The Nashville-based clear-aligner company will sell its products to clinicians in 2020 to put itself in direct competition with its ex-partner, Align Techology's Invisalign. Its supply pact with Align, which only permitted SmileDirectClub to sell its products online and in retail shops, expired at the end of 2019.
"We have seen increasing demand from the dentists and orthodontists in our network who wish to provide SmileDirectClub clear aligners to their in-office patients, and with our agreement with Align Technology now expired, we are no longer obligated to stay in the direct-to-consumer channel," said Alex Fenkell, SmileDirectClub co-founder, in a statement.
Align Technology, however, says their agreement never prevented SmileDirectClub from selling to dentists.
Reports of the new venture caused shares of SmileDirectClub to rise about 9% in trading before the markets opened in New York. Meanwhile, Align Technology's shares fell 2%, according to news reports.
This development follows the company's victory in New Jersey court. On January 13, the company announced that the Superior Court of New Jersey ruled in favor of SmileDirectClub, stating that the New Jersey Dental Association's claim that that company illegally practiced dentistry in the state had no merit.
The dental association had filed a complaint in January 2019, alleging SmileDirectClub's marketing practices violated state law. It further accused SmileDirectClub of illegally practicing dentistry in New Jersey through its control over the dentists that choose to use SmileDirectClub's marketing and administrative support services and its teledentistry platform.
The ruling shows that the association's complaint was a sham, said Susan Greenspon Rammelt, SmileDirectClub's chief legal officer, executive vice president of business affairs, and corporate secretary, in a statement.
"This court decision verifies that SmileDirectClub's model is in full compliance with the law, and that SmileDirectClub is not engaged in the corporate practice of dentistry," she stated.
From enemies to potential partners and back again
SmileDirectClub's move to work directly with dentists and orthodontists put them working with the same clinicians who have attempted to fight them at every turn.
The ADA, as well as local organizations, have warned about the dangers of direct-to-consumer orthodontics and have filed suits against the company mostly over how its teledentistry platform should be regulated. To date, the Dental Board of California has come the hardest at the direct-to-consumer orthodontics industry. In September, California became the first state in the U.S. to pass a teledentistry law requiring x-rays and other steps be taken before patients can undergo treatment from providers such as SmileDirectClub.
SmileDirectClub also seems to be on a new track to find a nemesis in Align Technology. In 2015, Align filed a patent infringement lawsuit against SmileDirectClub. Align ended up dropping the suit, investing in SmileDirectClub, and becoming a third-party supplier of its products. But with their agreement ending in 2019, it opened the door for SmileDirectClub to expand and go head-to-head against Align, which already offers Invisalign to clinicians.
SmileDirectClub says it's selling its clear aligners to dentists and orthodontists to meet demand. Currently, only about 30% of the approximately 200,000 licensed dentists and orthodontists in the U.S. offer clear-aligner therapy to their in-office patients. The company believes this is a win for clinicians and patients because it provides a more attractive, quicker, affordable teeth-straightening option. The average SmileDirectClub treatment lasts about six months.
"Clear-aligner therapy technology advances now enable patients who otherwise would not have been candidates in the past to avoid the discomfort and time commitment of traditional metal braces," said Jeffrey Sulitzer, DMD, SmileDirectClub's chief clinical officer.
SmileDirectClub plans to support this new distribution channel through its manufacturing operation in Antioch, TN. It plans to add a second manufacturing facility in Kyle, TX, in 2020 to further meet demand.
Other moves made
SmileDirectClub continues to make potential game-changing moves in the sector despite the constant barrage of litigation thrown its way.
On January 6, the company signed an exclusive deal with Walmart to sell a new line of oral health products, including an electric toothbrush and teeth-whitening system. SmileDirectClub claims to be the first clear-aligner therapy provider to sell an oral care collection on the mass market.
On January 8, SmileDirectClub announced it was expanding into Hong Kong. Its products already are available in the U.S., Canada, Australia, New Zealand, the U.K., Ireland, and Germany.
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