NuVasive, Inc., a medical device company focused on developing products for minimally disruptive surgical treatments for the spine, announced today that it has agreed to purchase Cervitech® Inc., a New Jersey based company focused on clinical approval of the PCM® cervical disc system, a motion preserving total disc replacement device. This strategic acquisition allows NuVasive the potential to accelerate its entry into the growing mechanical cervical disc replacement market.
Alex Lukianov, Chairman and CEO of NuVasive said, “We believe that the cervical disc replacement market will become one of the fastest growing segments in spine over the next several years as surgeons and patients choose motion preservation over traditional fusion. The PCM investigational device has the potential to significantly accelerate NuVasive’s entry into this important market. Cervitech is running an impressive clinical trial and the published clinical data verifies that the PCM offers significant benefits to patients. The potential approval will further strengthen our cervical product offering and will enable us to continue our trend of taking market share.”
Massimo Calafiore, President of Cervitech Inc. said, “We are very pleased to have NuVasive continue the development of the PCM. We thank all those whose efforts have brought Cervitech to this point and we look forward to NuVasive’s commercial success with the device.”
Currently, the PCM investigational device is in an FDA-approved clinical trial in the United States and two year follow up is scheduled to be completed in the fourth quarter of 2009. NuVasive anticipates submitting for FDA approval in the first quarter of 2010. The Company expects modest sales outside the U.S. in the near term, with product revenue of $100 million annually within three years of U.S. commercialization.
The initial payment for purchase of Cervitech will be approximately $47 million, with an additional contingent payment of $33 million upon FDA approval of the device. At NuVasive’s discretion, all payments may be made in up to 50 percent NuVasive stock. The transaction will be dilutive in 2009, but the Company expects to absorb any dilutive effects in its operations as indicated by the increased guidance detailed in today’s first quarter 2009 earnings release.