Orthopaedic M&A

As you may have seen, Smith & Nephew (LON:SN, market capitalisation: ~GBP$12.4bn), a leading orthopaedic company, recently announced the acquisition of Rotational Medical (RM), a medical scaffold company working within the tendon repair space for up to US$210m.

Link: http://www.smith-nephew.com/news-and-media/media-releases/news/smith--nephew-acquires-tissue-regeneration-technology-for-shoulder-repair/

Key summary points:

• RM focused on developing a medical scaffold for shoulder rotator cuff tendon repair only – RM’s product has 510(k) clearance for sale in the US, with a filing being prepared for EU approval
• Orthocell’s collagen medical device CelGro® boasts superior tissue repair qualities with multiple applications (including tendon, nerve, bone and cartilage repair) and multiple licence and acquisition opportunities Further, CelGro® is approaching marketing authorisation in the EU for dental bone and soft tissue applications expected in 4Q CY2017
• SN’s acquisition of RM, for an initial cash consideration of US$125m and up to US$85m over the next 5 years (contingent on financial performance), now represents the most recent transaction comparable for Orthocell’s CelGro® collagen medical device
• This transaction highlights the significant interest within the medical scaffold space, and further demonstrates the opportunities for biological soft tissue repair devices and significant upside potential in Orthocell