Smith & Nephew (SNN) agreed to acquire Ceterix Orthopaedics, developer of the NovoStitch® Pro Meniscal Repair System. SNN will pay up to US $105MM comprising an initial cash consideration of $50MM and $55MM over the next five years, contingent upon financial performance.
Ceterix received FDA 510(k) clearance to market the next-generation NovoStitch Pro in 3Q18. The technology allows arthroscopic stitch placement in tight joint compartments to repair complex meniscal tears in knees, hips and shoulders. It treats a broad range of tear types, including horizontal, radial, complex, bucket handle and root, as well as vertical tears, and complements SNN's FAST-FIX 360, which also addresses vertical meniscus tears.
Ceterix recently appeared on our list of arthroscopy/soft tissue repair companies worth watching, due to its flurry of activity in 2018. In addition to the clearance of NovoStitch Pro, the company announced that it was issued three patents and completed enrollment in a prospective, non-randomized, multi-center investigation assessing the NovoStitch system vs. other suture-only techniques—all strategic announcements that we expect made it a prime acquisition target for SNN.
The transaction is expected to close in early 2019, and supports SNN’s stated objective to more actively pursue M&A via bolt-on acquisitions. SNN's other purchases in the arthroscopy/soft tissue repair space have included ArthroCare in 2014 and Rotation Medical in 2017.
For 2017, ORTHOWORLD estimated SNN at the second position in the arthroscopy/soft tissue repair segment with 23% market share, following Arthrex at first place (33%).