Stryker acquires OrthoSpace and its rotator cuff implant in $220M deal

Stryker has acquired OrthoSpace, developers of a therapy for severely torn rotator cuffs, in a deal worth up to $220 million, split evenly between upfront cash and future milestone payments.

The Israel-based OrthoSpace has developed a biodegradable balloon spacer that fits between the shoulder’s scapula and acromonion bones, as well as the humerus of the arm, to realign the natural mechanics of the shoulder, reduce pain and improve range of motion.

The InSpace balloon allows the bones to move with less friction, and mimics the shoulder’s bursa, a fluid-filled cushion that sits between the shoulder bones. The minimally invasive treatment is currently undergoing clinical development in the U.S., and is not yet approved.

“The acquisition of OrthoSpace is highly complementary to our existing portfolio and aligns with Stryker’s focus on investing in sports medicine,” Stryker’s Med-Surg group president, Andy Pierce, said in a statement.

However, it might take some time to see a return: the company said it does not expect the purchase to add much to its net earnings in 2019.

“We are excited about the momentum OrthoSpace has in key global markets and the additional surgical option this technology provides our customers to address a complex pathology,” Pierce said.

To date, the CE-marked InSpace balloon has been used in outpatient procedures for massive, irreparable tears in more than 20,000 patients in 30 countries, the companies said.

OrthoSpace raised $8 million in funding for a U.S. pivotal study in 2015, followed by another $7 million a year later—including money from Johnson & Johnson Innovation, Smith & Nephew, TriVentures and HealthpointCapital.