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$500 Million CartiHeal Sale In Trouble

CartiHeal

Israeli medical device company CartiHeal’s sale to Bioventus, an American orthologics company, is in trouble. Citing the currently poor conditions in the stock markets worldwide, Bioventus revealed that the company will not be going forward with the raising of $415 million in capital that it needed to finance the deal.

Bioventus, however, still holds a 27% stake in CartiHeal.

In August of 2021, Bioventus, an American orthologics company, exercised an option that it held to acquire. The price set was 500 million with $360 million being paid out in front in cash.

Pursuant to its Option and Equity Purchase Agreement with CartiHeal Ltd., Bioventus made a $50 million escrow payment, sort of a deposit that ensures the company’s intention to go forward with the acquisition.

But that deal was contingent on U.S. Food and Drug Administration (FDA) granting Premarket Approval (PMA) for CartiHeal’s Agili-C™ implant. That approval came in March and so at the time Bioventus announced that it could move forward with the deal. Well, a lot can happen in just two months.

The Russian invasion of Ukraine led to multiple economic sanctions being imposed on Russia and Russian oligarchs who like big investments. This led to a drying up of available capital and this is not the first such deal to be hurt because of the situation. The conflict has also led to skyrocketing oil prices. Then add to that the U.S. Federal Reserve’s plan to raise interest rates – a move that caused investors to flee markets and in turn caused stock markets to drop – and you can see why Bioventus might want out of the deal.

CartiHeal is a privately-held Israeli medical device company that develops proprietary implants for the treatment of cartilage and osteochondral defects in traumatic and osteoarthritic joints. The Agili-C™ implant is indicated for the treatment of an International Cartilage Repair Society (ICRS) grade III or above knee-joint surface lesion(s), with a total treatable area of 1-7cm2, without severe osteoarthritis (Kellgren-Lawrence grade 0-3).

The Mayo Clinic explains that Osteochondritis dissecans (os-tee-o-kon-DRY-tis DIS-uh-kanz) is a joint condition in which bone underneath the cartilage of a joint dies due to lack of blood flow. This bone and cartilage can then break loose, causing pain and possibly hindering joint motion.

Osteochondritis dissecans occurs most often in children and adolescents. It can cause symptoms either after an injury to a joint or after several months of activity, especially high-impact activity such as jumping and running, that affects the joint. The condition occurs most commonly in the knee, but also occurs in elbows, ankles and other joints.

CartiHeal offers a cell-free, off-the-shelf implant, CE marked for use in cartilage and osteochondral defects. Agili-C has been implanted in over 400 patients with cartilage lesions in the knee, ankle and great toe in a series of trials conducted in leading centers in Europe and Israel. In these trials, the implant was used to treat a broad spectrum of cartilage lesions, from single focal lesions to multiple and large defects in patients suffering from osteoarthritis.

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