Lewisville, Texas-based Orthofix said the deal calls for $45 million in up-front cash, plus another $65 million in milestones pegged to FDA approval of the M6 cervical device and trailing twelve-month sales targets of $30 million and $50 million. It’s expected to close during the second quarter, the company said.
Sunnyvale, Calif.-based Spinal Kinetics makes the M6 disc for treating degenerative disc disease in both the cervical and lumbar spine. The discs are designed to mimic natural disc anatomy with an artificial visco-elastic nucleus and fibrous annulus. The devices have CE Mark approval in the European Union since 2006; Spinal Kinetics has a bid in for pre-market approval from the FDA for the M6 cervical implant.
“The Spinal Kinetics M6 artificial discs will further strengthen Orthofix’s product portfolio by filling a strategic gap in our spine fixation product line. This technology is a significant advance in mimicking the natural motion of the spine, which we believe will be very beneficial to patients and well received by our surgeon customers,” president & CEO Brad Mason said in prepared remarks. “This acquisition is very well aligned with our value creation strategy of accelerating topline growth by investing in faster growing market segments in our core businesses. In addition, we expect this news will energize our sales force and be attractive to potential new sales talent.”
“We look forward to becoming a part of the Orthofix team,” added Spinal Kinetics CEO Tom Afzal. “Joining forces gives us the opportunity to bring together Spinal Kinetics’ proven innovative technology with Orthofix’s regulatory, market development, distribution and commercial expertise as we work to broaden the availability of these devices and ultimately prepare for U.S. commercialization.”
Orthofix said it expects the deal to add slightly to adjusted earnings per share within the first year of PMA approval for the M6-C device, boost the top line this year and raise its organic sales growth rate in 2019.
In June 2014 Spinal Kinetics raised a $34 million funding round it planned to use to back the M6-C clinical trial and agreed to a global settlement of all patent litigation with Synthes and DePuy Synthes over the M6 device. In November 2013 a federal appeals court upheld the Sunnyvale, Calif.-based company’s win over Synthes, ruling that a pair of Spinal Kinetics intervertebral implants do not infringe a Synthes patent.
Heidi Dohse was diagnosed with a rare arrhythmia in 1982 and has been 100% pacemaker dependent for over 30 years. With the help of wearable devices, she has been able to pursue her dream to become a competitive cyclist.
You can hear her story and more when you register for DeviceTalks Boston, October 8-10.
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