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Musculoskeletal News Roundup 16-Oct-14

EARNINGS
Johnson & Johnson reported financial results for 3Q:14. Total revenue was $18.5 billion in 3Q:14, in-line with consensus estimates and representing an increase of 6% compared to $17.6 billion in 3Q:13. Gross margin for 3Q:14 increased to 70.8%, from 69.6% in 3Q:13. Domestic sales increased 12%, while international sales decreased 0.3% in 3Q:14. Total Orthopedic sales were $2.34 billion in 3Q:14 increasing 3% compared to $2.28 billion with domestic and international orthopedic sales growing 3% and 2% respectively. Hips increased 4% worldwide on an operational basis driven by strong volume growth results in primary hip stem platform sales. U.S. Hip sales grew 3%. Knee sales worldwide increased 5% on an operational basis, with U.S. sales growing 4%. Knee growth was driven by the launch of ATTUNE fixed bearing knee platform and offset by pricing pressures. Trauma grew 3% on an operational basis due to due to market growth.

M&A
European Union (EU) antitrust regulators will decide by March 11th, whether or not to approve Zimmer's proposed $13.4 billion acquisition of Biomet. Zimmer had sought EU approval in June, but the EU competition council halted its review due to certain details that were lacking in the company's merger submission. This latest extension was caused by concerns of reduced competition in certain medical device markets following the takeover.

Becton, Dickinson & Company (BD) entered into a definitive agreement to acquire CareFusion Corporation for $58.00 a share in cash and stock, equating to a total enterprise value of $12.2 billion, or 3.2x LTM revenues, or 13.4x LTM Adjusted EBITDA. The transaction builds upon BD's positions in medication management and patient safety solutions, and improves the company's capability to maximize outcomes in infection prevention, respiratory care, and acute care procedural effectiveness with an expanded product portfolio. The transaction is anticipated to close in 1H:15.

Bioventus entered into an agreement to acquire the OsteoAMP product line from Advanced Biologics. OsteoAMP is a tissue-based bone allograft designed to promote bone growth/regeneration and healing in spinal procedures by utilizing the bone morphogenetic proteins (BMPs) and growth factors found within human bone marrow. The acquisition of OsteoAMP, along with the 2013 agreement with Pfizer to develop a novel BMP product, constitute the foundation of Bioventus' Surgical Orthobiologics segment, a marketplace which the company has outlined as a priority.

Breg, Inc. and United Orthopedic Group, Inc. (UOG) entered into a merger agreement, creating a comprehensive suite of products and services to support orthopedic providers to prevent and rehabilitate orthopedic injuries. The combined company's product portfolio will feature four major product brands of orthopedic braces, cold therapy devices and deep vein thrombosis (DVT) prophylaxis products: Breg, Bledsoe Brace Systems, Hope Orthopedics and Cothera. Brad Lee, current President of Breg, has been appointed president of the newly combined company.

REGULATORY
The FDA issued a new final guidance document intended to clarify the process by which manufacturers of "custom" medical devices can comply with federal regulations. While much of the final guidance is identical to the January 2014 draft, there have been some changes made to this iteration in order to reflect comments the FDA has received. In this latest draft, the FDA has added a section to the guidance regarding its "five unit" definition, which maintains that the regulatory body will "take into account multiple considerations such as anatomical location, disease state, material, technology and indications", when examining a custom device.

Episurf Medical secured CE Mark certification of its Episealer Trochlea product, intended to treat cartilage injury behind the patella (kneecap). Episealer is based on the company's personalized implants.

Precision Spine received 510(k) clearance from the FDA for its VAULT-C Anterior Cervical Interbody Fusion Device, intended for use in skeletally mature patients with degenerative disc disease (DDD) of the cervical spine (C3-T1) at one disc level. VAULT-C is designed to allow for rigid screw fixation using a zero profile construct and aims to limit the risk of damage to surrounding vessels and adjacent soft tissue, while the large, open bone graft area allows for optimal graft containment.

PRODUCT INTRODUCTION & UPDATE
Aurora Spine launched its next generation EOS minimally invasive (MIS) TLIF interbody fusion system. This line of MIS lumbar interbody cages is constructed from PEEK-OPTIMA material and feature Aurora's TiNano titanium spray coating technology.

Globus Medical launched its SILC Fixation System (SILC), a low profile sublaminar fixation system for the correction of spinal curvatures without the need for pedicle purchase in all vertebrae. SILC consists of a polyethylene band that utilizes the strength of the laminar cortical bone as well as a top-loading clamp. It provides a solution for the full spectrum of patients ranging from pediatric to adult in order to address deformity correction, poor bone quality, and compromised anatomy.

