Durham, North Carolina-based Bioventus Inc. and the former CartiHeal shareholders have entered into a settlement agreement regarding the amended option and equity purchase agreement for Bioventus’s prior acquisition of Israel-based CartiHeal Ltd.
Is Bioventus Backing Out of CartiHeal Deal?
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According to the Bioventus press release, the settlement agreement gives Bioventus the option to “eliminate the entirety of $350 million of deferred purchase price obligations plus accrued interest under the amended acquisition agreement (which is comprised of $215 million of post-closing tranches and a $135 million sales milestone payment, if applicable, each as defined in the amended acquisition agreement, plus any applicable interest).” Additionally, under the settlement agreement, Bioventus will be released “from any and all future claims or obligations by or to the CartiHeal Sellers that may have arisen under the amended acquisition agreement.”
Bioventus has 30 days to assess options to retain CartiHeal. This includes assessing options to pay for any remaining obligations under the amended acquisition agreement. According to the press release, Bioventus will only pursue funding options “on an opportunistic basis, on terms that the Company [Bioventus] believes would be favorable to its stakeholders.” If, after the 30 day period, Bioventus fails to obtain funding necessary to pay the $215 million of post-closing tranche obligations, plus any applicable interest, Bioventus has “agreed to transfer ownership of CartiHeal to the CartiHeal Sellers.”
The settlement agreement will cost Bioventus. The company is going to have to pay to get out of its obligations and have an additional 30 days to potentially keep CartiHeal. Per the press release, Bioventus has “agreed to pay the CartiHeal Sellers $10,000,000 in cash as well as $150,000 in a non-refundable expense reimbursement payment.” Bioventus will have the option to exercise up to two 15-day extension periods “for an additional $5,000,000 payment per extension.”
For OTW’s coverage of Bioventus’s plans to buy CartiHeal, see “FDA Approves CartiHeal, Bioventus Buys Company for $315MM” and “Bioventus Set to Acquire CartiHeal and Agili-C Implant.”
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This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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