Transaction to expand Orthofix’s Spine Fixation portfolio with
innovative artificial disc designed to restore natural and physiologic
motion to the spine.
LEWISVILLE, Texas--(BUSINESS WIRE)--Mar. 15, 2018--
Orthofix International N.V. (NASDAQ:OFIX), a global medical device
company focused on musculoskeletal healing products and value-added
services, today announced that it has entered into a definitive
agreement to acquire Spinal Kinetics Inc., a privately held developer
and manufacturer of artificial cervical and lumbar discs. Terms of the
agreement include $45 million in cash closing consideration plus up to
$60 million in contingent milestone payments related to U.S. Food and
Drug Administration approval of the M6-C cervical disc and the
achievement of trailing twelve-month sales targets of $30 million and
$50 million.
“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
advancement in mimicking the natural motion of the spine, which we
believe will be very beneficial to patients and well received by our
surgeon customers,” said Orthofix President and Chief Executive Officer,
Brad Mason. “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.”
Spinal Kinetics manufactures and distributes the M6-C cervical and M6-L
lumbar artificial discs for patients suffering from degenerative disc
disease (DDD) of the spine. These unique discs are designed to mimic the
anatomic structure of a natural disc by incorporating an artificial
visco-elastic nucleus and fiber annulus. This allows for six degrees of
motion, similar to a natural disc.
“Artificial disc replacement is increasingly being indicated as the
superior surgical solution to the traditional spinal fusion because it
maintains normal motion of the spine and in many cases lessens the
chance of future surgery. However, the designs of the first-generation
artificial discs, much like total hip replacement, were based on the
ball-and-socket concept which does not take into account the natural
compression of the native disc,” said Dr. Richard D. Guyer, orthopedic
spine surgeon and Chairman of the Texas Back Institute Research
Foundation in Dallas and an investigator in the “Restore” U.S. clinical
trial sponsored by Spinal Kinetics. “The M6 disc is designed out of
materials to mimic the biomechanics of a normal disc including axial
compression, flexion-extension, lateral bending, translation and axial
rotation in order to provide patients with a more natural range of
motion.”
The M6 artificial discs currently have CE Mark approval for distribution
in the European Union and other international geographies. They are not
available for commercial distribution in the U.S. Spinal Kinetics has
submitted a PMA to the U.S. Food and Drug Administration in order to
gain U.S. market approval for the M6-C cervical disc to treat single
level cervical DDD. Internationally, there have been more than 54,000
implants of the M6-C and M6-L since the products were first launched in
2006.
“We look forward to becoming a part of the Orthofix team,” said Tom
Afzal, President and CEO of Spinal Kinetics. “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 estimates the artificial disc market in 2017 to be over $325
million worldwide and $200 million in the U.S., with double-digit growth
expected for many years. Also, Orthofix anticipates that the momentum
created from the addition of the M6 disc to the Orthofix spine fixation
portfolio will generate pull-through revenue of other Orthofix products
and position the company for market share gains in the $5.4 billion U.S.
spine hardware market.
The transaction is anticipated to close in the second quarter of 2018,
subject to customary closing conditions. Orthofix expects the
acquisition to not only add revenue in 2018, but also increase its
organic revenue growth rate in 2019 and beyond. The company also expects
the deal to be slightly accretive to the Company’s non-GAAP diluted
earnings per share and adjusted EBITDA within 12 months of PMA approval
in the U.S. and further accretive thereafter.
In connection with the transaction, Canaccord Genuity is acting as a
financial advisor to Spinal Kinetics.
Orthofix Conference Call
Orthofix will conduct a conference call on Thursday, March 15 at 4:00
p.m. Central time (5:00 p.m. Eastern time). An overview of the
transaction will be provided during the call. The investor presentation
is viewable on Orthofix’s U.S.
corporate home page or ir.orthofix.com. Interested parties may
access the conference call by dialing (844) 809-1992 in the U.S. and
(612) 979-9886 outside the U.S., and referencing the conference ID
7493218. A replay of the call will be available for two weeks by dialing
(855) 859-2056 in the U.S. and (404) 537-3406 outside the U.S., and
entering the conference ID 7493218.
About Orthofix
Orthofix International N.V. is a global medical device company focused
on musculoskeletal healing products and value-added services. The
Company’s mission is to improve patients' lives by providing superior
reconstruction and regenerative musculoskeletal solutions to physicians
worldwide. Headquartered in Lewisville, Texas, the Company has four
strategic business units: BioStim, Extremity Fixation, Spine Fixation,
and Biologics. Orthofix products are widely distributed via the
Company's sales representatives and distributors. For more information,
please visit www.orthofix.com.
About Spinal Kinetics Inc.
Founded in 2003, Spinal Kinetics is a privately held medical device
company focused on partnering with spine surgeons to develop innovative
and practical motion preservation systems for treating degenerative
diseases of the spine. The M6-C cervical and M6-L lumbar artificial
discs have rapidly established themselves among the leading artificial
discs available due to the unique biomechanical properties that
replicate the motion of a natural disc and the positive clinical
outcomes for patients. The company is located in Sunnyvale, California.
For more information about Spinal Kinetics or the M6 Artificial Disc,
please visit spinalkinetics.com.
Forward Looking Statements
This communication contains certain forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements, which may include, but are not limited to, statements
concerning the estimates, projections, financial condition, results of
operations and businesses of Orthofix and its subsidiaries, Spinal
Kinetics and their respective companies’ product portfolios, are based
on Orthofix management's current expectations and estimates and involve
risks and uncertainties that could cause actual results or outcomes to
differ materially from those contemplated by the forward-looking
statements.
The forward-looking statements in this release do not constitute
guarantees or promises of future performance. Factors that could cause
or contribute to such differences may include, but are not limited to
risks, including the possibility that the deal might not close,
difficulties commercializing Spinal Kinetics’ products and integrating
their product lines into Orthofix’s business, inaccuracies in Orthofix’s
estimates and projections of future product sales, including the current
and future size of the worldwide and U.S. artificial disc market, FDA
and regulatory approval risks, and other risks described in the "Risk
Factors" section of our 2017 Annual Report on Form 10-K, as well as in
other reports that we file in the future. Existing and prospective
investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to update or revise the information
contained in this press release.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180315006409/en/
Source: Orthofix International N.V.
Orthofix International N.V.
Investor Relations
Mark Quick,
214-937-2924
markquick@orthofix.com
or
Media
Relations
Denise Landry, 214-937-2529
deniselandry@orthofix.com