Wright to grab BioMimetic in $190M-plus agreement
Orthopedic devicemaker Wright Medical ($WMGI), a rumored acquisition target itself, will instead snatch up regenerative medicine company BioMimetic Therapeutics ($BMTI) in a deal worth at least $190 million and potentially much more over time.
BioMimetic's total price tag could hit as high as $380 million, assuming its Augment Bone graft product gains FDA approval and hits predetermined revenue milestones. Both companies' boards of directors approved the merger, which should close sometime in the 2013 first quarter, pending approval from BioMimetic's shareholders.
Having these two Tennessee companies join forces makes sense on a lot of levels. Wright Medical president and CEO Robert Palmisano said in a statement that BioMimetic's technology will help boost its foot and ankle reconstruction business, with Augment playing a big part in accelerating sales for the division. And BioMimetic president and CEO Samuel Lynch said that Wright's global sales prowess will help accelerate sales of Augment and other BioMimetic products, once they gain approval.
Wright is clearly hoping that the deal will give it a financial shot in the arm. Wright's 2012 third quarter revenue dropped 7% over the previous year, and losses--though improved--have continued. The company's foot and ankle products division offered a financial bright spot for the company, and Wright will split its struggling orthopedic reconstruction devices and extremities products into two separate divisions to help, in part, maximize the company's growth potential. Wright admitted in 2010 that it violated federal anti-kickback laws and has struggled to maintain a stable executive roster and balance itself ever since.
Wright's plan to purchase BioMimetic is something of a gamble. An FDA panel of experts voted in May 2011 that Augment was safe and effective as an alternative to autograft in hindfoot and ankle fusions. But the FDA responded with a non-approvable letter in January 2012, the companies noted in the sale announcement. Regulators wanted additional data and BioMimetic complied, and now the final PMA application is awaiting a decision either way. The product could tap into a $300 million U.S. market, the companies note, and it is already in use in Canada, Australia and New Zealand. But a regulatory thumbs-down in the U.S. could throw that financial potential out the window.
If approved, Augment would be the first product of its kind approved for the orthopedics market in about 10 years.
- read the release