Dive Brief:
- Smith & Nephew struck an agreement last week to buy CartiHeal for $180 million upfront to expand its range of sports medicine technologies.
- CartiHeal received U.S. approval for its knee implant Agili-C last year, but the progress has been overshadowed by Bioventus’ protracted buyout bid, which ultimately fell apart and opened the door to Smith & Nephew.
- The British medtech company seized the opportunity, agreeing to pay an additional $150 million tied to financial performance to slot Agili-C into its fast-growing sports medicine unit.
Dive Insight:
Bioventus, which was spun off from Smith & Nephew in 2012, exercised its option to buy CartiHeal for $315 million upfront last year but quickly ran into problems. The company planned to raise $415 million to fund the deal but encountered resistance from investors, leading it to establish a staggered payment plan. Bioventus closed the deal last year, only to agree to return CartiHeal to its shareholders in February.
The chain of events put CartiHeal back on the market for potential buyers. Smith & Nephew persuaded CartiHeal’s shareholders to part with the asset for less cash than Bioventus offered. The upfront fee now stands at $180 million, with up to $150 million more to follow if CartiHeal hits financial targets.
In return for the outlay, Smith & Nephew will gain control of an off-the-shelf treatment for bone and cartilage lesions. Smith & Nephew highlighted the breadth of the device’s label as an advantage, noting that its authorization for use in people with lesions in knees with mild-to-moderate osteoarthritis opens up a previously unserved patient population.
Agili-C will join a sports medicine portfolio that Smith & Nephew has established as a growth driver. Sports medicine and ENT sales increased 11% in the third quarter, and the segment has grown by double-digits every quarter in 2023. Smith & Nephew highlighted Regeneten, a device acquired in a deal worth $125 million upfront, as a key product.
