Conformis (NSDQ:CFMS) announced today that it completed the second of three milestones in its license and development agreement with Stryker (NYSE:SYK).
Under the agreement, Conformis is set to receive an additional $3 million from Stryker after achieving the milestone as it develops patient-specific instrumentation (PSI) for use in connection with Stryker’s knee implant offerings.
“We are pleased to announce the achievement of the second project milestone,” Conformis president & CEO Mark Augusti said in a news release. “We believe that this project, as well as the long-term distribution agreement under which Conformis will manufacture and supply PSI to Stryker, will create value for our shareholders as we successfully support the increasing demand for efficient outpatient joint replacement.”
Billerica, Mass.-based Conformis initially announced the agreement, worth up to $30 million, in October 2019. The deal called for Stryker to pay $14 million upfront for the Conformis PSI, which uses CT scans to create customized, single-use instrumentation for knee replacement procedures. Conformis said at the time that the deal includes Stryker’s Triathlon total knee.
Another $16 million is on the table in milestones for sales, licensing and development of the Conformis tech Stryker implants. The deal also includes a long-term distribution agreement, according to Conformis.
Milestones in the deal include an aggregate of $5 million within 30 days of Stryker receiving the first prototype and Conformis freezing the design. Additionally, Conformis is granting Stryker an exclusive, transferable, royalty-bearing, sub-licensable worldwide license and, within 30 days of FDA clearance, Stryker would owe another $11 million milestone payment.
Conformis is also barred from developing the technology for off-the-shelf implants for other orthopedics companies until Jan. 1, 2032. The assets in the deal include software code and manufacturing documents and half ownership of the copyrights and know-how contained in them, according to a regulatory filing.
Stryker is also the exclusive distributor of the co-developed product for five years under the agreement, as Conformis is its exclusive manufacturer with one-year extension options through 2031.
The deal also includes provisions making Stryker the exclusive distributor of the co-developed product for five years, with Conformis as its exclusive manufacturer and one-year extension options through 2031.
MassDevice reached out to Conformis to confirm details of the specific milestone announced today, but did not receive an immediate response.