Medtronic to Buy Mazor Shares, Promote Surgical Systemby
Medtronic to buy 15 of Mazor’s next-generation spinal systems
Medtronic could purchase up to 15% of Mazor Robotics shares
Medtronic Plc, the largest maker of equipment to treat spinal conditions, agreed to help promote Mazor Robotics Ltd.’s guidance system used during spinal surgeries and will take an equity stake of up to 15 percent in the company. Mazor’s stock surged.
Medtronic will purchase newly issued securities representing 4 percent of the company’s outstanding shares for about $12 million, equal to the 20-day trailing average price per share, Mazor said in a statement. It will have the opportunity to buy an additional 6 percent of the Caesarea, Israel-based company, plus a further 5 percent, in future allotments that Medtronic can cap at $20 million apiece.
The two companies will work together to promote Mazor’s next-generation robotic spinal system, used to help surgeons plan and precisely execute surgeries, and develop additional products used during the procedures. Medtronic will buy 15 of Mazor’s new systems by the end of the year. If the initial phase of the agreement meets expectations by the end of 2017, Medtronic will take over exclusive sales and distribution for Mazor’s spinal products. Financial details of the agreement weren’t disclosed.
“Medtronic has the biggest and widest sales organization in spine surgery,” said Mazor Chief Executive Officer Ori Hadomi in a telephone interview. “I do believe that working with Medtronic and the marketing capabilities they have will make Mazor surgical robotic technologies the standard of care in spinal surgery.”
The company’s shares rose 24 percent, the most since May 2009, to 25.55 shekels at 3:35 p.m. in Tel Aviv.
Medtronic will be working with Mazor’s next-generation robotic system, which will be installed at the company’s training and clinical sites once it is ready to be rolled out later this year, Hadomi said. Additional products developed by the two companies, including novel implants and applications, could create new revenue opportunities each time the system is used, he said.
Mazor has sold more than 110 of its original Renaissance systems, which can cost close to $1 million and use a mount that is affixed to the spine and 3-D images to plot the location of each vertebra so screws and implants are precisely placed. It will continue to sell its current system and develop it in areas outside the spine, Hadomi said.
“Our business model will be enriched by a new revenue component,” Hadomi said. “And we remain independent, remain free to develop the technology and create more value.”