San Diego, California-based NuVasive, Inc. has announced the acquisition of privately held Simplify Medical, Inc.
NuVasive acquired the cervical disc manufacturer for an upfront payment of $150 million. NuVasive “agreed to make additional future payments contingent upon milestones related to regulatory approval and net sales from products incorporating the Simplify Cervical Artificial Disc technology.” NuVasive made the upfront payment using cash on hand.
Based in Sunnyvale, California, Simplify Medical manufactures the Simplify Cervical Artificial Disc for total disc replacement. It was approved for 1-level use in September 2020. The device is “currently being evaluated in a separate IDE [investigational device exemption] study in the U.S. for 2-level indications, pending FDA approval.”
Analysts have viewed the acquisition positively, indicating that the acquisition addresses a gap in the NuVasive portfolio.
In a note to investors, Canaccord Genuity Analyst Kyle Rose commented, “We view the deal positively and are not surprised to see this acquisition given cervical has been highlighted as a key growth opportunity for NUVA [NuVasive] and a cTDR [cervical total disc replacement] product fills a key product gap in cervical (NUVA’s PCM disc was approved/ launched in 2012 but never gained commercial traction).”
Rose continued, “The deal with Simplify [Medical] further develops that portfolio, adding a differentiated cTDR option to the product bag and giving the commercial team a needed boost of new tech.”
Wells Fargo analysts shared this sentiment, indicating in a report that the acquisition was a “good strategic move.” The analysts looked at sales for the Simplify Cervical Artificial Disc. Under NuVasive, Wells Fargo analysts believe that “the integration of the commercial and supply chain will occur immediately followed by surgeon and sales training as there is a learning curve.” This suggests that “there will likely be some revenue contribution in 2021 that will be second half weighted.”
