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Smith & Nephew to Acquire Rotation Medical

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Smith & Nephew (SNN) entered into a definitive agreement to acquire Rotation Medical for US $125MM in cash, with up to $85MM in potential additional performance-based milestone payments. The transaction is expected to close by year-end and be earnings-neutral in 2018.

Rotation Medical has developed a collagen-based Bioinductive Implant for rotator cuff repair that complements SNN's sports medicine portfolio. The device induces growth of tendon-like tissue and may both prevent tear progression and reduce the incidence of re-tearing. It comes with disposable arthroscopic instruments. It can be used alone to treat partial tears, or with SNN's anchors/sutures to supplement complex repairs. The system received FDA 510(k) clearance and launched in early 2Q14.

Interim study results have indicated that patients receiving the Bioinductive Implant to treat rotator cuff disease reported statistically significant improvement at six months, vs. those undergoing standard treatment at two years.

SNN will sell the new system through the combined efforts of its own sales reps with Rotation Medical's dedicated salesforce. 

"Rotation Medical furthers our strategy to invest in disruptive technologies that accelerate the transformation of Smith & Nephew to higher growth," said Chief Executive Officer Olivier Bohuon. The comment follows reports that a U.S. activist investor, Elliott Management, obtained a greater than 2% stake in SNN and, as of the company's top seven shareholders, could be pushing SNN to divest portions of its business to become a more attractive acquisition target.

Sources: Smith & Nephew plc; ORTHOWORLD Inc.