Spine Company M&A Picks Up in 3Q18

Eight—yes, eight—spine acquisitions were announced in the four weeks since we published our analysis, “Spine Merger & Acquisition Activity Going Strong,” which stated that we expect players of all sizes will continue to make purchases in order to remain competitive. The eight transactions we reported between August 22 and September 22 affirm our assertions. The global spine market comprises nearly 300 companies; players need broad portfolios or novel technologies to vie for market share today.

We’ve tracked 31 mergers and acquisitions in the spine space from 2017 through mid-September 2018. The full list can be found online; highlights are included in the table below. From the eight that took place at the end of the third quarter, here are some notable mentions.

The most significant announcement was Stryker’s definitive agreement to purchase K2M for $1.4BB. Our estimates indicate that upon close of the transaction, Stryker will rank among the top three players in spine, narrowly stepping over NuVasive. The new lineup will be #1 Medtronic, #2 DePuy Synthes and #3 Stryker. K2M was #7 on our list prior to the transaction. The purchase allows Stryker to gain access to K2M’s robust portfolio of complex and minimally invasive products, filling gaps in its own portfolio. Additionally, the acquisition combines two forces promoting implants that use proprietary additive manufacturing processes: Stryker with its Tritanium and K2M with its Lamellar Titanium Technology.

Stryker also announced a definitive agreement to purchase Invuity and its portfolio of single-use, lighted instruments that deliver enhanced visualization for multiple applications, including spine. Invuity’s platform product is Intelligent Photonics® devices that provide direct visualization of the surgical cavity, enabling enhanced precision.

Globus Medical acquired Nemaris and its Surgimap software used to preoperatively plan spine surgery. Globus plans to incorporate Surgimap into its ExcelsisusGPS robotic guidance and navigation systems, as well as future products, in order to streamline workflow and enable more robust data analytics. The acquisition complements Globus’ 2Q18 purchase of KB Medical, developer of the AQrate Robotic Assistance system. Surgimap is widely used by Globus’ competitors, including DePuy Synthes, K2M, Medtronic, NuVasive, Orthofix, Stryker and Zimmer Biomet. Questions remain about those license agreements.

Johnson & Johnson Medical GmbH made a definitive agreement to acquire Emerging Implant Technologies (EIT), a manufacturer of 3D-printed titanium interbodies for spinal fusion. EIT’s implants are manufactured from EIT Cellular Titanium® that yields a porosity of 80% and are designed to mimic trabecular bone structure (obviating the need for bone graft). EIT entered the U.S. market in 4Q17. Ex-U.S, EIT’s products have been used in >10,000 procedures in >15 countries, including Australia, France, Germany, Korea and the Netherlands.

Medtronic entered into a definitive agreement to acquire Mazor Robotics for $1.64BB in cash in a transaction that is slated to close in January 2019. The announcement is not surprising, given their relationship that began in 2016 with a multi-phase commercial agreement for co-promotion, co-development and exclusive global distribution of certain Mazor products, as well as an equity investment in Mazor by MDT. This led to >80 installations of the Mazor X™ Robotic Guidance platform for spine surgery since the system’s launch in 2016. The partnership pairs Mazor’s guidance tools with Medtronic’s implants, navigation and imaging technologies.

Other M&A that took place included CTL’s purchase of Amedica’s spine business, IZI Medical’s acquisition of Benvenue Medical’s vertebral augmentation portfolio and Zavation’s acquisition of Pan Medical. Further details off spine M&A activity from 2017 through mid-September 2018 is outlined below.