Boston Scientific Corporation (BSX) Earnings Call Transcript & Summary

All right. Good morning, everyone. Thank you very, very much for joining Boston Scientific here at the North American Neuromodulation Society Investor Update. And for those of you on the webcast, I can attest, I'm grateful or relieved, I guess, there is a full room here in Las Vegas at 7:00 a.m., which is impressive, I think. So very excited to give you a deep dive on our Neuromodulation business, one of our most exciting businesses. And we have 3 representatives here. Maulik Nanavaty, I think you all know him. He leads the neuromodulation team, Senior Vice President and President of Neuromod. And then familiar faces as well, Jesse Feinkind is the Vice President for our Global Pain franchise. And then he'll be followed by comments -- by Milad Girgis, who is the Vice President for our Global Brain Modulation franchise. There's also several members of the neuromodulation team here in the room. And so after our prepared comments, we look forward to your questions, and we'll wrap up promptly at 8 Vegas time. So without further ado, we have the usual safe harbor for forward-looking statements and financial and regulatory disclaimers, and I will hand it over to Maulik.

Thanks. Thanks, Susie. Good morning, everyone. This is probably the last year, at least for the next couple of years, is going to be Las Vegas. I think the next time -- next 2 years is going to be in Florida, so it's a refreshing change, and at least you'll get to see -- get some fresh air when you step out of the hotel. It's really exciting for us to be here today and talking about neuromodulation. For us, we believe that this space remains probably one of the highly underpenetrated and high-growth market, even in the space that we're in. In particular, for the pain therapies, we have been really focused on saying, how do we truly create a category leadership in this space, particularly looking from a physician point of view and how they look at the patients walking into the clinic. And this is really evidenced by the platform that we have built on the SCS and innovation taking place, plus the acquisition of Vertiflex and the past acquisition of RF therapies that provides us a true toolbox for the physician when they look at the patient now and as the patient evolves and looking at it in the future and making sure that they're able to provide treatment options as things go forward. Especially on the SCS side, and Jesse Feinkind will talk a lot more on the detail with a lot of studies that we have done. This is the first time we're actually coming out with multiple different studies that we'll be talking about, the clinical data that we're going to be talking about, in particular, especially for COMBO RCT that we're going to be talking today, 88% responder rate. That is pretty significant in terms of the results that we're getting. And this is based on a past Illumina data that we have had with real-world results, which were already spectacular. And on the brain side for us, this is truly transforming the space. We have created a highly innovative platform and cadence, particularly not just our platform of what we do on our Cartesia Directional system that we have built, which is one of the most critical element when you're looking at a DBS surgery for Parkinson's. Target is so tiny. You'll want to be able to make sure you get to the target first before worrying about anything else. And second thing is partnership with Brainlab provides us a platform, allowing both sides, the neurosurgeons and the neurologists, to be able to communicate in the same language. So that really provides a platform. And this is our -- we're already on the third-generation platform. We've been in the market since after Europe for 7 years, and we're already innovating at a very fast pace in a third-generation platform, and we'll continue to innovate at that pace. And then a lot -- because of the platform and the flexibility that we have built and the directionality we're able to provide, all of a sudden now, you're looking at this as a platform and able to go and touch the targets that previously were inaccessible because you are trying to maximize the benefit and minimize the side effects, and that is one of the most critical things in this. So we are in clinical work and investments we've made through in Alzheimer's. We already have a pivotal study ongoing through the investment and also an early work going on in stroke rehabilitation, depression. Those are huge markets and clearly unmet need. Right now, there are no other therapies available, including on the pharma, there are also challenges. On the market size and the market that we play in right now, $3.6 billion growing at about 8% to 10% over '19 to '22. So we feel that this is a fast-growing pace and will continue to do so. Overall, you've seen this slide in summer when we had the Investor Day. Spinal Cord Stim last year was -- 2019 was a soft market. We saw very much a flat or negative growth. We see this market starting to return to growth going into this year. On the RF ablation, it's a 10% market growth and we see this continue to expand. And Vertiflex is completely untapped market. We're touching less than 1% of the patient. If you look at about 6 million patients with moderate lumbar stenosis, about 1.7 million addressable market. And we have only just started to scratch the surface. When you combine those 3 things, you're looking at a mix of therapy options you're providing to the pain physicians when they look at how to intervene and how to provide long-term outcomes and best outcomes for the patient. On the DBS side for movement disorder, 10% market growth, almost 1.2 million patients in Parkinson's. And Milad Girgis is going to talk in a little more detail about the platform and the flexibility and the feature sets that we have. But also we look at what we are building is for the future, not just for Parkinson's platform, giving a tremendous amount of flexibility in technology for indication expansion to the point we sometimes have to say no because there's so much of interest in what this technology platform can do when you look at all the different targets that people have always wanted to touch in the last 25 years. So we see this as a growth platform and very excited about the culture that we have and particularly the pace of innovation combined with clinical outcomes. With that, I'm going to turn over to Jesse Feinkind to walk you through the pain therapies. And after that will be Milad Girgis.

