FTC Approves Tornier and Wright Medical Merger
The U.S. Federal Trade Commission (FTC) recently issued a final order that conditionally approves the merger between Amsterdam, Netherlands-based Tornier N.V. and Memphis, Tennessee-based Wright Medical Group, Inc. Reuters reports that the all-stock transaction is valued at about $3.3 billion. Plans for the merger were first announced in October 2014, and approved by the shareholders of both companies in June 2015, subject to receipt of clearance by the FTC. Progress on the transaction was suspended when the FTC expressed concerns that the merger would reduce competition for total ankle replacements and total silicone rubber (silastic) toe replacements in the U.S. market.
The FTC’s Bureau of Competition enforces U.S. antitrust laws and works with the Bureau of Economics to investigate alleged anticompetitive business practices. On occasion, the Bureau urges the Commission to take law enforcement action. In this case, the FTC’s concerns were the final obstacle to the proposed merger. The recent final order, which follows a mandatory public comment period, settles the FTC’s allegations of anticompetitive behavior.
The order calls for Tornier to sell a portion of its U.S. assets and IP rights to Integra Lifesciences Corporation (NASDAQ: IART), a competitor in the U.S. orthopedics space, which is based in Plainsboro, New Jersey. The newly combined company will be required to provide Integra with ankle and toe replacement products for up to three years. Through this arrangement, the FTC seeks to foster competition in the affected market.
In addition to its upper and lower extremity portfolio, the merged companies will maintain a presence in the growing biologics market. Wright Medical recently obtained FDA approval on the Augment bone graft material (left), which is as an alternative to autograft in a variety of arthrodesis procedures. Tornier has developed a line of biologics that includes its BioFiber line of absorbable scaffolds and its Conexa reconstructive tissue matrix, both of which are used for soft tissue repair.
The U.S. market for cell-based therapies for musculoskeletal injuries (orthobiologics) is valued at over $1.5 billion and is expected to grow significantly in 2016. Other market participants in the orthobiologics space include Dublin, Ireland-based Medtronic (NYSE: MDT), San Diego, California-based NuVasive (NASDAQ: NUVA), Kalamazoo, Michigan-based Stryker (NYSE: SYK), and Johnson and Johnson’s West Chester, Pennsylvania-based DePuy Synthes (NYSE: JNJ). Orthobiologics are part of the growing field of regenerative medicine, which includes bioprinting and stem-cell based therapies, and is projected to be worth $6.5 billion in the U.S. by 2019. Bioprinting, itself, has received recent investment and growth.
Following the merger, the resulting company will be renamed Wright Medical Group, N.V. and will be incorporated and headquartered in the Netherlands.
3D Printing Partnership: 3D Medical Limited to Acquire Mach7 Technologies
3D Medical Limited (ASX: 3DM) recently announced that it has entered into a binding Heads of Agreement (HOA) to purchase 100% of shares issued in Mach7 Technologies. According to the agreement, 3D Medical will issue 460 million shares to the owners of Mach7 in exchange for the company’s assets and intellectual property. Up to 300 million performance shares will also be distributed if predetermined financial milestones are reached. The deal is valued at approximately $60 million USD.
3D Medical Limited is an Australian provider of 3D printing technology and services for use in clinical medicine. The company’s “Touch 3D” service creates 3D printed models from CT or MRI scans. The models may serve as visual aids for pre-surgical planning or be directly implanted during surgery. In June 2015, the company 3D printed a titanium jaw bone that was transplanted into a Melbourne man (Figure 1, right). 3D Medical subsequently received orders for 25 additional custom implants.
Mach7 Technologies is a US based provider of enterprise level medical imaging solutions. Its Mach7 system promotes sharing of data between different departments or facilities and allows the consolidation of images from disparate software platforms. The Mach7 platform is currently used in over 300 sites worldwide, including in leading academic medical centers in the United States.
The proposed merger will give 3D Medical additional exposure in US markets, and provide it with increased control over the 3D printing process from image acquisition through model and implant creation. The company hopes to raise an additional $10.9 million Australian ($7.85 million US) in working capital to support the sales and marketing activity of Mach7, to decrease Mach7’s debt, and to further develop 3D Medical’s data offerings. On October 28th, 3D medical announced that it had raised $4 million through an oversubscribed private placement.
Following the deal, the merged companies will adopt the name Mach7 Technologies and operate out of a Melbourne headquarters. The new company will offer four product lines, including Touch 3D printed models and implants, Mach7 image management solutions, the Visualize holographic projection platform (developed by EchoPixel), and the GestSure in-theater image manipulation system.
3D printing in medicine has gained momentum in recent years and some analysts predict the global market will reach over $965 million by 2019. A variety of 3D printed structures such as teeth, skull, and pelvis have been implanted into human patients, and 3D printed heart models have been used to plan complex surgeries in patients with congenital anomalies (Figure 2, left). Some companies, like San Diego based Organovo (NYSE: ONVO), use human cells in the 3D printing process, which is called bioprinting. Organovo is working with researchers at Yale University to develop bioprinted human organs for implantation, but for the time being, Organovo prints micro-livers for use in drug development. Other companies in the medical 3D printing space include Belgium based Materialise (NASDAQ: MTLS), Michigan based EnvisionTEC, and Minnesota based Stratasys (NASDAQ: SSYS).
Materialise, EnvisionTEC, and Stratasys own a variety of patents related to 3D printing and implants.
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