BASEL, Switzerland — Medartis, a Swiss-based orthopedic company for head and extremity surgery, announced its intent to acquire Nextremity Solutions Inc., a Strategic Commercialization Organization (SCO) with a focus on the extremity musculoskeletal space, located in Warsaw.
Founded in 2007, privately held Nextremity Solutions Inc. (NSI) “is a highly regarded U.S. MedTech company that has specialized in the design, development and manufacturing of indication specific technologies for the treatment of fractures and deformities in lower and upper extremities,” according to a news release from Nextremity. “NSI is an excellent strategic fit to Medartis creating significant new growth opportunities in the U.S. extremities market. Based on external market research, the USD $2 billion U.S. foot and ankle market is among the fastest growing areas in orthopaedics due to new treatment concepts and demographic trends. With this acquisition, Medartis gains access to a highly dedicated and experienced R&D team, strong relationships to US design surgeons and industry thought leaders, a complementary product pipeline, IP portfolio, product knowledge and a modern regional manufacturing base.”
Thanks to the acquisition, Medartis will be able to further accelerate and scale its current U.S. expansion plans and views this transaction as a catalyst for its extremities business in the U.S. and possibly elsewhere, the news release states. To fully exploit the growth potential, Medartis U.S. will significantly expand its distribution network and training and education offering. Its North American research and development center will be established in Warsaw, where NSI is located.”
NSI has built a brand-new manufacturing plant for instruments and implants. The modern 69,500-square-foot production area is expandable and will be used to serve the regional market needs. This will improve the natural currency hedge of the company and provide design transfer opportunities.
Medartis CEO Christoph Brönnimann said, “In the U.S., we strengthened our sales distribution and invested into training and education capabilities. The acquisition of Nextremity Solutions is a great strategic and cultural fit. The new R&D center and modern manufacturing facility in the U.S. will be a catalyst to accelerate our extremities business in the U.S. and potentially elsewhere. I am delighted that CEO Rod K. Mayer and his leadership team will stay with the company, complementing our local management team and working with us to grow our U.S. business.”
Mayer, who has been in the orthopaedic business for over 40 years, said, “This partnership is an exciting opportunity to jointly develop and commercialize patient-centric solutions. Medartis has an excellent reputation among U.S. upper extremity surgeons. By pooling our resources, we will make our current solutions available to more doctors and introduce further innovations to improve treatment options. We are excited to join a company that shares similar values to ours. We are both innovation- and precision-focused, work intensively with design surgeons, and are committed to patient well-being.”
The first products with significant sales potential are expected to be launched in early 2023. The total purchase price will be up to U.S. $70 million. Besides an initial cash payment of U.S. $40 million at closing, the purchase agreement includes milestone and earn-out payments of up to U.S. $30 million linked to the timing of product launches and achievement of certain sales targets. The transaction is expected to be completed in first half 2022. This shared risk profile will allow Medartis to invest significant additional amounts in a dedicated foot and ankle franchise to be built over the next three years. The funding of the acquisition can be financed from existing cash resources and future cash flow. Additional financing options are also being examined, according to the news release.