Thanks, Maulik. Good morning, everybody. So the big challenge with pain is that there's no instruction manual. There's nothing that tells a physician really how best -- what's the main pain generator that a patient walks in. Patients are different. Pain is complex. And so the beauty of our category leadership portfolio is we have products to address the major pain generators that our physicians are facing each day. So the first one for chronic neuropathic pain, we have our Spectra WaveWriter device, we have our Montage full-body MRI device and we have our Novi Primary Cell device. For pain patients that have a pain generator of severe joint pain, we have our Cosman RF device. And then for patients that have moderate lumbar stenosis, we have our Vertiflex procedure. So what a pain physician is going to do is figure out what's the major pain generator that they want to treat. And so if the major pain generator they want to treat is lumbar spinal stenosis, they're going to go to Vertiflex. However, over time, a patient may actually generate a secondary pain generator. And then they might want to treat with, let's say, SCS. And there might be patients that actually present with multiple pain generators. Our holistic category leadership portfolio allows physicians to treat their main pain generator today and in the future as new pain generators emerge. So it's really allowing physicians to create an action plan for patients and allow them to treat over the full pain continuum. We're also proud that we're collecting data, really proving the therapy on all our different devices, SCS, RF and Vertiflex. And the one study I want to point out is actually our SOLIS study, which is our nonsurgical back study, which will start enrolling in the second half of this year. The nonsurgical back market could be huge, probably could be larger actually, double the SCS market of today. So we're very excited to initiate that in the second half of this year. If we move to Vertiflex, Vertiflex has exceeded our expectations. Physician excitement continues to build. And the reason excitement continues to build is the Vertiflex procedure fills a critical gap today. There are many patients with moderate to mild stenosis that really aren't ready for surgery. There's an aging population, a lot of comorbidities, where really they're not surgical candidates. And what Vertiflex allows our pain physicians to do is to treat those core patients. It's backed by incredible 5-year level 1 RCT data. And the one data point I'll point out is the 85% decrease in opioids, which is really unheard of in the space. We are rolling out real-world data. The real-world data matches the RCT data. It was exciting. And one of the things that we're really looking forward to continuing to collect in the real world is patients that are actually treated with both therapies, both Vertiflex and SCS, because they're both neuropathic and mechanical pain or stenotic pain. If we move on to SCS, our strategy in SCS has been consistent for years, where to get the best outcomes you have to personalize therapy. But to personalize therapy, you have to understand a broad knowledge base of the therapy. So a number of years ago, we started the PROCO RCT -- actually, back in '13, we started the PROCO RCT. It's a double-blinded RCT to answer a critical question, is rate important to pain relief? And what PROCO looked at is looked at rates from 10,000 to 1,000. And what we found is rate is not important to pain relief. What is important is understanding the neural dose. So then we looked at, hey, if you understand the neural dose, can you actually dose and get effective pain relief below 1,000, which then we initiated the HALO study. So HALO study looked at rates from 1,000 all the way down to 10 hertz. And so we understand how to dose for effective pain relief over the spectrum of 10,000 hertz all the way down to 10 hertz. And it's all about understanding the neural dose and making sure you're providing the best -- the right parameters to the patient. The HALO study was actually run on our proprietary Contour algorithm, Contour therapy. The Contour therapy was created after looking at over 20 different mechanisms, 20 different targets. We prioritize targets directly in the dorsal horn. So the Contour therapy directly activates targets in the dorsal horn, and it's a very large field. So targeting of that sweep perception target is actually incredibly easy. With the Contour field, and if we dose at 200 hertz, you can actually provide almost 90% less energy than 10,000 hertz, than 10,000, and the pain relief that we see, the 2.5, is fantastic. That neural dosing knowledge went into the COMBO RCT that Maulik talked about. And the COMBO RCT, there's more data that we're going to release at NANS at our lunch symposium. But the COMBO RCT looked at the Contour algorithm, the Contour therapy combined with paresthesia in the COMBO therapy arm and then match that with the other arm, which is paresthesia monotherapy. And what we had is 88% response -- responder rate in the COMBO therapy arm, which is fantastic, really industry-leading responder rates. And then the other interesting thing is we also looked at not only responder rates, we looked at disability improvement, we looked at global impression of change of the patient and we looked at satisfaction. And 54% of patients in the COMBO therapy arm actually met all 4 of those criteria: clinical success in responder rate; clinical success in disability; clinical success in global impression of change; clinical success in satisfaction. And 98% of patients in the COMBO therapy arm actually hit clinical