Smith+Nephew swoops in with $330M offer for CartiHeal after Bioventus bows out

After the collapse of Bioventus’ efforts to acquire its previous orthopedic partner CartiHeal last year, Smith+Nephew has swooped in to pick up the sports medicine developer—and at a discount.

The total deal value comes in under CartiHeal’s last offer, with Smith+Nephew proposing $330 million versus Bioventus’ $450 million, which the latter first put forward in April 2022

However, the balance between cash and milestone payments has since tilted in CartiHeal’s favor: Smith+Nephew has opted to put down $180 million at closing, with the remaining $150 million based on the sales performance of the company’s knee cartilage repair implant.

While Bioventus had first pitched a plan to pay out $315 million upfront and the remainder in milestones, that split was reworked in the weeks that followed, marking one of many deals that fell victim to mid-2022’s “current market conditions.”

Bioventus went on to drop its plans to raise $415 million in debt financing to help fund the acquisition that May before settling on a new deal structure the month after—offering just $100 million upfront, with another $8 million thrown in for CartiHeal’s troubles. The following $215 million of the previously promised tranche was to be paid out in regular installments through 2027, plus interest.

But the entire plan turned out to be for naught, as Bioventus officially backed out of the deal this past April—just days before the company announced it would begin looking for a new CEO

Enter Smith+Nephew. The company aims to take control of CartiHeal’s Agili-C implant, an off-the-shelf, porous, resorbable scaffold that aims to promote the regeneration of damaged knee cartilage.

“As a leader in sports medicine and with a deep knowledge of biologics, Smith+Nephew is the ideal new home for Agili-C,” CartiHeal CEO Nir Altschuler said in a statement. “We are excited at the prospect of our technology helping many more patients overcome knee pain.”

The FDA previously granted Agili-C a breakthrough designation in 2020 before approving it in 2022 for surface lesions in both arthritic and non-arthritic knee joints. CartiHeal reported its first commercial implantation in the U.S. this past July.

Previous studies showed superior improvements in knee pain scores after two years when compared to traditional surgeries, including in patients with mild to moderate osteoarthritis—which Smith+Nephew describes as a condition that’s been unaddressed in standard care.

The company said Agili-C’s broad indication will allow it to reach a wider number of patients on top of the estimated 700,000 that undergo cartilage repair procedures annually in the U.S.

“Agili-C’s superior clinical performance makes it highly complementary to our existing knee repair portfolio and with our proven commercial expertise in high-growth biologics, we are confident that we will drive further success with this compelling treatment option,” said Smith+Nephew CEO Deepak Nath.