Wright Medical (NSDQ:WMGI) said today that it agreed to pay $435 million in cash to acquire Cartiva and its synthetic cartilage implant for treating arthritis in the big toe and raised its sales outlook for the rest of the year.
Alpharetta, Ga.-based Cartiva won pre-market approval from the FDA for the SCI implant in July 2016 (the device won CE Mark approval in the European Union back in 2002 and is also on the market in Canada, Brazil, Chile and Australia). It’s made of an organic polymer designed to mimic the function of human cartilage.
Wright forecast a $35 million top-line contribution from Cartiva this year, assuming the purchase closes as expected during the fourth quarter, and $47 million in 2019. Memphis-based Wright said it plans to finance the purchase with an equity offer.
“We are delighted to add Cartiva’s technology, including its Synthetic Cartilage Implant, the first and only PMA product for the treatment of great toe osteoarthritis, to our market-leading lower extremities portfolio. Supported by compelling clinical performance and the only product of its kind backed by Level I clinical evidence, Cartiva is experiencing rapid commercial adoption and is well positioned for future growth as it addresses large markets with significant unmet needs. We believe this technology is a perfect fit for our Lower Extremities business and adds a differentiated product that addresses a common condition that is treated by most foot and ankle surgeons and has strong patient demand,” president & CEO Robert Palmisano said in prepared remarks.
“We are delighted to have found an excellent strategic buyer in Wright, a company that shares our commitment to technological leadership and that is a leader in foot and ankle with a demonstrated track record of commercializing breakthrough technologies. We believe that Wright, with its 300-plus direct foot and ankle sales organization in the U.S. and its large international organization, as well as its expertise in medical education and product development, is the ideal partner to realize the full potential of our SCI technology. We look forward to an exciting future as part of Wright Medical,” added Cartiva president & CEO Timothy Patrick.
J.P. Morgan Securities advised Wright, with Bass, Berry & Sims and Ropes & Gray as legal advisors. Guggenheim Securities iadvised Cartiva, with Gunderson Dettmer Stough Villeneuve Franklin & Hachigian as legal advisor.
Wright said it now expects to post full-year sales, excluding Cartiva, of $812 million to $822 million, up from $808 million to $820 million previously.