success in at least one or more of those categories. So again, we'll do a deeper dive at our lunch symposium. The other exciting thing is this is RCT data. For the last 2 years, we've been collecting real-world data on the COMBO RCT, and we know how important it is for the real-world data to match the RCT data. Again, our real-world data is showing about 26% of patients. It's 312 patients, 26% of patients actually have -- are pain-free, have a 0 pain score. Over 2/3 are between 2 and 0. So what you want to see is real-world data matching RCT results. The information on neural dosing, the Contour algorithm and our combination therapy has gone into 2 launches that we're launching here at NANS, our SIMPLIFY METHOD and mySCS. And we're really trying to go after 3 main challenges of our customers. First of all, what therapy are they going to start with? If the first therapy that they start with doesn't work, what's the treatment algorithm to make sure they have a success during a trial? And then if they have a good candidate and often, SCS is a therapy of last resort, what happens when the patient goes home and fails, what do they do? And so what we're launching for the physician, we have the SIMPLIFY METHOD, which simplifies the process of evaluating therapy in a trial. And the SIMPLIFY METHOD also includes a full upgraded portfolio. So we've upgraded our MRI device -- our full-body MRI device. We've upgraded our Primary Cell device to all deliver the Contour therapy. So now our full portfolio can go after multiple mechanisms, hitting multiple targets with multiple modalities for the physician. For the patient, we can connect with the patient in a trial in real-time so we can understand how the patient is doing in real-time. And if they're not doing well in the trial, we can proactively intervene. And so patients with mySCS have actually increased their trial success rate over 90%. And then we have a poster of this data that we're also posting at NANS as well. So how does combination therapy work? So combination therapy works by -- you have paresthesia. So you're in the patient -- the patient is in the physician's office and they get 2 modalities simultaneously. They get paresthesia, which takes instant effect. They also get the Contour therapy which washes in over time. All subperception therapy in the industry can take 1 to 2 days to take effect. Once both of these therapies wash in, you have this combined effect, which is what's shown in the real-world data, which is what's shown in the RCT data with the responder rate and the functional improvement. But the challenge with subperception across the board and the whole industry is the patients in the physician's office, they leave in pain, right, because it takes 1 to 2 days to take effect. And if that first therapy that's applied doesn't take effect, they could take 1 or 2 other days to apply a different subperception therapy. So the patient's not confident. They don't know that the therapy is going to take effect. The physician is not 100% confident. They don't know that the therapy is going to take effect. So our groundbreaking research and all the knowledge in neural dosing created -- came up with FAST, Fast Acting Subperception Therapy. And so what that is, is it's therapy while the patient is in the office, subperception therapy takes immediate effect. So if you've probably seen pictures of Parkinson's patients with deep brain stimulation where you turn it on and the patient stops the tremors and starts movement, it's very similar to that. It's instantaneous effect of subperception therapy while the patient is in the physician's office, giving the patient and physician confidence that, that therapy is going to work. The initial pain relief that we're seeing is outstanding, below 2s. We've been talking about the complexity of pain. And the irony is pain is so complex, but it's judged on a 10-point scale with smiley faces, right? It's a very subjective measure. And there's no objectivity to it. There's no biomarker. And so what we've done is we've partnered with IBM Research. IBM Research is the team that actually created the Watson, the system. We partnered with IBM Research to really study this, how do you create objective measures of pain. And so we have a large study that's going on. It's going to be up to 1,700 patients. It's going to be up to 30 sites. We're looking at up to 15 different objective measures to really understand what's important when you're looking at a pain patient, with the goal to create objective measures to take something out of a smiley face scale and make it more objective, but also to use AI to create predictive algorithms. We want to be able to predict response to therapy. We want to be able to predict longevity of therapy. And then depending on if a patient is not doing well, we want to be able to intervene and make sure they're doing well from that standpoint. So what we're doing is creating predictive therapy to provide deep personalization for patients. And so to wrap it up before I turn it over to Milad, what we're doing from the SCS side is, today, we're very excited with the SIMPLIFY METHOD. It has an upgraded portfolio that allows our entire portfolio to have Contour. We have the COMBO RCT with 88% responder rate. We have mySCS. It takes trial success over 90%. And then as we look to the future, we have transformative therapy in FAST, which takes subperception therapy and makes it instantaneously effective for patients. And then we have our partnership with IBM that we're excited about. So with that, I will turn it over to Milad Girgis, who is the head of our brain franchise.

