Medtronic PLC is preparing to invest another $20 million in Israeli med-tech company Mazor Robotics, which is expected on Tuesday to announce a new robotically assisted spine-surgery system called Mazor X.
Analysts say physician interest in robotically assisted surgical tools is steadily growing, and Medtronic seems to be positioning itself to capitalize on the trend — and potentially accelerate it — if it takes off.
More than 16,000 successful spinal surgeries have been done worldwide with Mazor’s existing flagship guidance system, the Renaissance, and its predecessor. Last May, Mazor revealed that it had signed commercial agreements with Medtronic for up to $52 million in total potential investments from the Minnesota-run device company and exclusive distribution rights for new Mazor spine products.
At an investors presentation Tuesday in New York, Mazor is expected to announce plans to launch sales of its new robotic surgical-guidance system, Mazor X, which has already been cleared for U.S. sales by the U.S. Food and Drug Administration. The $850,000 system will go on sale this fall.
A Mazor news release says the unveiling of the Mazor X system will trigger Medtronic’s second-stage investment of up to $20 million in Mazor, pending satisfaction of other conditions in the agreement that aren’t specified.
In the first stage investment, announced last May, Medtronic paid $11.9 million to acquire 4 percent of Mazor’s shares. The second and third stages of Medtronic’s investments can be capped at $20 million, for a total investment of $51.9 million. The third stage is contingent on, among other things, the start of a global distribution agreement between Medtronic and Mazor.
Mazor remains an independent company, and its CEO, Ori Hadomi, said the firm’s surgical systems will remain “open” so that they’re compatible with other companies’ implants, not just Medtronic’s. But Mazor and Medtronic will work closely to jointly develop products that facilitate spine surgeries using Medtronic products.
“Mazor Robotics is a leader in the field of surgical guidance systems, and their portfolio is a natural complement to our existing enabling technology offerings,” a Medtronic spokeswoman said via e-mail. “With the expertise of our two companies, we are striving to improve the accuracy and efficiency of spine surgery to benefit more patients and those who treat them.”
Mazor makes robotically assisted spine-surgery systems that mount directly to patient bone and precisely guide surgical tools under a detailed preoperative plan. The systems are intended to cut down on less-accurate “freehand” surgical procedures, and the amount of radiation used to make freehand surgery accurate. The surgeon retains control of the tools, which are positioned by the robotic system based on 3-D modeling.
Hadomi confirmed that the Mazor X system will start at an “introductory” price comparable to the Renaissance system, which is about $850,000 for spinal procedures.
Last year Mazor reported a $15 million loss on $26 million in sales, and it has not turned a profit since its founding in 2000, records filed with the U.S. Securities Exchange Commission indicate. The company had accumulated a deficit of $103 million by the end of 2015.
The news of Medtronic’s investment and co-development agreements has excited some investors. Mazor’s stock price has climbed 91 percent since it announced the Medtronic agreements on May 19, closing at $20.27 on Monday.
Medtronic, meanwhile, continues to build its spine-products business, with investments in Mazor and other back-surgery platforms. Net sales of Medtronic spine products declined 2 percent in the year ended in April, to $2.9 billion, which was about 10 percent of Medtronic’s sales for the year.