Smith & Nephew has agreed to acquire tissue regeneration player Rotation Medical for $125 million in cash upfront. Another $85 million is on the table if certain financial milestones are achieved.
Rotation Medical is dedicated to transforming how rotator cuff tears are treated. The Plymouth, Minnesota-based company developed a collagen-based bioinductive implant derived from bovine Achilles tendon. About the size of a postage stamp, the implant is delivered arthroscopically. It is designed to foster the growth of new, tendonlike tissue in the rotator cuff and earned FDA clearance in 2014.
The treatment boosts the body’s natural healing response and has the potential to stop tears from getting worse and reduce the likelihood of retears, Smith & Nephew said in a statement.
Rotator cuff tears are typically treated with surgery, but many people delay surgery until the injury and pain have progressed, Rotation Medical says. While this allows patients to put off the long rehabilitation period and lifestyle changes that accompany recovery, it also makes it more difficult to repair the tear.
“Rotation Medical furthers our strategy to invest in disruptive technologies that accelerate the transformation of Smith & Nephew to higher growth,” said Smith & Nephew CEO Olivier Bohuon in the statement. “The Rotation Medical Rotator Cuff System is an innovative technology serving unmet clinical needs. It is highly complementary to our Sports Medicine portfolio and provides a compelling new treatment option for our customers.”
Smith & Nephew will sell the product through its sports medicine sales team, as well as through Rotation Medical’s sales force. The company also plans to file for regulatory approval in the EU.
“Since first commercialization in 2014, thousands of patients have benefited from the Rotation Medical technology,” said Rotation Medical CEO Martha Shadan in the statement. “We are proud of the impact our technology has made in healthcare and are excited by the opportunity to reach many more customers and their patients as an integrated part of Smith & Nephew's extensive Sports Medicine portfolio.”
The deal is slated to close by the end of the year. While Smith & Nephew doesn’t expect it to make a dent in earnings next year, it expects it to be earnings accretive in 2019.