Thanks, Jesse. I just celebrated my 15th year with the company last year. And just seeing the technology that's emerging to treat patients and to change patients' lives is just incredible to see. I'd like to share with you our journey on deep brain stimulation and brain modulation. Tomorrow actually marks our 1-year anniversary receiving our FDA approval in the United States for our Vercise system with our Cartesia Lead, our directional lead. So we're coming off 1 year there, celebrating our journey, and I'll share with you in a couple of slides how that's gone. Like Maulik shared, this therapy in Parkinson's disease, there are 1 million patients in the U.S. alone that have Parkinson's. And you've seen some of these slides probably before. Of those 1 million patients, 60,000 are newly diagnosed. 240,000 of those patients should receive deep brain stimulation therapy, but they don't. Again, the numbers, you can look them up. Numbers are about 12,000 new implants a year, only about 5% penetration. And half of those implants are replacements, so patients are getting replacement devices every 3 to 4 years. And so only 1 in 20 patients who should be receiving the therapy are actually receiving it. The patients on the right-hand side are in a continuum of care. They're in primary care practitioners. They're seeing general neurologists. Nurses are doing the programming, and the programming today is blind. That's the world we entered. The programming occurs by playing almost Battleship. They're looking at a patient. They don't know really what's happening. They try, turn on a contact, turn off a contact. And that was the paradigm because of the technology that had come, coming from pacemaker technology. And so we, again, part of our culture, we look to improve outcomes for patients and look to transform this therapy. So we've been on this journey for a little over 7 years. We started in 2013 in Europe. That was our first-generation system called Vercise. And back then, when we started, we had -- we came out with 8 contacts and we came out with a rechargeable system, and many thought we were crazy. Many wonder why -- "What am I going to do with this?" And what they saw is the power of what we call multi-independent current control, the ability to use the technology to deliver the right dose of stimulation to the right neurons at the right time to be able to achieve those outcomes. And then slowly, that started changing the paradigm. The other thing was not having patients have surgery over and over and over that would open them up to infections. And as you can see, it started taking off. In 2015, we pioneered and were the first in the world to release directional capability. We released that in Europe in the fall of 2015. So it wasn't just about now the structure in the brain. That structure that's the size of a Tic Tac has 3 substructures. And clinicians wanted to be able to steer almost like a lighthouse to stimulate the right region for motor improvement while allowing patients to speak. And that was some of the challenges in the past. We'll show you a little bit of what that means. We entered the U.S. in 2018. You can see some of the inflection there in our trajectory. And last year was an incredible year, where we saw -- you'll see some of the numbers, I guess, when we release earnings, but you can see in the charts, now treating over 10,000 patients globally. We're the world leader and the gold standard now of directional stimulation. We pioneered it. We're the leader in that. And all of this has been backed on our 3 years of innovation and randomized controlled studies and real-world data. So as I've been sharing, we've built building blocks from left to right on this graph. It shows those building blocks of our first-generation system with the foundation again coming from this current base stimulation that's stable. That, again, when you set stimulation, it stays where it is because as impedances change in the brain, again, the device compensates for that, bringing directionality. And the innovation that we're most excited about is bringing visualization. This is the chart on the right-hand side, this image, something we called STIMVIEW XT. Maulik mentioned our partnership with Brainlab. Brainlab is one of the world leaders in imaging and image processing, finding those locations in the brain using an MRI. So what we have done, we actually released this system in Europe in the fourth quarter of last year. And what this does for neurologists is it shows the personalized patient MRI, shows the structure and shows them where the lead is and the stimulation field. So now what was occurring in a blinded fashion playing Battleship is now visible, so that the neurologist or nurse on their patient programmer -- or their clinical programmer can actually superimpose those images and get to the right location. And they're seeing outcomes based on that. We're seeing patients who are walking fine, and we can turn -- get stimulation so they can walk. And then with a few clicks, a few movements of the electricity, now they can speak and they have no side effects. This is all backed by 25-plus clinical studies, randomized controlled studies and also studies in real world and nonsponsored studies. Physicians are doing their own studies, seeing again the power of this technology. We're going to be bringing additional platforms that will revolutionize in the next coming years to be able to again bring better connectivity and better personalization to patients. So look at a few of these again, foundational studies, again just to ground us on where we came from. On the left-hand side is a picture of our VANTAGE study. This was our first European pivotal study, is across 40 patients. And in that, we saw a 62% improvement in motor outcomes. If you look at the literature, standard outcomes are in the 30s. So this is nearly double the outcome of other studies. This was our first study there, and it's the best study that's shown these types of outcomes for DBS for Parkinson's disease. This was published in Lancet Neurology. You can also look at some of the data behind this. 70% of the programs in this study use the power of our technology. And we believe this is why, again, they achieve these types of results. On the right-hand side, the INTREPID U.S. randomized controlled study. This was the only double-blind, randomized, sham-controlled study in DBS. And again, it's hard to compare across different studies because of different designs. But again, 6 hours of on time improvement. This was with our first-generation system again. That's 20% to 50% better than the legacy systems. And what that means for a patient, that means a patient can go back to work. That means a patient has better -- again, 6 hours of better time during the waking hours to be able to handle their daily living. So this shows our ecosystem today. The Vercise therapy, again, providing to neurosurgeons -- the idea is linking neurosurgeons and neurologists. And so on the left-hand side, our partnership with Brainlab allows us to give neurosurgeons the best tools that are available so they can see brain fibers. They can see these substructures. And they can again identify the right location to stimulate. And then directionality becoming the gold standard. It truly is being able to fine-tune stimulation and it's about location, location, location because the brain isn't a rigid structure. The brain is dynamic, and it's surrounded by fluid so that we don't get concussions whenever we just walk. So whenever the surgeon will try to place a lead, but often, it's not -- it doesn't end up where they thought. So again, being able, with the stimulation, to bring it back and stimulate those right structures are vital. And then the idea is to wrap this all up with smart programming. In our software, we capture effects and side effects so that we can again better inform the therapy. And so this is our vision. Our vision that's happening now is to bring this all together with informatics, patient-specific information around side effects, around effects, around lead locations, bringing these into basically a cloud-based solution that aggregates data across patients and across centers. So now the idea is that we can take a nonexpert center and they can compare their results with expert centers so that the therapy can grow from the niche and from the academic to the mainstream. And we believe, by bringing these systems together, bringing a holistic approach to therapy that this can truly happen. And like Maulik shared, this really becomes the platform to unlock new indications. $8 billion of potential market that's there. But it's not just market of patients, it's patients with debilitating diseases, like Alzheimer's, who have really no choice today, mild Alzheimer's disease. There was a Phase I study that was completed and through our partnership with a company called FNMI (sic) [ FNM ], they're engaged today in actually a pivotal ID, randomized study, looking at using deep brain stimulation, using our system to be able to treat patients who have mild Alzheimer's disease. This study is enrolling, 15 centers around the world across the United States, Canada and Germany. And again, this will be ongoing to research this indication. Also through partnership with Cleveland Clinic and a company called Enspire, we're -- again, using our technology today, they came to us for our technology to look at DBS for post-stroke rehabilitation. Again, something that's completely debilitating for patients where there really aren't any other solutions. We're looking also at physicians who are using this for depression, for OCD. And the opportunities are incredibly before us to change the lives of many more tens of thousands of patients in this space. So Maulik, I'll turn it back over to you.

