London-based orthopedics devicemaker Smith & Nephew is jumping into the growing field of robotically assisted knee surgery by acquiring Plymouth’s Blue Belt Technologies for $275 million. The debt-funded deal is expected to close by year’s end.

Blue Belt, which had revenue of $19 million in 2015, makes a computer-assisted surgical drill called the Navio that is approved for partial-knee replacement surgeries. The computer allows a doctor to treat a partly arthritic knee by precisely drilling out a compartment in a patient’s lower femur bone to make space for a new metal implant.

Blue Belt is already working to get approvals for other surgeries involving knees and hips, which could greatly increase the market for the device. Smith & Nephew said in an announcement that it expects to quickly invest in research and development and clinical testing to expand the markets for Blue Belt’s robotically assisted surgical drill, which is compatible for use with its own orthopedic implants.

Other surgical robots are already on the market. In 2013, Michigan-based Stryker Corp. paid $1.65 billion to acquire Mako Surgical Corp., which sells a robotic arm that helps surgeons precisely drill out bone for the placement of implants and speed up recovery times.

Blue Belt’s Navio system has no robotic arm. Rather, the doctor uses a freehand bone drill whose bur is retracted or stopped automatically when the computer senses that the tool is outside the three-dimensional zone where bone is supposed to be cut. CEO Eric Timko has said the Navio’s $400,000 price is one-third or less of what his competitors charge.

The technology was spun out of Carnegie Mellon University’s Robotics Institute, and many of the company’s staff remain in Pittsburgh near the university. The announcement of the Smith & Nephew acquisition said about 120 employees in Minneapolis, Pittsburgh and Manchester, England, will join Smith & Nephew as part of the deal.

“We are delighted to be joining with Smith & Nephew, with whom we will share a passion for innovation and a mission to support health care professionals,” Timko said in a release.

The Navio system was designed to cut a bone in shapes that accommodate implants made by several different orthopedics companies, though Smith & Nephew’s systems were Blue Belt’s most successful implant partners since the device was cleared for use in the U.S. by the Food and Drug Administration in 2012.

When the deal to acquire Blue Belt was announced Oct. 29, Smith & Nephew said it would continue to support customers who choose to use implants from other manufacturers.

In addition to partial-knee procedures, which comprise only about 15 percent of the market for knee surgeries today because they’re difficult to perform, research is ongoing to adapt the Navio system for a total-knee replacement using orthopedic implants including Smith & Nephew’s Journey II system. That procedure could launch in 2017, the companies said.

The Navio may also have uses in complex revision surgery on the knee and knee-replacement procedures that retain the cruciate ligaments, as well as in total hip replacements and sports medicine.

“Combining our next generation products in development with robotic technology will give Smith & Nephew an enhanced platform from which we intend to deliver further expansion,” a company news release said.

Blue Belt revenue is expected to grow 50 percent annually for the next several years, as the business becomes profitable in 2018. Knee implants were Smith & Nephew’s largest sales division in the most recent quarter, and sales of the Journey II total knee replacement system contributed to 6 percent sales growth. As of Tuesday, Smith & Nephew had a market cap of $9.8 billion.

 

Twitter: @_JoeCarlson