In this "brutal" fundraising environment, Augmedics has pulled off the largest orthopedic surgery product rounds in 11 years and perhaps the largest augmented reality financing ever, said the company's President and CEO Kevin Hykes.
"The fact that we were able to raise capital at all is a testament to the impact we're making on spinal surgery," Hykes said. He said that the deal was the focus of a year of effort for Augmedics in this down market.
The funding round was led by CPMG, and adds Evidity Health Capital as an investor, along with participation from current investors H.I.G. Capital, Revival Healthcare Capital, Almeda Ventures and others, Augmedics said in a statement. As part of the round, CMPG founder Kent McGaughy and Evidity’s Managing Director Paul Enever will join Augmedics’ board of directors, the statement said.
With this latest financing round, Augmedics has raised about $148 million, including a $36 million round in March 2021, $15 million raised in 2020 and seed funding of $8.3 million in 2017, Hykes said.
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The news comes on the heels of the 4,000th patient to undergo spinal surgery that used xvision to guide the surgeon's hand, the company said. The U.S. Food & Drug Administration approved xvision, the first augmented reality surgical navigation tool, for use in 2019.
The xvision spine system superimposes CT images of the patient's spine onto the surgical field while surgeons are placing pedicle screws into the vertebrae, increasing accuracy and lessening orthopedic surgeons' fatigue and stress during spinal surgeries, Hykes said.
"Augmedics stands apart with a proprietary AR navigation solution, delivering best-in-class surgical accuracy daily to ORs across the country," CMPG’s McGaughy said in the statement. "For nearly two decades, we have studied and invested in enabling surgical technology. We are excited to partner with Augmedics, the clear leader in augmented reality surgery."
Compared to legacy surgical navigation that features two-dimensional images on screens in the operating room, xvision allows physicians, wearing a head-mounted projector, to visualize patient anatomy through skinand tissue in a 3D image without continually looking up and away from the surgical field, he said.
With an infusion of $82.5 million, Hykes says the company will put more well-trained, effective clinical salespeople in the field to grow adoption of the system.
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Currently, only about 20% of spinal surgeries use either type of navigation, despite findings that "freehand" surgery is about 91% effective and navigation raises accuracy up to about 97% to 98%.
"That's a big difference when you're talking about putting screws into a spine," Hykes said.
Among current users of the xvision system, he said, about 60% of clinicians have switched to augmented reality from legacy systems, while the other 40% have never used navigation in surgery before.
In addition to growing sales, Hykes says that process innovations are underway. The company has introduced an artificial intelligence component that works on image processing to better differentiate between bone and filter, and other enhancements are being developed.
In the short term, Augmedics will continue its focus on growing as a spinal surgery navigation tool sold only in the U.S., because "that's the right place to start," Hykes said.
However, in the longer term, xvision "is easily extendable not just to musculoskeletal surgery using CT scans, but even for soft-tissue surgeries using MRIs, Hykes said.
This story first appeared in Crain's Chicago Business.