Just in conclusion, as you saw, you can see the excitement we have for the platforms that we have built, especially in the treatment of pain, focusing more holistically on the category leadership and then providing a set of toolbox. But each one of those has to have innovation backed by clinical data to be able to provide some of the best outcomes. So you're providing that to the physician where they can look at the patient individually and figure out what is the best therapy algorithms as well as when to use what. The second thing on the brain side, you can see the innovation taking place and the pace at which we are moving forward and to be able to provide more a system solution where you're able to provide the same language that the neurosurgeon and the neurologist is able to talk, plan much better in terms of how they're going to approach the surgery as well as how they're going to be able to treat the patient. And all that leads to really looking at new indications and really accelerating the innovation taking place in this space, not just from a product side, from the patient outcome and touching new population. So really excited about this space and we believe that this is a -- continue to be one of the most highly underpenetrated and high-growth market going forward. Thank you.

And now we'll take questions. Can I steal a handheld, if I may? Great. Thank you. Sure. Go ahead. David, you want to start?

It's David Lewis, Morgan Stanley. Just a few for me here. Maulik, just the one thing that was conspicuously absent, just market growth for SCS. What do you think market growth is going to be in the next 12 months? And I guess coming to this conference and looking at 3 different randomized data sets coming out between -- we've got Omnia with PDN. We've got COMBO. We've got Stimgenics data. So just market growth in SCS, what you're seeing in those market trends and how you think about the Boston relative share position in 2020.

So I'll answer it from last to first. I think we saw continued progression and momentum from Q3 to Q4, as Mike mentioned, at the JPM. And we see the growth -- returning growth, especially with a lot of the new technology coming in, new platforms, new clinical data coming out. When you go and talk to the physician, clear excitement in the therapy options that they're able to provide. So we see that as a positive in this year. And I think we'll have to wait and see what's -- at what pace the momentum takes place. So that's about the best way I can answer to you.

So is 5% to 8% a decent way of thinking about it?

I think we'll have to see. So everyone has been wrong last year. So -- but what you're starting to see in every aspect, everyone is starting to see the momentum taking place. And trials are up. The overall implant rates are up, all those things pointing to the right direction going forward.

Are your implants in that 5% to 8% range?

So in Q3 to Q4, we saw continued increase.

Okay. And then is your share position flat, up or down this year?

I think that we'll have to see -- we have to see all the numbers coming out so we'll be able to identify, but we continue to see the growth for the business.

And then Vertiflex, Maulik, didn't get a lot of attention in the presentation. What trends did you see in Vertiflex into the back half of 2019? And then given the reimbursement change, how should we think about the relative impact to reimbursement and how do you feel about getting a change in that reimbursement heading into '21?

Right. So one of the reasons we saw the change in reimbursement actually was one of the hospitals had coded the data incorrectly and not including some of the procedure expenses. So that's the reason when the CMS pulls the data, it turned out to be inaccurate in terms of -- so that has been corrected and they've communicated that to CMS. So we expect to see that hopefully corrected going forward. But at the same time, the therapy is so highly underpenetrated. Number of physicians that are implanting are very limited. We see a large expansion of training and physician education going forward, especially into this -- in 2020. We saw the momentum continued in 2019 and we see that going forward, a strong momentum. There's a little bit of a bump in December maybe because people wanting to have some of the surgery done early. But when you look at the actual implanting base and the number of physicians that have actually been trained and implanting is very limited. So the potential is very huge.

Just one quick technical question on the COMBO trial. You start with paresthesia-based stimulation and then you kind of morph into subperception-based stimulation with Contour. What is the rate of stimulation for subperception once kind of Contour takes over? I wasn't clear what the average rate patients are being stimulated in to get the subperception results.

So in the COMBO therapy arm, actually, patients were simultaneously given paresthesia and Contour, so it -- they're given at the same time. And then the rate is -- there's a few rates that we were given -- that we can give in the COMBO therapy arm. Yes, yes.

It's Vegas, just ACCELERATE update, can you give an update on ACCELERATE trial?

ACCELERATE, I think that we had a successful trial. And the outcomes, we met the primary endpoint. And we'll be talking about the release -- talking about the data later this year. And at the same time, what we have seen, especially what you saw from Jesse's presentation, we've seen some of the outcomes are no longer really relevant to the frequency. So we're starting to see that frequency becomes the least important. It's more about how do you really dose and get the outcomes for the patient. So with the data that we have in front of us, we will see which direction we take.

Jesse, just to go back to you. One second, Larry. Can you just talk a bit more -- it's the difference between delivering both waveforms at the same time versus alternating that?

Versus cycling?

Yes, if you could go into that.

So I think from a technical standpoint is, it's very different to cycle 2 waveforms on for a few seconds, off for a few, on for a few seconds. What combination therapy does, which is unique, is it actually is delivering 2 different modalities at the same time interspacing -- interspaced in the pulses. So the technology around combination therapy is proprietary, and it's different, very different than cycling 2 different therapies at the same time.

And 2 different therapy targeting 2 different mechanisms at the same time. So you're really creating this combined effect that you don't see anywhere else.

And that's what's...

That's the reason we see the outcomes we've seen.

Right. Okay. Thank you. Larry, thanks for your patience.

No problem. Larry Biegelsen, Wells Fargo. Neuromodulation, overall, Maulik, I'll just follow up a little bit on David's earlier questions. But Neuromod grew about 7% organically for you guys in 2019. SCS was down slightly. But DBS, I think, grew about 80% by our math. You also have Vertiflex becoming organic in the second half of 2020. So my question is, how do you see overall Boston Scientific Neuromod growth in 2020 relative to 2019? And any color on the components, particularly the strength in DBS?

Right. I think that we will continue to see the strength in DBS just based on the platform we have and what the -- the clinical data is coming out and the outcomes that physicians are seeing because it's only been 1 year since we launched the platform, the full platform, and we got the MRI conditionality approved about 6 months ago.

Yes, in the summer.

So you're looking at a very new platform coming out. And we will continue to see that momentum going forward. On top of that, with Vertiflex, we'll be accelerating our investment, making sure that the number of physicians that are being trained, implanting physician and also the in-center usage as physicians get more and more comfortable with the procedure, they're going to see more and more patients that are going to be treated with Vertiflex. So those 2 will be driving a heavy amount of growth going into 2020. And then as SCS comes and returns to growth, we see this to be a decent year.

Better 2020 than 2019?

Larry, we'll give guidance on February 5, thank you, and not by business.

All right. I guess maybe I'll ask you on the PDN data from Nevro that we're going to see. Assuming that data is positive, and I don't know if you have a different view, but how do you see that impacting the market? Is that going to be proprietary to HF10? Do you think everybody will benefit?

