Smith & Nephew Acquires Osiris Therapeutics for $660 Million to Expand U.S. Regenerative Medicine and Wound Care Portfolio

VCBeat (WeChat Official Account: vcbeat) has learned that British orthopedics and wound care giant Smith & Nephew announced on March 12, 2019, the acquisition of U.S. medical products manufacturer Osiris Therapeutics and its regenerative medicine portfolio for $660 million, aiming to expand its presence in the medical products manufacturing sector.

As of July 2018, Osiris Therapeutics had raised a total of $95 million across four previous rounds of financing. Osiris Therapeutics’ product portfolio includes skin and bone graft products, as well as a wound care product line. This acquisition will help Smith & Nephew better compete with large-scale U.S. institutions, including Johnson & Johnson.

Smith & Nephew CEO Namal Nawana stated, “Osiris Therapeutics’ significant presence in the rapidly growing regenerative medicine market will strengthen our product portfolio and advance our wound care business. Looking ahead, Smith & Nephew is well-positioned to deliver more sustained innovation across additional channels and indications. We are seeking a rapidly growing product portfolio backed by robust clinical evidence to address the urgent needs of the healthcare market.”

This acquisition also highlights Nawana’s excellence in strategic planning. With half of Smith & Nephew’s revenue derived from the U.S. market, Nawana’s expertise in deal-making and his deep understanding of the American market led to his appointment as CEO of Smith & Nephew in April 2018.

To date, Smith & Nephew has successfully acquired 19 healthcare institutions and completed five investments. Its most recent investment occurred on January 14, 2019, when it contributed $18.3 million to Trice Medical’s Series C financing round.

Smith & Nephew stated that the acquisition was completed at a price of $19 per share, representing a 37% premium over the 90-day volume-weighted average trading price of Osiris Therapeutics’ stock. Peter Friedli, Chairman and Co-founder of Osiris Therapeutics, agreed to sell his 30% stake and indicated that the acquisition is scheduled to close in the second quarter, at which time the 360 employees of Osiris Therapeutics will join Smith & Nephew.

“I am very proud of the business we have built by researching advanced regenerative technologies. Smith & Nephew is the best new home to drive these products forward, expanding our access to customers and providing more patients with opportunities to receive better treatments,” added Friedli.

In the first three quarters of 2018, Osiris Therapeutics reported sales of $102 million, with $36.5 million generated in the third quarter. A Smith & Nephew spokesperson stated that the company would announce Osiris Therapeutics’ fourth-quarter and full-year results on March 15. The cash and debt transaction is expected to contribute to S&P 500-adjusted earnings per share starting next year, and return on invested capital is projected to exceed the cost of capital within three years after the deal’s completion.

One day after the acquisition announcement, Osiris Therapeutics’ stock price rose 0.9%, closing at $18.88 per share. Smith & Nephew’s stock price rose 0.7% to $39.04 per share, with a gain of 0.8%, closing at $38.79 per share.

Smith & Nephew, headquartered in London, UK, was founded in 1856. It holds industry-leading positions across its three core business segments—Orthopaedics Reconstruction, Endoscopy, and Wound Management—and has developed more than 1,000 product lines within these areas. Smith & Nephew is committed to bringing innovative medical products to market, delivering superior clinical outcomes for patients, and helping healthcare providers reduce costs.

Smith & Nephew’s global infrastructure continues to expand annually, with current operations in 32 countries and annual sales reaching $3.4 billion. According to 2018 data, Smith & Nephew ranked first globally in arthroscopy, second in trauma management, third in advanced wound care, and fourth in orthopedic reconstruction.

Osiris Therapeutics is a U.S.-based stem cell company and medical product manufacturer, founded in 1992, that focuses on the development and marketing of medical products for the treatment of inflammation, cardiovascular conditions, orthopedic disorders, and wound healing. Osiris Therapeutics primarily operates through two segments: Therapeutics and BioSurgery. The Therapeutics segment focuses on developing biologic stem cell drugs using currently established technologies.

(Compiled by Wang Shuijing)