Wright Medical to Buy BioMimetic Therapeutics
Two Tennessee-based medtech companies are joining forces. Wright Medical Group Inc. in Arlington is buying BioMimetic Therapeutics Inc. in Franklin for about $190 million in cash and stock. Total potential value of the deal, which depends upon reaching predetermined milestones, is nearly $400 million.
Wright Medical is an orthopedics company. BioMimetic develops regenerative medicine products to promote the healing of musculoskeletal injuries and diseases with a novel protein therapeutic product called Augment bone graft, which currently is under late-stage review by the U.S. Food and Drug Administration (FDA) as a replacement for autologous bone graft in foot and ankle fusions. According to officials at Wright, the transaction will combine BioMimetic's biologics platform and pipeline with Wright's established sales force and product portfolio, with the hope of growing Wright's extremities business.
Under the terms of the agreement, the transaction has a total potential value for BioMimetic shareholders of approximately $380 million, or $12.97 per share, based on Wright's closing stock price on Friday, Nov. 16. Each share of BioMimetic common stock will be converted into the right to receive an upfront payment of $1.50 in cash and 0.2482 shares of Wright common stock. The upfront payment values BioMimetic at approximately $190 million, or $6.47 per share, also is based on Wright's closing stock price on the 16th.
Each BioMimetic share also will receive one tradable Contingent Value Right (CVR), which entitles its holder to receive additional cash payments of up to $6.50 per share, which are payable upon FDA approval of Augment and other revenue milestones.
The transaction is expected to close in the first quarter of 2013 and is subject to customary closing conditions, including BioMimetic shareholder approval. The transaction received the unanimous approval of the board of directors of both Wright and BioMimetic, the companies reported.
"We believe this transaction will significantly accelerate the continued transformation of our business as well as our strategy of building a world-class biologics platform and growing our foot and ankle business at well above market growth rates,” said Robert Palmisano, president and CEO of Wright. “BioMimetic's products complement our existing biologics product portfolio, and, if approved by the FDA as we expect, Augment bone graft will provide us with a unique solution for the U.S. hindfoot and ankle fusion market that leverages the distribution capabilities of Wright's dedicated foot and ankle sales organization and our physician training capabilities."
"BioMimetic is delighted to partner with a company that shares our commitment to building a world-class biologics platform,” said Samuel Lynch, president and CEO of BioMimetic Therapeutics. “We believe that Augment bone graft will become an important new therapeutics option to improve patient outcomes in hindfoot and ankle fusion procedures, and that Wright Medical with its leadership position in the foot and ankle market is the ideal partner to accelerate the rapid adoption of our products around the world."
BioMimetic's Augment product line is based on recombinant human platelet-derived growth factor (rhPDGF-BB), a synthetic copy of one of the body's principal healing agents. In May 2011, an FDA advisory panel voted to recommend approval of Augment. In January, however, BioMimetic received a post-panel non-approvable letter requesting additional information in a premarket approval (PMA) amendment. In June, BioMimetic submitted the amendment, and the product currently is pending a final FDA regulatory decision. If approved, Augment will be the first clinically proven protein therapeutic to come to the orthopedics market in a decade, offering the potential to reinforce surgical bone repair in hindfoot and ankle fusion procedures effectively, which translates into an estimated market opportunity believed to be approximately $300 million annually in the United States, according to Wright’s figures.
Augment currently is available for sale as an alternative to autograft in Canada for foot and ankle fusion indications and in Australia and New Zealand for hindfoot and ankle fusion indications.
Wright predicts the transaction will lower adjusted earnings until the second full year after FDA approval of Augment. Afterward, the deal should add to earnings.
Earlier this month, Wright reported its third-quarter loss narrowed from a year-earlier period weighed down by restructuring charges, while sales fell 6.6 percent.