I think that we'll see when the data comes out, but our focus has been, as Jesse mentioned, talk about nonsurgical back patients because, to us, that really is the ideal next step in continuing to move the treatment algorithm up on the patients that are currently being treated with SCS. So that's where our focus has been.

So no comment on whether you think it will help the market or not.

Overall, that's always a good thing when you kind of continue to expand the therapy and then the physicians have more options, but we'll have to see.

We'll go to Matt and then Chris.

Matt Miksic from Crédit Suisse. So one follow-up for Jesse or Maulik on the comments you made about personalization and AI, which maybe a few years ago sounded like something that was further out, but seems to be kind of moving faster than some of the other specialties we cover. And I just would love to get some color on sort of time lines for seeing something either on pilot or commercialization or -- and then I have one follow-up.

So I'll talk briefly about. We've been at this for almost 3 years. And actually, we've collected about 42,000 days of patient data. That is going behind the signs that you're seeing. This is where you're seeing is some of the work that was done early work, and you'll see more and more work coming out as we go forward. We're very excited about this because you are able to now -- pain is something you can't see. It's the fifth vital sign, but it's not -- doesn't have a clear biomarker. And the patient walking into the physician clinic, they're not looking and saying, "Let me see what your smiley face is or one single biomarker." They look at them holistically. So if you're able to provide that type of set of tools, where you're looking at all aspects of functionality, emotional status and to be able to manage the patient for that particular patient, for that particular day at that particular time, you will see a tremendous impact on the therapy outcomes. So I'll let Jesse add to that.

Yes. And just because we've been at it for 3 years, actually, initial data is actually being released now. And throughout 2020, we'll release more data. So for us, it's not the Star Wars vision. It's a near-term reality.

And sort of commercialization and how do you think about sort of, I guess, the commercial model or the result on your business?

Overall, everything has to depend on the outcomes that you see in the patient. So it has to match with the outcomes, just the story is not good enough. So we continue to focus on saying, is it backed by clinical data? Can you get the outcomes that you will be able to provide longevity of the therapy and then predictiveness as we go forward? So we're very excited about how we see this combining, especially once we get the basic science and fundamental blocks of the mechanism of action, understanding of different mechanisms, how do you apply that to patient and then you combine that with this, you really have a winning combination.

And just a slight insight with mySCS, right, connecting with patients, understanding how patients are doing. mySCS showed trial success over 90%. That's just the tip of the iceberg when you really understand patients and proactively intervene when needed.

That's great. And then the follow-up on some of the partnership around Enspire with stroke rehabilitation. I was wondering if there is application or what your plans are for sort of addressing the progression of gait in some of these other side, Parkinson's patients, but same kind of rehabilitation needs.

So there's ongoing work all the time for furthering the therapy. So physicians every day are looking around the programming modalities, their locations in the brain around the targets, which ones to stimulate, how to stimulate. So definitely, how to do that. There's other -- I'm not sure if you're referring to any particular study in that regard or...

No. It was mostly just the use of the partnership with Enspire around stroke rehab and its applications to sort of -- to addressing the issue, progressive issue of gait in some of these Parkinson's patients.

They're separate. So in a stroke rehab, it's purely for just the post stroke, whether it's regaining arm movements or -- so it's separate things and separate targets in the brain. They're looking at a dentate nucleus. It's cerebellar stimulation for the stroke side.

Chris?

Chris Pasquale at Guggenheim. A couple of questions for Milad. The DBS market seemed like it picked up a little bit in 2019, maybe 10% growth had been, maybe mid-single digits the prior couple of years. But given how underpenetrated it is, why isn't it growing much faster? And are there things that Boston Scientific can do beyond just rolling out new technology? Is there a problem -- you showed that flow chart of all the referral pathway and the management pathway for these patients, is there a disconnect there? Is there some market development work that Boston can do to get this market stimulated more?

Right. So for sure, we think this market is at an inflection. It used to be a monopoly over the last 3 years. There's more just people out there. And for sure, because of the outcomes of our therapy, because of the outcomes of the technology, there are better patient stories that are emerging. And what we're doing with those patient stories is then going to the advisory groups, getting -- it's on the ground, informing patients, working with the patient societies and then getting, again, more information that this therapy could be different. And then showing -- again, the results of the clinical studies is the 62% improvement, these stories of patients who can now speak and not have slurred speech because of stimulation. And we're taking those to, again, patient groups, societies and getting that information on the ground.

And I think the other piece, the major piece is to be able to have the neurosurgeons and neurologists to be able to speak the same language, to be able to identify and plan ahead of time what target they're going after, how you're going to see the simulation of the brain structure wasn't there before. And the neurologists would be like writing down notes and then say, "Come back after 2 months. I've turned on this contact." Those things are going to really change and transform how efficiently they're able to manage the patient flow and allowing more patients to come through as well.

Okay. And then just looking for more information on the pilot work in Alzheimer's. When could we start to see some of that data? Can you tell us anything about the anatomical target and the mechanism of action that's being used?

So the study is ongoing. The target is fornix stimulation. So there was a first study that was conducted by the primary investigator, Dr. Andres Lozano. So the idea is they're going to stimulate this target called the fornix. Using our directional lead, what they want to do is, again, target stimulation towards that structure in the brain. And again, the idea is to slow down the progression of the disease. And it's for mild Alzheimer's patients over 65 years.

Do you have timing on pilot data?

So the first 42-patient study data was done, and this is now what's led to the pivotal that's ongoing right now. So it's enrolling, these 15 centers around the world. So we're going to enroll -- they're going to enroll that study and we'll monitor that over the next coming years.

Other questions in the room? I know there's one from the webcast asking about SIMPLIFY METHOD and sort of timing and nature of the rollout, physician training, et cetera? It's from Rick Wise at Stifel.

