Bioventus to exercise option to buy CartiHeal for $500m

Nir Altschuler

The Israeli company has developed cartilage implants made from coral.

US orthologics company Bioventus (Nasdaq: BVS) has announced today that it is exercising its option to acquire Israeli medical device company CartiHeal, which has developed cartilage implants made from coral. Bioventus will pay $360 million up front and milestone payments that could bring the deal up to $500 million.

Bioventus has elected to make a $50 million escrow payment pursuant to its Option and Equity Purchase Agreement with CartiHeal Ltd., signaling its intent to move forward with an acquisition of CartiHeal, as soon as the Israeli company's cartilage treatment receives FDA approval. CartiHeal recently successfully completed a major clinical trial and if there are no major surprises the company will receive FDA clearance in the coming year.

Bioventus SVP and CSO Alessandra Pavesion said, "The robust data generated from the pivotal clinical trial, a randomized controlled trial with Agili-C, demonstrated superiority over surgical standard of care, microfracture and debridement, in KOOS overall compared to baseline. We believe this product could be a strong alternative for the approximately 650,000 US patients annually receiving microfracture or debridement along with other cartilage treatment options. In combination with our HA products, Agili-C represents an exciting potential new offering for our portfolio designed to address the spectrum of osteoarthritis disease."

CartiHeal's technology was developed by founder and CEO Nir Altschuler. He said, "We found that the implant draws stem cells from the bone marrow. These cells gradually break down in the implant while rebuilding the damaged cartilage and bone."

Elron Electronic Industries Ltd. (OTC: ELRN; TASE:ELRN) said after the agreement was signed that it expects to receive $126-129 million if the option is exercised including $90-92 million at purchase and $36-37 million in milestone payments - if CartiHeal generates revenue of $100 million during a 12 month period.

Accelmed Fund, controlled by Uri Geiger, has a 15% stake in CartiHeal, and expects to receive $75 million, a return of seven times its investment.

From its founding, CartiHeal was supported by Boaz Lifschitz, general partner and cofounder of Peregrine Ventures . Peregrine, which invested in CartiHeal out of its Peregrine 2 fund, will achieve a 5000% on return on its investment. 

Other shareholders include aMoon, Access Medical Fund, Partech, and Johnson & Johnson Innovations.

Published by Globes, Israel business news - en.globes.co.il - on August 30, 2021

Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Nir Altschuler
Nir Altschuler
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