Toronto-based Titan Medical Inc. has inked a development and license agreement with Medtronic plc, of Dublin, to advance the development of single-port robotic-assisted surgical tools. A separate agreement gives Medtronic licensing rights to certain Titan intellectual property.
The arrangement aligns with Medtronic’s goal of building its robotic-assisted surgery business and gives Titan’s financials a needed shot in the arm.
Titan’s technology includes a surgeon-controlled robotic platform that features multi-articulating instruments for performing minimally invasive surgery through a single port. The Sport Surgical System includes a workstation and surgeon-controlled patient cart with 3D high-definition endoscopic view of the procedure.
Under the license and development agreement, Titan will receive a series of milestone payments totaling up to $3.1 million for Medtronic’s license of robotic-assisted surgical technologies. Among the milestones is for Titan to raise an additional $18 million within four months of the development start date, slated for some time this month. A steering committee comprised of Titan and Medtronic representatives will oversee the work of achieving and verifying the milestones.
Senior secured loan
To support development, Medtronic has provided Titan with a senior secured loan of $1.5 million, at an annual interest rate of 8%, which will be increased to cover expenses related to the agreements. Repayment of the loan is due June 4, 2023, or upon completion of the last milestone or a change of control at Titan, the company said.
Under the second agreement, Medtronic has licensed certain unspecified Titan technologies for an up-front payment of $10 million. Titan retains the rights to continue developing and marketing those technologies for its own purposes.
“These agreements ... will allow Titan to continue to develop its single-port robotic surgical technologies while sharing our expertise and technologies with Medtronic,” said David McNally, Titan Medical’s president and CEO. “We are very excited about the opportunity to continue Titan’s pioneering work to bring new single-port surgical options to the market.”
The agreements mark Medtronic’s second notable robotics deal of the year, as the company eyes the release of a soft tissue robot to compete with Intuitive Surgical Inc.’s Da Vinci system. In February, the company acquired London-based Digital Surgery Ltd., which focuses on surgical artificial intelligence (AI), data analytics, and digital education and training. The aim was to increase precision and predictability in robotic surgery by integrating Digital Surgery’s AI technology into Medtronic’s robotic platform.
During a May 21 fourth-quarter earnings call, Geoff Martha, Medtronic’s president and CEO, said the COVID-19 pandemic has slowed the launch of the soft tissue robot. “Our ability to finalize the system in preclinical testing has been delayed, and given the uncertainty of the pandemic, it’s too early to update you on timelines,” he said. “However, we’re exploring ways to expedite this work with the intent of minimizing the delay.”
Martha stressed that Medtronic is taking the long view when it comes to the coronavirus, including pursuing new partnerships and investments that can boost its competitive edge. The Titan Medical agreements align with that goal.
“Medtronic’s surgical robotics business will continue to make strategic investments across the robotics space, especially within the technology vectors of robotic platforms, instrumentation, visualization and navigation, and data and analytics,” Medtronic spokesman John Jordan told BioWorld. “These types of strategic investments allow us to maintain insight into technology, market dynamics and trends.”
In connection with the agreements, which were unanimously approved by Titan’s board, the company’s chairman, Charles Federico, and director John Schellhorn have resigned. Meanwhile, McNally has been appointed chairman, in addition to his current roles.
Last week, Titan was notified by Nasdaq of the potential delisting of its common shares due to the failure to meet minimal listing requirements of $2.5 million in stockholders’ equity, $35 million in market value of listed securities or $500,000 in net income from continuing operations for continued listing. The company has said it will appeal the determination.
For the first quarter of 2020, ended March 31, Titan reported losses of $768,043, a 97.3% gain over losses of roughly $28.3 million in the same period of 2019.
In recent months, the company has completed three incremental financings – a registered direct offering that drew proceeds of $1.2 million in March, the $1.5 million Medtronic loan in April and a second registered direct offering for $2 million in May.