Kiwi medtech Formus Labs makes US breakthrough for its AI-powered product

Artificial intelligence is the “it” technology of 2023. And for Formus Labs, it’s literally hip.

The Auckland maker of an AI-powered orthopaedic surgery planning tool has just made a key breakthrough in the United States.

The firm has just received 510(k) clearance from the US Food and Drug Administration (FDA) for Formus Hip as the first “automated radiological image processing software” for hip replacement pre-op planning.

The firm’s founder, Dr Ju Zhang, says the FDA clearance is the last hurdle before its commercial launch in North America, which is set to start with major healthcare providers on the US East Coast. Two of the biggest names in North American orthopaedics, the Cleveland Clinic and the Hospital For Special Surgery – both based in New York – supported Formus Labs’ FDA application.

“Today is a huge milestone. FDA clearance serves as a significant validation of the accuracy and rigour of our AI models,” Zhang said.

Make it your business to know

Start your day with the latest business headlines straight to your inbox.

Please email me competitions, offers and other updates. You can stop these at any time.

Email address

Sign Up

By signing up for this newsletter, you agree to NZME’s Terms of Use and Privacy Policy.

It’s all about using machine learning (a branch of AI) and biomechanics (the science of body movement) to help with the pre-operation planning for hip and knee replacements, whose implantation involves a lot of low-tech sawing and hammering.

“In some ways, it’s a lot like carpentry,” Zhang says.

Over the past two decades in NZ, nearly one in 10 hip replacements has been a revision and one in five knee replacements are unsatisfactory, he says.

Zhang has calculated that, for a hip replacement, there are 11,000 different combinations of prosthetic implants and placement options.

Formus Labs’ software can analyse x-rays and CT scans to help select the right-sized ball and stem, and the inclination at which it should be placed. Traditional planning for an individual orthopaedic surgery is time-consuming, taking days or weeks to complete. An assist from AI, and Formus Labs’ various biomechanical smarts, can reduce that to a fraction of the time, Zhang says.

Like the small army of other AI medtech startups that have also emerged from Auckland University’s Auckland Bioengineering Institute (ABI), Zhang says it’s not about replacing medical staff but helping them to save time and money in overworked healthcare systems worldwide.

“The surgeons who have used the Formus platform in Australia and New Zealand tell us they like having pre-op plans that make facing any unforeseen challenges on the day of the surgery easier to overcome because of the thorough understanding of each patient’s physiology.

“It also has huge potential to save costs, time spent on logistics, and inventory. We’re excited to bring those same potential savings to providers in the US now too.”

A doctor using Formus Labs' software. Photo / File

Clearance by the influential US regulator is also expected to clear the way for relatively straightforward approval in other countries.

Japan is next on the list. Zhang says its ageing population and openness to new tech make it an ideal market. In Australia and New Zealand, where Formus gained regulatory approval in 2021, its software has already been used in pre-op planning for more than 2000 orthopaedic surgeries.

US$15m raise

Formus expects to double its 25-strong staff over the next 18 months, and has already added a sales specialist in the US: Polly Teevan, who joined from Johnson & Johnson, where she held a series of executive roles with the global giant’s medical devices group.

Read More

• Toku Eyes poised for US breakthrough after big industry names back $13m raise
• Kitea Health raises $6 million as its implant nears human trials
• 'The next F&P Healthcare': Alimetry raises $16m for breakthrough product
• ‘Radiologists miss cancer sometimes’: Will AI take doctors’ jobs?

Teevan is based in Warsaw, Indiana – dubbed the orthopaedic capital of the world because it produces about half of the world’s orthopaedic medical devices and is home to about 100 firms working in the field.

Further hires will be made in North America with the startup’s commercial launch, but R&D will remain in NZ.

Zhang’s startup has previously raised more than $7m in seed funding from backers including NZ venture capital firm Global From Day One (GD1) and Auckland University’s commercialisation arm, Uniservices.

Formus Labs founder Dr Ju Zhang. Photo / File

The founder says he’ll be looking to follow up the US launch with a Series A raise in the region of US$10m to US$15m, which he wants to be “offshore-led” as his firm moves into a global stage of growth.

Zhang does not anticipate any problems with the venture capital drought that’s hit other sectors amid economic downturns and rising interest rates. Medtech was already hot. Now that there’s an AI investing frenzy, a medtech with machine-learning smarts is in the cat-bird seat.

On top of that, “the FDA approval will unlock serious interest” from venture capital firms, the founder says.

The whole sick crew

And it’s not just a theoretical love match. April saw Toku Eyes (another Auckland Bioengineering Institute alum), raise $13m for its AI-powered software that analyses eye scans, while in February sensor implant startup Kitea Health (also spun out of the institute) raised $6m.

A third spinout, gut health startup Alimetry, raised $16m last year. And a fourth Auckland medtech, HeartLab, which uses AI to analyse cardiac scans, has staged several successful funding rounds.

“We have been on the Formus journey for a while now, and it’s clear that this is a mission-driven team looking to drastically improve outcomes in orthopaedics,” GD1 managing partner Vignesh Kumar tells the Herald.

“As venture investors we’re always searching for technologies that do this by balancing the delicate ‘iron triangle’ of healthcare cost, access and quality and, as such, Formus is a great example of a digital health solution solving those core pain points in an extremely elegant manner.

“We have always had one eye fixed on larger markets with higher volume caseloads, and getting 510(k) approval allows us to fully unlock our US commercialisation strategy.”

Zhang told the Herald that Formus Labs has new products on the way too, which will allow it to address the broader orthopaedic market.

Currently, some 2 million joints are replaced each year, a number that’s tipped to double by the end of the decade.