Medical technology company Smith+Nephew (SN.L,SNN) announced Wednesday that it has entered into a definitive agreement to acquire CartiHeal for an initial cash consideration of $180 million at closing.
Under the deal terms, Smith+Nephew will also pay up to a further $150 million contingent on financial performance.
The acquisition is expected to close in the first quarter of 2024. Breakeven to trading profit is targeted by 2027.
CartiHeal, founded in 2009 as a university spin-out, is the developer of Agili-C, a novel sports medicine technology for cartilage regeneration in the knee.
CartiHeal retains a small facility close to Tel Aviv and a sales office in New Jersey, US. Smith+Nephew noted that CartiHeal has large quantities of raw material in the US and, by close of the deal, will also have ample US stock to support full commercial launch. All CartiHeal employees are expected to transfer to Smith+Nephew.
Agili-C is a porous, biocompatible, and resorbable scaffold which promotes natural regeneration of the articular cartilage and restoration of its underlying subchondral bone. The U.S. Food and Drug Administration granted Agili-C Breakthrough Device designation status in 2020 and Premarket Approval or PMA in March 2022.
The company noted that Agili-C is an off-the-shelf one-step treatment for osteochondral (bone and cartilage) lesions with a broader indication than existing treatments.
Deepak Nath, Chief Executive Officer of Smith+Nephew said, "The acquisition of this disruptive technology supports our strategy to invest behind our successful Sports Medicine business. Agili-C's superior clinical performance makes it highly complementary to our existing knee repair portfolio and with our proven commercial expertise in high-growth biologics, we are confident that we will drive further success with this compelling treatment option."
The acquisition will be financed from existing cash and debt facilities.
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