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Alphatec Holdings (ATEC)

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ATEC » Topics » Research and development.

These excerpts taken from the ATEC 10-K filed Mar 4, 2009.

Research and Development

Our research and development department has extensive experience in developing products to treat spine pathologies. Our research and development department works closely with our Scientific Advisory Board and

surgeons to design products that are intended to improve patient care, simplify surgical techniques and reduce overall costs. We are focusing our research and development efforts in two major strategic areas. First, we focus on continually enhancing and upgrading our current product portfolio and supplementing it with new products where appropriate. Second, we devote significant resources to developing complementary products and unique technologies to create new solutions to address spinal pathologies that affect the aging spine. Our goal is to become the market leader in providing solutions for the aging spine by developing products that have superior efficacy for patients who suffer from poor bone density, a VCF, adult deformity, or spinal stenosis. In order to further promote this strategy, we are focused on converting these research and development programs into commercially viable products that incorporate minimally invasive access techniques and integrated biologic solutions to improve patient outcomes across all of our product lines.

Research and Development

Our research
and development department has extensive experience in developing products to treat spine pathologies. Our research and development department works closely with our Scientific Advisory Board and

surgeons to design products that are intended to improve patient care, simplify surgical techniques and reduce overall costs. We are focusing our research
and development efforts in two major strategic areas. First, we focus on continually enhancing and upgrading our current product portfolio and supplementing it with new products where appropriate. Second, we devote significant resources to
developing complementary products and unique technologies to create new solutions to address spinal pathologies that affect the aging spine. Our goal is to become the market leader in providing solutions for the aging spine by developing products
that have superior efficacy for patients who suffer from poor bone density, a VCF, adult deformity, or spinal stenosis. In order to further promote this strategy, we are focused on converting these research and development programs into commercially
viable products that incorporate minimally invasive access techniques and integrated biologic solutions to improve patient outcomes across all of our product lines.

FACE="Times New Roman" SIZE="2">Manufacture and Supply

We conduct our manufacturing operations at our facilities in Carlsbad,
California. We manufacture the majority of our implants in-house. Certain of our implants and a significant amount of our instrumentation are purchased from third parties. We believe that the in-house production of our implants maximizes efficiency,
reduces product development time, simplifies production scheduling, reduces inventory backlogs and is more responsive to the changing needs of surgeons. Our facilities include distinct areas dedicated to the machinery, tooling, quality control,
cleaning and labeling of our products. Additionally, we have an advanced manufacturing group that includes design engineering and manufacturing personnel. The advanced manufacturing group is dedicated to providing rapid prototyping and innovative
custom instrumentation for our research and development programs and our surgeon customers. Occasionally we enter into distribution agreements, pursuant to which we distribute products manufactured by a third party under our own private label.
Following the receipt of products or product components that we receive from third parties, we conduct inspection, quality control, packaging and labeling, as needed, at our manufacturing facilities.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">We devote significant time and attention to ensure that all of our products are safe, effective, adhere to all applicable regulations and are of the
highest quality. An established and comprehensive quality system drives our focus from the initial translation of surgeon needs into design specifications through an exhaustive series of quality control checks that are performed through the
purchasing, production, and packaging of our products. We record the complete production history for every product, ensuring full traceability from the raw material stage through the delivery of the product into the marketplace. The raw materials
used in the manufacture of our products are principally titanium, titanium alloys, stainless steel, allograft and PEEK. Only one company, Invibio, is currently approved in the U.S. to distribute PEEK for use in implantable devices. In
October 2004, we entered into an exclusive supply agreement with Invibio, pursuant to which we agreed to purchase our entire supply of medical quality PEEK in the U.S. from Invibio. As consideration for the PEEK materials, we pay Invibio a
dollar amount depending on the weight or the length of either the raw material or stock product that Invibio processes for us. The dollar amount of the PEEK may increase over time, but the price increase is capped at a certain percentage annually.
Under the terms of the agreement, we are restricted from selling PEEK to third parties, except when it is incorporated into our products, and we are not authorized to alter the chemical structure of the PEEK. The term of the supply agreement is
through October 2014. Either we or Invibio may terminate the supply agreement for an uncured material breach of the agreement.

With
the exception of PEEK and allograft, none of our raw material requirements is limited to any significant extent by critical supply. We are subject to the risk that Invibio will fail to supply PEEK in adequate amounts for our needs on a timely basis.
In addition, because allograft implants are processed from human tissue, maintaining a steady supply can sometimes be challenging.

Our manufacturing operations and those of the third-party manufacturers we use on a limited basis are
subject to extensive regulation by the FDA under its quality systems regulations, or QSRs, and other device-related or tissue-related good manufacturing practice regulations, state regulations, such as the regulations promulgated by the California
Department of Health Services, and under similar requirements of regulatory authorities in different states and foreign countries. For tissue products, we are FDA-registered and licensed in the states of California, New York and Florida, the only
states that require licenses. For our implants and instruments, we are FDA registered, California-licensed and International Organization for Standardization, or ISO, certified. Our facility and the facilities of the third-party manufacturers we use
on a limited basis are subject to periodic unannounced inspections by regulatory authorities, and may undergo compliance inspections conducted by the FDA and corresponding state and foreign agencies. Our last FDA inspection was in
November 2003, and minor non-compliance items were cited on an FDA Form 483 that we received following the inspection. Following receipt of the Form 483, we submitted a formal response in which we indicated the steps that we had taken
to correct the noted deficiencies and have not received any further request from the FDA with respect to the Form 483 we received.

Research and Development

Research and development expenses consist of costs incurred to further the Company’s research and development activities and are expensed as incurred.

This excerpt taken from the ATEC 10-K filed Mar 17, 2008.

Research and Development

Research and development expenses consist of costs incurred to further the Company’s research and development activities and are expensed as incurred.

This excerpt taken from the ATEC 10-K filed May 18, 2007.

Research and Development

Research and development expenses consist of costs incurred to further the Company’s research and development activities and are expensed as incurred.

This excerpt taken from the ATEC 10-K filed Apr 2, 2007.

Research and Development

Research and development expenses consist of costs incurred to further the Company’s research and development activities and are expensed as incurred.

This excerpt taken from the ATEC 10-Q filed Aug 14, 2006.

Research and development. Research and development expenses increased $1.1 million to $1.6 million for the six months ended June 30, 2006 from $0.5 million for the same period in 2005. The increase was primarily due to headcount increases in order to support our new product development programs and custom engineering projects, and to increase our regulatory and technical expertise. As a percentage of revenue, research and development expenses increased 1.1 percentage points to 4.2% for the six months ended June 30, 2006 as compared to 3.1% for the same period in 2005.

EXCERPTS ON THIS PAGE:

10-K (3 sections)	Mar 4, 2009

10-K	Mar 17, 2008

10-K	May 18, 2007

10-K	Apr 2, 2007

10-Q	Aug 14, 2006

Alphatec Holdings (ATEC)

ATEC » Topics » Research and development.

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