Smith & Nephew (SNN) agreed to acquire Ceterix Orthopaedics, developer of the NovoStitch® Pro Meniscal Repair System, for up to US $105MM comprising an initial cash consideration of $50MM and $55MM over the next five years, contingent upon financial performance.
Ceterix received FDA 510(k) clearance to market the next-generation NovoStitch Pro in 3Q18. The technology allows arthroscopic stitch placement in tight joint compartments to repair complex meniscal tears in knees, hips and shoulders. It treats a broad range of tear types, including horizontal, radial, complex, bucket handle and root, as well as vertical tears, and complements SNN's FAST-FIX 360, which also addresses vertical meniscus tears.
NovoStitch Pro will be sold through SNN's sports medicine salesforce and Ceterix’s existing dedicated salesforce.
The transaction is expected to close in early 2019, and supports the company's stated objective to more actively pursue M&A via bolt-on acquisitions. SNN's other purchases in the arthroscopy/soft tissue repair space have included ArthroCare in 2014 and Rotation Medical in 2017. For 2017, ORTHOWORLD estimated SNN at the second position in the arthroscopy/soft tissue repair segment with 23% market share, following Arthrex at first place (33%). For the nine months ended September 30, 2018, SNN reported ARST revenue of $952MM, up 5.4% from the same period in the previous year and representing ~37% of the company's overall orthopaedic revenue.
Sources: Smith & Nephew plc; ORTHOWORLD estimates