Yes. The SIMPLIFY METHOD, which, again, is our way for physicians to really easily evaluate therapy of patients in the trial and then our full upgraded portfolio, that's being rolled out right now. And so reps and physicians are being trained on it starting this year and throughout the year.

Great. Yes? Then we'll go to Josh. Go ahead, Larry, you can use that one.

Maulik, 2 for you. Just one on new technology in SCS. So thoughts on external stim devices, closed loop and DTM. Is DTM proprietary? And I have one more for you.

You're talking about Stimgenics.

Yes, Stimgenics, external. There's a bunch of them by now -- approved now and then closed loop.

I mean they're presenting the data. I mean it's interesting data. I think that time will tell. It's still very early. It's only 3 months. And sometimes, what we have seen in the last 5 years of our experience is that every new waveform has shown great results. But now the frame of reference has moved to longevity of the therapy, not just can you get the pain relief or not. So that's what is really going to be important. On the external stim, I think it's going to be a question of form factor, usability for the patients and can you really provide that because at the end of the day, the patient has to live with it. And so as you see that improvement and combine -- it has to combine with outcomes, then that's where we will see that much more accepted by the patient because it's very different than just having an implanted product.

The -- and then closed loop, sorry.

On the closed loop, so you're talking about...

Like Saluda.

Saluda.

They've said publicly they're doing closed loop as well.

Yes. I mean, I think that the -- there's a lot of work that is going on. And this tells us that, that is an important factor. The question always is when you have a closed loop, what are you measuring? And is it really reflecting the actual pain relief for the patient and are you able to measure it in a way and to be able to provide therapy over time? So the work that we've done with IBM Research in the last 3 years really gives us a lot better insight. And we want to be able to look at much more holistically, especially when pain is so complex. There are like 20 different mechanisms, so you just focusing on one thing is going to be really risky in terms of the longevity of the therapy. You may get great results, but then are you able to address different conditions as the pain evolves for the patients?

Maulik, just lastly for me. On the Vertiflex reimbursement, for those of us who aren't familiar, could you tell us what exactly is happening and why you expect it to kind of be correct?

Yes, I mean, hopefully, it will. I mean, what -- as I mentioned, there was incorrect coding that was done probably by one of the institutions, and that resulted in some of the numbers that rolled up. But the implanting base is so small. And as we look at the new physicians that are getting trained, they are very excited about the therapy option and the outcomes and the data that you see is providing. So overall, we don't see that as an impediment going forward for the therapy and therapy acceptance.

Maulik, can you talk a little about cross-fertilization between sort of legacy BSC docs with SCS and the introductions there a little bit?

Yes. I mean, so we see that combining the -- what is impressive is that the way the education and treatment protocols that were set up for Vertiflex and the amount of rigorous training that need to go through, 2 things. One is you want to make sure that outcomes are really good and understanding how to select the patients. Those 2 things really results in some of the solid data sets that we see. And as we see this combining with expanded physicians who have the good technique, have the ability to identify the right patient, we see this expanding. And as Jesse mentioned, we're starting to see some of the SCS patients over time who have not really -- the therapy is becoming not as effective. They have been able to combine that with Vertiflex, and you're really providing a longevity of the therapy because it is a mechanical element that you may not be able to answer with neuropathic pain, have 2 different pathways. And same thing with Vertiflex patient saying, okay. Well, we've taken care of this aspect of the pain generator that Jesse mentioned. And now we're able to add one more element and saying, I can take care of the neuropathic pain as well. So we see this continue to expand and really becoming an integral part of how pain is approached over time.

And just to follow up, if you look at both the businesses of Vertiflex procedure and SCS, there's lot of commonalities. Both are really underpenetrated markets, right? So really, we're focused on awareness of therapy for both. We're focused on education of patients of both and working on access of care. And so there's a lot of field marketing, commercial strategies that are synergistic over both therapies. At the end of the day, it's patient identification and making sure that patient has access to care.

Just if I may if we have time. Just any updated thoughts on why the SCS market slowed? I mean it's something that companies have even acknowledged, like we're just not sure. We've heard Vertiflex might be hurting SCS implants vis-à-vis medical marijuana. I don't know if you have any updated thoughts.

We've looked at every aspect of different market research. Well, you see one thing very clearly, the physicians remain excited about the SCS therapy. There is not -- they don't question that the outcomes have been very, very good. I think that there were some questions around in the earlier part of the year about the challenges in terms of the reimbursement, getting the preauthorization, all those things and also maybe lack of new technology coming in, new clinical data because when you look at actually physicians, a lot of them don't implant this 2 or 3 times a day. They do it once a week. So when you go and ask them, it's almost like a presence of mind and that -- having that focus on the therapy with a lot of the new information coming in with platforms and data, I think, is going to change the mindset going forward.

Dr. Jennings?

Josh Jennings from Cowen. Just a question on the data accrual. Industry has obviously done a fantastic job of delivering on acute efficacy. And just wondering if, I mean, there's a lot of clinical trial data that's out there, I think it's maybe hard to differentiate platform to platform because of no head-to-head trials per se on the latest generation technologies. Is there an opportunity to deliver on durability of efficacy and long-term effect and differentiate yourself down the line?

I think so. I mean, what you see is that we worked on both fronts. One is understanding the mechanism so that it gives us a much better insight into saying, one thing is not going to be the answer, so you want to be able to have multiple options so you don't develop tolerance, you're able to hit the different targets. And that's the work that was done with HALO, the work that was done with PROCO, all that. Also, the WHISPER RCT we did where we had patients already in, like, how many years of pain?

