Article preview from IN VIVO - January, 2012
The spin-out of Smith & Nephew’s Biologics and Clinical Therapies division into a privately held entity, Bioventus LLC may serve as a model for other large publicly held device companies seeking to maximize the performance of non-core businesses.
Article preview from IN VIVO - January, 2012
The spin-out of Smith & Nephew PLC’s biologics and clinical therapies division into a privately held entity Bioventus LLC will serve as a model for other large publicly held device companies seeking to maximize the performance of non-core businesses - at least that’s what Marty Sutter’s inbox tells him. The General Partner of Essex Woodlands Health Ventures, the majority investor in the $118 million financing that will create a new company, says following the announcement of the deal he was peppered with congratulatory emails from industry contacts praising the structure of the deal and wondering if their companies should be next.
Only time will tell whether the enthusiasm of the device industry will translate into transactions; perhaps a lot of time. The deal took over two years to develop, according to Sutter, starting with a meeting at the JP Morgan Conference in 2010. A firm hired by Smith & Nephew to examine options for the division initiated contact. Smith & Nephew initially met with a few potential partners, according to Sutter, but the talks quickly narrowed to Essex Woodlands. Sutter says Essex Woodlands’ deep health care expertise and a $990 million fund gave it the expertise and capital necessary to do the deal. Essex Woodlands will invest a minimum of $60 million as it plans to bring in co-investors Pantheon Ventures, a limited partner of Essex Woodlands, and Spindletop Healthcare Capital, an investment firm that represents UTIMCO, another long-time investor in Essex Woodlands Funds. Together, the group will pay out $118 million, of which $98 million will go to Smith & Nephew. The remainder will go toward Bioventus.
But the imitation deals may only come if Bioventus can execute on Essex Woodlands’ lofty goals of creating a leader in bone healing and orthobiologics. As constructed, Bioventus presents a good base business. Bioventus’ product lines currently include the Exogen ultrasound bone healing system and hyaluronic acid joint fluid therapy products, Supartz and Durolane.
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