A Medical Device Daily

The Endoscopy Division (Andover, Massachusetts) of Smith & Nephew (S&N; London) reported that it acquired privately held OsteoBiologics (OBI; San Antonio) for $72.3 million in cash.

OBI markets bioabsorbable bone graft substitutes (BGS) in Europe to repair cartilage defects in the knee, and offers the TruFit BGS Plugs in the U.S. as a bone void filler. S&N said that OBI's products add to its arthroscopy portfolio and will be sold through Smith & Nephew Endoscopy's global sales force.

Mike Frazzette, president of S&N Endoscopy, said that the addition of OBI's technology “will allow us to provide even more choices to surgeons when it comes to treating injuries within the joint.“

OsteoBiologics' 2005 sales revenues were $3.3 million. S&N said the acquisition is expected to reduce its second-half 2006 earnings by $7 million and be “broadly neutral“ in 2007.

OBI's primary product marketed in Europe, TruFit CB, is described as a one-step arthroscopic procedure for repairing bone and articular cartilage defects, often a result of traumatic injury or degenerative conditions found in conjunction with meniscal tears or ACL injuries.

“There is strong evidence that articular cartilage defects can lead to osteoarthritis,“ S&N said in a statement, and that “less than 20% of cartilage defects in the knee are treated due to the lack of an efficacious and patient-friendly solution.“

Joe Darling, vice president of marketing for S&N Endoscopy, said, “The availability of OBI's simple-to-use TruFit CB will allow these defects to be treated before they lead to additional damage within the joint. In addition, OBI is a powerful complement to our comprehensive knee repair product offering and further strengthens our arthroscopy portfolio.“

The TruFit implants are manufactured with poly (D,L-lactide-co-glycolide) polymer, formed into a bi-layered cylindrical scaffold absorbed by the body within six to nine months.

S&N specializes in endoscopy, orthopedic reconstruction, orthopedic trauma and advanced wound management products.

In other dealmaking activity:

• Applied Biosystems Group (Foster City, California), a business of Applera (Norwalk, Connecticut), reported completing its acquisition of Agencourt Personal Genomics (APG; Beverly, Massachusetts), a developer of genetic analysis technologies, for about $120 million in cash. The deal was initially unveiled in May (Medical Device Daily, May 31, 2006).

APG's parallel fluorescence sequencing by stepwise ligation technology is a high-throughput approach to DNA/RNA analysis. Applied Biosystems said it expects APG's technology to be complementary to its platforms and applicable to many genetic analysis applications, including de novo genome sequencing, medical sequencing, high throughput gene expression and high throughput genotyping.

The APG R&D team will continue to be based in Beverly and will join the Applied Biosystems' team reporting into the Molecular and Cell Biology Division of Applied Biosystems in Foster City.

APG was incorporated in January 2005 as a separate entity owned by Agencourt Bioscience. Since the acquisition of Agencourt Bioscience by Beckman Coulter (Fullerton, California) in May 2005, Beckman Coulter has owned 49% of APG, with 51% owned by other shareholders, including APG management.

• IsoTis (Irvine, California/Lausanne, Switzerland), an orthobiologics company, reported entering into a non-exclusive, private-label sales agreement for its demineralized first-generation bone matrix products DynaGraft II and OrthoBlast II with Alphatec Holdings (Irvine, California). Financial details were not disclosed.

Pieter Wolters, president/CEO of IsoTis, said the agreement “builds on our multi-channel growth strategy of selling our successful first-generation products through a limited number of premier orthopedic companies as non-exclusive private-label partners, thus allowing us to focus our U.S. and international distributor channel on our innovative Accell product line.“

He added, “In our last reported period, private-label sales accounted for approximately 10% of our global sales, while sales of our Accell product line increased 39% to nearly two-thirds of our sales in the U.S. We expect that Alphatec, with its recent growth in the U.S. spine market, will be a significant contributor to the private-label efforts.“

Alphatec Spine, a subsidiary of Alphatec Holdings, develops products for the surgical treatment of spine disorders. Alphatec's initial public offering took place on June 2, raising over $80 million.

IsoTis' products include natural and synthetic bone graft substitutes, on the market and others in development.

• U.S. Renal Care (USRC; Fort Worth, Texas), a provider of outpatient kidney dialysis services, has acquired from Tarrant Dialysis Center (TDC) a majority interest in the assets of nine dialysis centers in and around Fort Worth.

Financing for the TDC acquisition was provided by $36 million from the company's equity sponsors and a $55 million credit facility led by CIT Healthcare, a unit of CIT Group. CapitalSource Finance has joined the credit facility as syndication agent.

The transaction forms a new partnership, USRC Tarrant, which treats more than 900 patients, and with plans to develop two additional centers that will open during the third and fourth quarters of 2006.

U.S. Renal acquires and operates outpatient treatment centers for persons suffering from chronic kidney failure. With the transaction, U.S. Renal Care will operate 31 dialysis clinics in Texas and Arkansas, serving about 2,200 dialysis patients, with additional clinics in development.