Orthofix Enters Agreement to Acquire Spinal Kinetics

In a move to fill a significant gap in its spine portfolio, Orthofix (OFIX) entered into a definitive agreement to acquire Spinal Kinetics for US $45MM in cash plus up to $60MM in milestone payments, contingent upon FDA approval and sales targets. The transaction is expected to close in 2Q18.

Specifically, the milestones include $15MM upon FDA Premarket Approval of the M6-C cervical disc for single-level use, $15MM upon TTM revenue of $30MM worldwide and $30MM upon TTM revenue of $50MM worldwide. All milestones must be achieved within five years of closing.

For 2017, Spinal Kinetics posted revenue of ~$15MM, all ex-U.S. Its portfolio comprises the M6-C and M6-L cervical and lumbar artificial discs to treat degenerative disease, which are currently CE Marked in the EU. Ex-U.S., the devices have been implanted >54,000 times since 2006 launch. The company has completed enrollment in Restore, a single-level U.S. clinical trial comparing M6-C to ACDF in 258 patients.

For 2018, the impact of the acquisition could potentially add up to $9.0MM to OFIX sales, increasing to up to $18.0MM in 2019.

M6 devices are designed to mimic natural disc design by incorporating an artificial viscoelastic nucleus and fiber annulus into both the cervical and lumbar platforms.

FDA approval for M6-C could come by mid-2019. Other companies with devices in the U.S. cervical disc market include Centinel Spine, having acquired DePuy Synthes prodisc assets; Medtronic with Bryan and Prestige discs and Zimmer Biomet’s Mobi-C, which it acquired from LDR Spine. Smaller share is held by Globus Medical’s Secure-C and NuVasive’s PCM Cervical Disc. Simplify Medical is in clinical trials for its disc, presently.

Sources: Orthofix International N.V.; clinicaltrials.gov; ORTHOWORLD Inc.