Axonics takes top spot on FT ranking of high-growth businesses

After Axonics, a newly established medical devices company, licensed the patents for a miniaturised “neuro-stimulator” in 2013, it sought the most profitable use for the technology.

Company co-founder Raymond Cohen, a serial entrepreneur with decades of experience in the industry, recalls: “We looked at all the clinical applications that existed for neuromodulation . . . and we decided that focusing on overactive bladder was really the way to go.”

The treatment works by implanting a small device just beneath the skin in the upper buttock, which emits mild electrical pulses that target the sacral nerves. This restores normal communication between the brain and the bladder and spares people the embarrassment of leaks.

The commercial logic of Axonics’ decision has proved unimpeachable. The company recorded a compound annual growth rate in 2017-20 of 855.1 per cent, taking 2020 revenues to $112mn. This extraordinary trajectory has placed the California-based business at the top of the latest FT-Statista ranking of the fastest-growing companies in the Americas.

This pie is so big that it doesn’t matter if more competition comes along; we’re not dealing with a limited opportunity here

An estimated 40mn adults suffer from an overactive bladder in the US alone. Yet Cohen explains that, until Axonics came along, this huge, largely untapped market was being serviced by just one monopoly player: Minneapolis-based Medtronic.

Conditions were ripe for a new entrant. Implantable devices to address urinary and faecal incontinence were already covered by health plans in both the US and Europe, ensuring treatment for both conditions would be reimbursed.

Moreover, the Axonics executives were not impressed with the technology then on offer to doctors and their long-suffering patients. Devices had to be replaced every few years and had to be removed if patients needed to undergo an MRI scan.

“There is no market in the world in medical devices where there’s over half a billion dollars of revenue with only one player. This was really a unicorn situation and we thought that we could innovate and bring new products to the market that met [physicians’] requirements,” Cohen says.

He has since made good on that belief, introducing a device that is MRI-compatible, which at 5 cubic centimetres is 60 per cent smaller than Medtronic’s original device and rechargeable — so it is guaranteed to last at least 15 years. This treats overactive bladder, faecal incontinence and urinary retention.

Travis Steed, a Bank of America analyst who covers Axonics, says a combination of a new, more attractive product and “really good customer service . . . allowed [the company] to take a 20 per cent share in three quarters. This was not a typical medical devices launch, it was atypical in terms of how quickly they took share in this market.”

Medtronic has also now come up with better and more user-friendly products but Steed reckons Axonics is still on track to expand its 25 per cent share of a market currently worth an overall total of around $700mn. Within three to five years, its value is likely to grow to between $1.5bn and $2bn, he says.

“We really see no reason why [Axonics] can’t get to 50 per cent share in the next three to five years,” he adds.

In 2021, 92 per cent of Axonics’ total company revenue was generated in the US, with the remainder from international markets.

Axonics’ extraordinary success, Steed suggests, will probably tempt other companies to enter the field, although he argues that the market is big enough that newcomers would be unlikely to constrain the company’s prospects.

Cohen takes a bullish attitude: “Anybody who would like to join us in this effort, come on down.” He adds: “80mn people in the US [are] suffering from these forms of incontinence, so this pie is so big that it doesn’t matter if more competition comes along; we’re not dealing with a limited opportunity here.”

Axonics recently launched a TV advertising campaign to reduce stigma and raise public awareness of new technologies to treat incontinence. Tens of millions of women, he says, “have no idea that it is not normal to leak urine for any reason”, and that it is not simply a natural consequence of ageing.

The company has “just literally scratched the surface” in reaching those who could benefit, Cohen adds. “We estimate that less than 3 per cent of all the women who have these problems in the world have actually gotten treatment by any of these devices or technologies that we have.”