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February 23, 2015 COVER STORY

ReWalk goes for the big time: Marlborough firm is fastest-moving player in a huge market

Photo/Edd Cote ReWalk Robotics CEO Larry Jasinski displays a ReWalk system at the company's U.S. headquarters in Marlborough in February.
Photos/courtesy Company images show ReWalk exoskeletons helping paraplegic patients walk again.

Talk to technology entrepreneurs and there's a question that often comes up: Would you rather do cool stuff or important stuff? Make an amazing virtual reality headset or improve the treatment options for diabetes? ReWalk Robotics doesn't have to choose. The company, which has its U.S. headquarters in Marlborough, makes something straight out of the comic books — robotic exoskeletons — and uses them to do something amazing: help paraplegics walk again.

Last year, the company, which was founded in Israel in 2001 and opened its Marlborough operations in 2012, hit some impressive milestones. In May, it received the Smaller Business Association of New England's Innovation Award. A month later, the ReWalk exoskeleton became the first product of its kind to get FDA approval. In September, the company completed a $150 million initial public offering.

In 2015 and beyond, ReWalk is poised for even bigger things. Observers see its products finding a huge market, and doing great things for people with disabilities. The big question is whether the company can stay ahead of competitors as the fledgling exoskeleton industry explodes.

Matthew Taylor, an analyst who follows ReWalk for Barclays, said one thing that stands out about the company's devices is what patients and doctors have to say about them.

“Their enthusiasm for the product was almost indescribably high,” he said. “This is life-changing for people that haven't been able to walk for years and years. They can walk their daughter down the aisle.”

Of course, they can only do that if they can get one of the exoskeletons, and they're not cheap. Each device costs around $70,000. And, while some potential customers have that kind of cash lying around — or the ability to raise the money privately — large-scale sales depend on winning insurance coverage.

There's been good news for ReWalk on that front as well in recent months. In June, the James J. Peters VA Medical Center in the Bronx, N.Y., which also handles insurance payments for veterans, became the first U.S. insurer to reimburse a patient for the device; and this January, private Midwestern insurer Workers' Compensation did the same. Four groups in Germany have also agreed to cover the exoskeletons.

Taylor said he expects more insurers to get on board with ReWalk, but they'll want more data from clinical studies than what they've seen so far.

“It's a big expense,” he said. “I mean, it's $70K. So you have to show that you're going to save $70K on the back end.”

That could mean avoiding expensive surgery thanks to the exoskeleton's positive effects on a user's health compared to wheelchairs, Taylor said. Or it could mean simply improved quality of life, translated into financial terms. The company is now evaluating possible health benefits, including increased bone density and reduced body fat, better heart and lung health, improvements in bowel and bladder function and less pain. It also says users find the ability to stand for much of the day makes it easier to engage in conversation, give hugs, cook and do other everyday activities.

ReWalk is expecting more insurance deals soon. In an email interview, CEO Larry Jasinski wrote that the company has multiple claims pending with private insurers throughout the U.S. and it's working with several other federal Veterans Affairs centers on potential coverage.

Jasinski wrote that in 2015, “we believe we will see multiple reimbursement cases in the U.S. and Europe; we expect several additional regulatory clearances; we expect to see a high level of growth in terms of home use year over year.”

In the third quarter of 2014, which ended Sept. 30, ReWalk reported 26 sales, compared with 25 of the devices in all of 2013. The sales are to individual users as well as rehabilitation centers.

One center using the devices is Boston-based Spaulding Rehabilitation Network. Spokesman Tim Sullivan said patients can be fitted with the exoskeletons, work with them in the therapy setting and then bring them home. The network is “kind of a hub for communities with disabilities,” he said, and it works to bring patients, technology and funding sources, including foundations and government organizations, together.

“For us it kind of fits with our mission and mode of always trying to advance the technology, and also giving access,” Sullivan said. “I think we've seen the robotics and exoskeleton technology keep advancing, and certainly we all hope that one day it's commonplace to see somebody in Starbucks walking up [and using one of the units].”

Sullivan cautioned that the ReWalk devices aren't appropriate for everyone using a wheelchair. So far, the FDA has only approved them for people with spinal cord injuries that have caused lower-body paralysis. The company is now developing a new design for patients with quadriplegia who are unable to hold crutches. That would be a particularly significant milestone for the company since its founder, Amit Goffer, is a quadriplegic whose own life experiences led him to invent the ReWalk device.

The company is also planning to seek regulatory approval for use by people with other diagnoses such as multiple sclerosis, stroke and cerebral palsy.

Taylor said that even without official approval, rehab centers can use the devices for those other conditions.

“A lot of the rehab centers we've talked to have said they want to use it for an array of things,” he said. “They'll use it how they see fit. They don't have to follow the label.”

The New York City firm Ark Investment Management estimates there's a potential market of 2.6 million Americans who might be able to use a robotic exoskeleton — with more outside the U.S. — signaling a huge opportunity for ReWalk to grow. The question is whether the company can stay ahead of the competition.

Taylor said ReWalk has distinguished itself by getting the first FDA approval, which is likely to lead to more adoption in the short term. Another advantage for the company is its patented “tilt sensor” technology, which lets users guide the machines with natural body movements rather than with a joystick, as some competing products require.

“It is sort of a more natural way to do it,” Taylor said.

He said users are likely to prefer the experience with the ReWalk device, and there may also be health benefits associated with the more natural walking style the product allows.

David Conway, a robotics analyst with ARK Investment Management, said it's hard to predict the future for companies like ReWalk because the market for exoskeletons is so new, and bound to change in coming years. As insurers begin to cover the products, he said, more will be produced, driving the prices down. ARK projects that the per-unit cost of the devices will drop from $70,000 to $40,000 by 2020, then to $10,000 — comparable to the current price of a high-end wheelchair — by 2030. By then, the firm suggests, about 1.3 million medical exoskeletons could be sold, representing half the market.

There's no certainty that ReWalk will be the company to provide the best and most cost-effective product in the long term, Conway said. ReWalk noted in its IPO prospectus that it has a number of competitors, including Ekso Bionics, Rex Bionics, Cyberdyne and Parker Hannifin, and Conway said more players will undoubtedly enter the market as it heats up.

“The potential market is huge, but currently it's very, very small,” he said. “In five years, who knows what we'll see.”

For the MetroWest area, though, there's good reason to be excited about ReWalk, at least for the moment, and perhaps many years to come. The company has 10 employees at its Marlborough office, a second-floor suite at 33 Locke St., and about 60 more in Israel and Germany. It's now adding positions in fields that include administration and finance in Marlborough, and Taylor said he expects the growth to continue.

“Certainly they're going to hire a lot more people before they fire anybody,” he said. “I would be really excited if they chose my town as their headquarters, because they're really cutting-edge. They're really moving quickly.”

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