Spine Wave launched its Lateral Access product portfolio, which consists of the previously released StaXx XDL Expandable Device and the just released StaXx IBL Expandable Interbody Device, the Abacus Lateral Spacer System, the XLR Lateral Access System and a full complement of disposable accessories, for full commercial launch. With this launch, the company now is able to offer spine surgeons multiple expandable implant options as well as a more traditional non-expandable PEEK implant.

Smith & Nephew launched its EVOS MINI Plating System for use in complex fractures of the long bones of the arms and legs. The system is designed specifically for traumatologists and includes the variety of mini, flat plates and screw sizes necessary to address both fracture reduction and short-term fixation while the final, load-bearing repair is being completed. Organized into a single tray, each EVOS MINI Plating System includes three different, color-coded, size modules that offer a variety of up to eight low-profile plate geometries.

OPERATIONS
Aastrom Biosciences announced plans to change its corporate name to "Vericel Corporation" and move its corporate headquarters to Cambridge, MA. These changes mark the progression of Aastrom's transformation from a clinical-stage company to a fully integrated, commercial-stage specialty biologics company. Management believes the new name reflects the company's commitment to the cell therapy market, and the change in location expands the company's presence in the "vibrant" Cambridge biotechnology community. The company will continue to maintain manufacturing facilities in Cambridge, Massachusetts and Ann Arbor, Michigan.

CLINICAL
VEXIM initiated a new clinical study that will support its planned application for 510(k) regulatory clearance for its SpineJack. The prospective multicenter, randomized study will compare the safety and effectiveness at one year follow-up of SpineJack device with Medtronic's balloon on 150 patients suffering from vertebral compression fractures due to osteoporosis. The company expects to complete the study in 2 years’ time in support of a 510(k) submission in 2017.

COLLABORATION
nanoMAG LLC, a subsidiary of Thixomat Technologies, executed a license agreement with a strategic partner for the commercial development of its BioMg 250 bioabsorbable magnesium alloy. The collaboration with the strategic partner is focused on achieving certain milestones, including regulatory approval for this new class of materials for use in orthopedic applications. Magnesium alloy implants designed to be strong and dissolve over months as the bone recovers its original strength.

DISTRIBUTION
Amedica Corporation entered into a multi-year private labeling agreement with Spinal Kinetics, a developer of advanced artificial spinal disc technology. Under the terms of the non-exclusive agreement, Amedica will provide Spinal Kinetics with its sterile packed silicon nitride spinal interbody fusion devices for sale in worldwide markets.


FDA Issued Final Guidance on Custom Medical Devices

The FDA issued a new final guidance document intended to clarify the process by which manufacturers of "custom" medical devices can comply with federal regulations. While much of the final guidance is identical to the January 2014 draft, there have been some changes made to this iteration in order to reflect comments the FDA has received.

"Custom Devices" are defined as devices not being generally available, not available in finished form, deviated for the needs of a specific patient, not advertised for commercial distribution and intended for a specific patient.

Like products developed by pharmaceutical compounders, custom medical devices are similar to already-approved devices, but are custom-made to the specifications of a single patient based on their prescribed needs as determined by a healthcare professional. They are mostly exempt from regulation, and are not required to seek premarket approval (PMA) or clearance, however, are required to meet the standards for good manufacturing practices (GMPs) under FDA's quality system regulation.

In this latest draft, the FDA has added a section to the guidance regarding its "five unit" definition, which maintains that the regulatory body will "take into account multiple considerations such as anatomical location, disease state, material, technology and indications", when examining a custom device.

The guidance now contains a new section about what to do if a patient must undergo revision surgery to replace a component that is no longer manufactured. The FDA stated that such a component would not necessarily be a custom medical device.

Lastly, the FDA incorporated a decree within the final guidance that companies should provide it with information regarding when a device is destroyed by the ordering physician. Under FDA's new "five device" policy, the agency will not count residual devices manufactured for a particular patient as long as they are either returned to the manufacturer or destroyed.


Bioventus to Acquire OsteoAMP Product Line from Advanced Biologics

Bioventus entered into an agreement to acquire the OsteoAMP product line from Advanced Biologics. Under the terms of the agreement, Bioventus will acquire the intellectual property, commercial business, research and development (R&D) and product supply (which could lead to future innovations) associated with the OsteoAMP product line.

OsteoAMP is a tissue-based bone allograft designed to promote bone growth/regeneration and healing in spinal procedures by utilizing the bone morphogenetic proteins (BMPs) and growth factors found within human bone marrow. OsteoAMP is available in four distinctive formats: granules, compressible sponges, putty, and structural grafts, allowing surgeons to tailor delivery of the technology according to their needs in surgery. The product aims to be an alternative to recombinant growth factors and allograft-derived stem cells.

The acquisition of OsteoAMP, along with the 2013 agreement with Pfizer to develop a novel BMP product, constitute the foundation of Bioventus' Surgical Orthobiologics segment, a marketplace which the company has outlined as a priority.

Bioventus will continue to distribute OsteoAMP through the product's current network of distributors.



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