Conformis agreed to sell and license aspects of its patient-specific instrumentation (PSI) technology to Stryker for use in knee implants. PSI creates single-use, patient-specific instruments from a CT-based 3D model. Conformis will receive $14MM upfront and an additional $16MM in milestone payments for selling, licensing and developing part of its intellectual property. The payments are split between $5MM upon the first prototype and completion of the design, and $11MM upon first FDA 510(k) clearance.The companies also entered into a long-term distribution agreement to manufacture PSI for Stryker, including for the Triathlon Total Knee System.
The deal gives Stryker further differentiation in their knee portfolio as they prepare to fend off renewed competitive pressure from Zimmer Biomet amid the ROSA Knee ramp up. Taken together with Stryker’s acquisition of sterilization specialist TSO3, the deal with Conformis shows that the company is seeking ways to drive efficiencies in instrumentation, a common economic and logistical challenge for customers.
The upfront payment represents a sizeable revenue infusion for Conformis, giving the company additional headroom during the slower than expected ramp up of their hip platform. Stryker is the best-executing knee company in the industry, and this deal provides Conformis with validation for their technology and, more generally, their focus on solutions that scale to outpatient settings.