Synovis Life Technologies Inc., a St. Paul biotechnology company, said Tuesday it has purchased the assets of a California company that has developed biological products used for soft tissue repair largely in orthopedic surgery. The pricetag: $12.1 million.
Synovis' cash bid won in a competitive sealed bidding process for Pegasus Biologics Inc., of Irvine, which it will operate as a separate division.
Although Pegasus raised more than $38 million in venture capital and debt since its founding in 2004, it shut down in May when additional capital dried up in the current economic climate.
Synovis CEO Richard Kramp said the purchase was "unexpected and abruptly presented," but is "a really a grand opportunity." He said the orthopedic focus of Pegasus' products complements Synovis' portfolio of biomaterials -- tissue-based products used in bariatric, hernia and breast reconstruction surgeries.
Pegasus' two main product lines focus on the $1 billion orthopedic market. They include a soft tissue scaffold for surgical applications such as rotator cuff repair and a collagen wound dressing used to treat chronic wounds such as diabetic foot ulcers. Both have received marketing clearance from the Food and Drug Administration and have been approved for use in Europe. Pegasus' products use material harvested from the pericardial sac surrounding the heart of a horse.
Synovis said that at the end of last year Pegasus employed about 75 people and generated about $9.1 million in revenue. Synovis said it will maintain Pegasus' manufacturing plant in Irvine.
Synovis expects the new division to report $1 million to $2 million in operating losses in the fourth quarter of fiscal 2009, and potentially $5 million in losses in fiscal 2010, then break even during fiscal 2011.
Synovis' stock closed Tuesday at $19.02 a share, down $1.13 or 5.6 percent.
Janet Moore • 612-673-7752