Over 5.

Over 5 years in pain and then able to increase the longevity of the therapy just by adding personalization and adding multiple mechanism. So we see that continuing. And then when you combine those things, you really are -- will be able to see durability. And to me, that's really one of the most important factor going forward. How do you -- instead of just the last option, how do you make this a first-line therapy? You have to not just have pain relief, but you have to have the longevity of the therapy as well.

And just to follow up on Larry's question as well on just market headwinds. I mean, could these platforms, I know it's very early with multiwaveform options and the whole neuroplasticity phenomenon. Could they be impacting any replacement cycle tailwinds that have been playing in the industry historically or is that just not...

Well, for us, we have never focused on replacement as a revenue stream. There may be others that have done that because this is a highly underpenetrated market. And what you want to be able to do is, can you get the maximum pain relief, can you get the longevity of the therapy versus focusing on replacement, which kind of goes opposite to the longevity of the therapy. And that's really important because the more you do that, the more it becomes an acceptable therapy instead of just saying, oh, by the way, let me just try this.

And I did want to follow up. I think longevity of therapy is really critically important when you deal with SCS therapies. And so we have our RELIEF registry, which is a very large multicenter registry that had explant rates at just over 1%, right, so I think for inadequate therapy. So we've always looked at longevity of therapy. As Maulik mentioned, we've got a subperception labeling based on the WHISPER RCT, which looked at existing implanted patients and say, can you recover therapy if you give them options to other therapies? And we show that you can get superior outcomes if you provide options to give patients the best relief. So longevity of therapy is sort of core to all of our technology.

Jason?

Jason Mills, Canaccord Genuity. So thinking longer term and getting away from SCS for a second, talk about neuromodulation, basic science, literature seemingly has accelerated over the last 4, 5 years. There's a lot of it and various targets, right? We've seen some evidence of positive commercialization success in areas like sacral and others. And there are a lot of study going on in various targets, whether it be drug markets like rheumatoid arthritis, which, if any, of these sort of longer-term targets does Boston Scientific think is attractive, promising? And do you expect that you will be developing technologies if you do see promising? Will this come internally or do you expect it will be a combination of internal investment and M&A?

A combination of. First, to answer that, they're a combination of internal work as well as investments externally and M&A, for sure. But I think that one thing that we have learned is that what you saw in the HALO study is, for the first time, we're understanding how to dose with electricity and creating truly a dose response curve similar to how you do drug. The more we understand it, then going after other targets becomes meaningful because otherwise you may have a lot of omission of data and you won't be able to tell the difference or you may miss out on the true effectiveness of the therapy. So those 2 have to come together for us as we go forward.

Are you willing to say which certain neuromodulation targets are most promising in your mind long term at this point in time?

I think that there are a number of targets. So it's almost like if you add up the space, there's like $30-plus billion of targets and everything from sleep apnea to rheumatoid arthritis inflammation to sacral nerves. There's like so many different targets that you can look at. And the question is going to be, can you get to the right way of stimulating? Can you get the outcomes that you're looking for? And is there an unmet need? So those 3 things probably will drive a lot of this direction.

Quick one from the webcast. Can you hear me? Kristen Stewart from Barclays is asking about the RF modality. Is there a pipeline there? Can you just talk about sort of how that fits in? I know you touched on it, Jesse, but is there more to come there?

There is more to come, so there's a pipeline there. We're starting to collect real-world data and we're publishing on it. So as we talked about, we are investing from the clinical data and also from a portfolio for all of our therapies combined.

Right. Time for one more. If not -- go ahead, David, and then we'll wrap it up.

It's David Lewis, Morgan Stanley. Maulik, you were asked about closed-loop SCS. On closed-loop DBS, you've sort of been less specific. What are your thoughts on the efficacy of closed-loop DBS?

Do you want to talk about it?

So the way we would look at that is really then foundational. So like I was sharing, it's about location, location, location and the right waveform and really using directionality as the gold standard. And that's what we have today. And so that's what we believe really is delivering the outcomes today. The rest of it around the future and the capabilities, it's been great -- it's been interesting research for the last 10 years. But again, it's -- understand, there's no biomarker for Parkinson's disease. People are looking at beta rhythms or other things but where is really that biomarker to predict the disease? And so I've shared wherein we've seen in our technology where we can change speech or we can change, again, gait because we have different frequencies and such. So I think we're going to see where the science and the research goes. And we definitely have a rich pipeline. You've seen some of the work that Jesse has done on the SCS side and on the rich pipeline of further innovation in the future. So we're going to watch that and then develop accordingly.

It doesn't sound like you think closed loop is the answer for DBS.

We'll see where it goes in the future. And we're building again a broad modular capability that can get to patients based on the science.

All right. Great. Sorry, one last one. Go ahead. It's coming. She's right there.

You mentioned depression as one of the next indications for DBS. How do you think about DBS versus vagus nerve stimulation for depression clinically and then commercially?

So what we're doing, I can share the work that we're doing there, again, with our systems. It's out in Europe and it's work called stimulating the medial forebrain bundle. And that's work that's happening in Europe today. It's actually stimulating the fiber pathway. And again, it's part of why imaging is important, stimulating the right fibers that can be seen for that modality. So again, it's what we've seen out of depression work. And if you look at the literature, it's patient selection, it's patient modalities. They're all very important aspects. And again, we're going to look and see how that data comes out. So far, things look promising, but that study and that work has to continue. And we're going to again see where the clinical data leads.

Okay. Great. Maulik, Jesse, Milad, everyone here, thank you very, very much, really appreciate your interest and happy to take more questions offline. Thanks.

Thank you.

Thanks.