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Funding

1H16 Funding Recap: Spine Remains Dominant Market for Investments

ORTHOWORLD reported 18 funding announcements in 1H16, compared to 23 in 1H15. Similar to recent years, the spine market was the largest target for funding. Half of the announcements in 1H16 were made by companies seeking to commercialize products for spinal indications, while three more have product portfolios heavily focused in spine. Five of those 12 companies—Bone Biologics, Ortho Kinematics, Nanovis, SI-BONE and Tyber Medical—also received funding in 2015. The majority of investments came in from venture firms, though Johnson & Johnson, Medtronic, Musculoskeletal Transplant Foundation and Orthofix also backed certain financing deals.

Most recently, OrthoPediatrics filed to raise up to $75 million in an initial public offering. Since its founding in 2006, the company has developed and received regulatory clearance for 17 surgical systems for trauma, long bone deformity and correction, scoliosis and sports medicine, focused on pediatric patients. For 2015, OrthoPediatrics logged revenue of $31 million.

The following list summarizes funding secured by orthopaedic-focused companies during the first half of 2016. Previous funding announcements and trends can be found here.

Benvenue Medical completed a $60 million financing round, derived from $23 million in equity and $37 million in debt. Proceeds will support U.S. commercialization of the Luna® 3D Interbody Fusion System for treating degenerative disc disease and the Kiva® Vertebral Compression Fracture Treatment System. Benvenue’s equity financing was provided by six venture firms.

Bone Biologics completed a $5.75 million funding round from Musculoskeletal Transplant Foundation, OrthoFix and Hankey Capital to support development of a bone graft substitute for initial use in spinal fusion. The company has developed Nell-1™ bone growth factor as a lower-cost alternative to current growth factor products.  

Bone Solutions closed a funding round for a total of > $1.7 million, and affirmed an additional $1.65 million commitment from Next Health, its distribution partner. The funding was announced just prior to the company’s launch of its magnesium-based bone void filler product, OsteoCrete™, which is FDA cleared for long-bone and general orthopaedic applications.

CartiHeal completed a $15 million financing round. Funds will support ongoing manufacturing scale-up, EU product commercialization in 2017 and clinical studies in new therapeutic areas for Agili-C™ cartilage regeneration technology. The investment was led by Johnson & Johnson Innovation and existing investors Accelmed, Access Medical Ventures, Elron and Peregrine Ventures.

CollPlant received authorization from Israel’s Ministry of Economy for funding ~50% of its NIS 12 million (~US $3.1 million) development project for 2016. The funding will support various 2016 development projects, including products to treat torn and inflamed tendons/ligaments. 

Nanovis received a National Institutes of Health (NIH) grant for an undisclosed amount, supporting pre-clinical studies of FortiCore® deeply-porous interbody fusion devices enhanced with nanotube technology. To date, the company has received eight grants from NIH and other research organizations for its nanotechnology platform.

Mazor Robotics signed a three-step equity investment deal with Medtronic. In the first tranche, Medtronic will purchase newly issued securities representing four percent of Mazor’s issued and outstanding capital for a total of $11.9 million. The second and a potential third tranche could increase Medtronic’s holdings in Mazor to 15%. The two companies also signed a two-stage, multi-faceted commercial agreement for co-promotion and co-development of products.

MX Orthopedics was awarded a state-backed $0.75 million Accelerator Loan. Funds will support commercialization of dynaMX™ superelastic orthopaedic fracture fixation implants. (MX Orthopedics has received two 510(k) clearances in 2016, one for a Nitinol compression screw and the other a compression staple.)

Ortho Kinematics closed $4 million in debt financing. Funds will support global commercialization of the Vertebral Motion Analysis (VMA) product for radiographic assessment of spinal motion and instability, as well as launch of new product features. Since the funding announcement, Ortho Kinematics has secured a CE Mark and Health Canada Approval for VMA. The company had closed a $9.6 million Series C equity financing in 2015.

OrthoPediatrics filed to raise up to $75 million in an initial public offering. Within 2016, OrthoPediatrics announced partnerships with SpineGuard for distribution of PediGuard probes, as a complement to its RESPONSE™ Spine System for pediatric spinal deformity cases, and with Robert Reid for distribution of RESPONSE in Japan. In 2014, the company closed a $39 million investment.

OsteoVantage was awarded a $0.15 million Small Business Innovation and Research Phase I grant by the National Science Foundation. Funds will support enhancements to the INDOS™ spinal instrumentation system. 

Regentis Biomaterials closed a $15 million Series D investment round. Funds will primarily support a pivotal U.S. clinical trial of GelrinC®, a cell-free implant for the treatment of articular knee cartilage injuries. The funding round was led by Haisco Pharmaceutical Group in China.

SI-BONE closed a $20 million round of growth capital financing, led by new investor Arboretum Ventures, with participation from all of SI-BONE’s existing major investors. Proceeds will support expansion of U.S. sales, following recent decisions to cover MIS SI joint fusion by Blue Cross Blue Shield of Michigan, Geisinger Health Plan in Pennsylvania and First Coast Service Options in Florida. Additionally, proceeds will support R&D for new products to treat the SI joint.

Spinal Simplicity closed a financing round with an investment from Nueterra Capital. Funds will support U.S. launch of the Minuteman fusion device to treat lower back pain. Spinal Simplicity received FDA 510(k) clearance for the HA Minuteman G3 MIS Fusion Plate and Minuteman Percutaneous Interlaminar Fusion system in 2015.

Spine Wave closed a $11 million round of new financing. Proceeds will fund the company’s largest product portfolio expansion to date, with seven major new products expected to launch in the next 12 to 18 months. The funding came from existing investors Acadia Woods and New Enterprise Associates. Other participants included California Technology Partners, Collinson, Compass Global Fund, Howe and Lennox, Industry Ventures and MB Ventures.

Tyber Medical was awarded a $362,500, ten-year loan from the Pennsylvania Industrial Development Authority to purchase equipment for in-house fabrication. In 2015, the company had received economic development funding, including a $0.5 million Pennsylvania First Program grant and $0.75 million in Job Creation Tax Credits.

Vivex Biomedical raised $6.6 million of a potential $10 million offering of Series A Convertible Preferred Stock. Among other segments, the company’s biologic products such as demineralized bone matrices and synthetic bone grafts have application in general orthopaedic, spine and sports medicine procedures. Vivex, which recently expanded relationships with Arthrex and Xtant, raised $7.4 million in its last round of funding during 2013.

Xtant Medical was awarded grants totaling $0.15 million from the Montana Department of Commerce to support growth at Bacterin’s orthobiologic processing facility. Bacterin is a wholly-owned subsidiary of Xtant Medical.