with distributors in several other countries have been initiated. The aim is to establish an EU-wide distributor network in the course of 2021. This is a realistic target, and the first partnerships selected in the larger European countries prove that the list of candidates is feasible and compelling. Collaboration with Nordic university hospitals will continue. Negotiations have been under way with leading Nordic university hospitals throughout the smart needle’s history. Discussions and previous clinical trials in several hospitals have proved that when it comes to launching sales, we are on a solid ground.

Competitive situation

Spinal needles for lumbar punctures are widely used around the world. Every year, some 100 million lumbar punctures are performed, and the procedure dates back more than a century. The current practice is both a competition factor and an opportunity. Opportunity stems from the fact that the current practice involves problems and risks that the Injeq IQ-Tip®️ needle is able to minimize, while a competitive situation arises if the treating physicians believe the existing method is sufficiently effective and affordable. However, many pediatricians are unsatisfied with the current solutions, since lumbar punctures are demanding, particularly when it comes to children, and there are more risks associated with using a conventional needle with this patient group. That is why the company has focused its resources first on the needs of children, a route which is then expected to establish the smart needle as the new standard in procedures performed on adults, too.

The smart spinal needle does not yet have its own market segment, because the products are not yet commercially available. Injeq Oy will thus be the technology and industry leader when the product is launched. Established needle manufacturers are familiar with the company and are following its progress. And with good reason, as the company’s vision is to revolutionize the existing treatment practice. For some needle manufacturers, this could mean weakened sales. As we achieve our goals, the use of conventional needles for the applications in question will decrease – one hospital unit at a time. However, there is an opportunity on the global markets to partner with conventional needle manufacturers and take advantage of their logistics and sales & distribution channels.

The problems related to lumbar punctures are widely known, and attempts have been made to develop competing solutions based on, for instance, measuring pressure or light scattering at the tip of the needle. However, the use of pressure measurement, i.e. the manometer-based technique, has its limitations, and light-based solutions are not yet in the commercialization phase. It is safe to say that there are no competitors in the market who can match our product, and their product development work and commercialization lag behind Injeq’s.

Quality Management System and approval of a medical device

The manufacturing of medical devices is regulated by the authorities. The authorities have outsourced the control of regulated activities to Notified Bodies approved by the authorities. According to the regulations, Injeq must have a quality management system, approved by the Notified Body, covering the minimum requirements set out in the regulations. The requirements are more demanding than the normal quality management system. In order to minimize the risk to the patient to an acceptable level, the measures defined in the quality management system related to e.g. product development, manufacturing, product testing, product’s clinical investigations, marketing and post-market follow-up of a product to be commercialized must be approved when the product is launched to the market.

We moved our operations to production-scale premises in summer 2019. The necessary quality management system, which is currently being certified, has been in use for a longer time. In the company’s estimation, clinical evidence based on the final studies is expected to be approved by the notified body early 2021. In addition, the company is in the final stretch of completing all testing and audits in compliance with the EU’s regulatory requirements. After obtaining an EU marketing authorization, the company intends to apply for marketing authorizations in other geographical areas, primarily in areas where the CE marking is approved as is or with minor adjustments, as well as initiate preparations for other larger market areas (such as the U.S., which requires its own FDA approval - The Food and Drug Administration).

Medical Device Regulation and regulatory requirements

Although the development work and commercialization of new medical devices in compliance with regulatory requirements is not always straightforward, gaining access to the market often establishes a firm position for the product. An essential aspect of commercialization is the regulatory approval required for medical devices. New requirements were set for the highly regulated industry in 2017. The EU’s regulatory framework changed from a Medical Device Directive (MDD) to a Medical Device Regulation (MDR) and will apply directly to all member states’ legislation. The transition period between the directive and the regulation for medical devices ends in May 2021. The practices under the more stringent MDR are thus not yet fully established. The new MDR has also made the certification process more demanding. Brexit also has not helped the situation, as roughly 30% of the notified bodies’ resources were in the U.K. All of this creates waiting lines for the customers of European notified bodies. With regard to the requirements of the MDR, Injeq has started preparations with notified body TÜV SÜD already in 2018.

A sustainable competitive edge

The company’s products cannot be easily copied by competitors. Copying or replacing either the needle or the analyzer is not a straightforward process, and to protect them, the company has either been issued or has applied for patents covering four different technologies. The company’s business is protected by the patents to a certain extent and, in addition to these patents, the data generated in studies and clinical trials, which cannot be patented or copied, provide a sustainable competitive advantage. Competitors must also conduct similar clinical trials, which gives Injeq a clear head start in the market.

The company’s algorithms are confidential, and measurement data is gathered when the products are used. This enables the continuous development of the products and the optimization of the algorithms. The company’s objective is for the Injeq IQ-Tip®️ needle to eventually become the best treatment practice.

Growth paths

The company’s first market segment will be lumbar punctures performed on children in European hospitals, particularly in connection with the treatment of acute llymphocytic leukemia (ALL). Success in this market is a key goal for the company. The aims of the four-year-long multinational ALLTogether study launched in 2019 are very much aligned with the benefits brought by Injeq’s smart needle. Our distributors in Europe are being offered the opportunity to join the efforts to improve the treatment and prognosis of pediatric ALL, as driven by this current European study. 

Proactive measures to create distributor and sales channels have been initiated in Europe. Once the CE marking has been granted, we intend to expand the company’s operations to countries that accept the certification. This will give Injeq major market potential in the early phase of commercialization. Once the first foothold is established, there will be several more paths to growth. Investments there will be considered on a case-by-case basis. The main growth paths that have been identified include, but are not limited to:

1. Lumbar punctures on adults. Focusing on a limited and at the same time important segment, such as pediatric treatment, is the sensible way to enter the market. However, lumbar punctures and spinal anesthesia are performed on adults considerably more than they are on children. For example, cerebrospinal fluid biomarkers are increasingly being used to support a diagnosis of Alzheimer’s disease (Paterson et al. 2018). The aging population and increase in the incidence of Alzheimer’s disease are increasing the number of diagnostic lumbar punctures. Once the product has gained a strong enough foothold in pediatric use and the benefits of the technology have been demonstrated to clinics, the intention is to use the pediatric clinics as references, highlighting the benefits and low risks of the technology in order to expand its use from pediatric units to other units. After overcoming initial obstacles and gaining approval for the IQ-Tip®️ system, this transition will be relatively easy. In the company’s view, new devices or other local distributors will then not be needed, nor will clinics need to learn new skills. The company expects that the smart needle will eventually be part of regular diagnostic and treatment procedures, as the easy-to-use and safe digital technology is greatly appreciated. The smart needle can furthermore be used to help train new healthcare professionals. This customer need has become evident in connection with the Injeq’s clinical investigation.
2. Expanding sales to other global markets. Focusing on children’s well-being is a growth area also outside Europe and the U.S.  For many countries, European product approval serves as a good foundation for their respective approval processes. New marketing authorizations and the expansion of sales networks will be considered once EU approval has been gained.
3. Initiating preparations for FDA approval and expanding sales to North America. Preparations to initiate the FDA approval process, along with new patient studies, can begin once EU approval (CE marking) has been granted to the IQ-Tip®️ product and the product is in the market. As the world’s largest medical product market, the U.S. offers significant opportunities.
4. New product areas. Besides lumbar punctures, IQ-Tip®️ technology can also be used for numerous other demanding procedures, such as joint and blood vessel punctures, biopsies, as well as in veterinarian medicine and first aid, to name a few. The company will study the various opportunities in these application areas after the smart needle’s first application has entered the market.