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By Bernard Banga

Staff Writer

PARIS – A major new deal has been concluded in the world of med-techs. Stryker Corp. of Kalamazoo, Mich., has just made a tender offer for Balma, France-based Vexim SA. The U.S. orthopedics giant paid $215.7 million to acquire this French company specializing in minimally invasive treatment of vertebral fractures, which has been listed on the Euronext Growth market since 2012. "This integration will help us speed up international development of our technology for repairing vertebral fractures and consolidate our position in Europe," Vincent Gardès, CEO of Vexim, told BioWorld MedTech.

Every year, osteoporosis and trauma cause more than 1.4 million vertebral compression fractures

(including more than 900,000 in the U.S.). In addition, fractures also result from cancerous lesions. The amount of surgery done to treat these compression fractures is increasing due to an ageing population, better diagnosis, and the rise of minimally invasive treatment.

"Based on an original idea by Christian Renaud, an orthopedic surgeon in Albi, Vexim has developed a mechanical intravertebral implant that can carry out vertebral expansion. This achieves controlled anatomical reduction of vertebral fractures before they are injected with bone cement," said Gardès.

Ever since the company was established in 2006, it has invested $23.5 million to develop its Spinejack technology and obtain European regulatory approval. The technology is protected by around thirty patents and features a titanium intravertebral implant inserted into fractured vertebrae. This Spinejack implant expands vertically – like a jack used to change car tires – to straighten up a collapsed vertebral body. Vexim's vertebral-body restoration technology is height-adjustable to sub-millimetric precision.

A specific mixture of highly viscous bone cement is then injected into fractured vertebrae to ensure lasting restoration of their anatomical shape. Using a range of specialized surgical instruments, the implant is inserted into vertebrae under X-ray guidance. "This minimally invasive procedure is done via 5 millimeter-long skin incisions and takes just 30 minutes, meaning that patients can be discharged soon after their operation," said Gardès.

Vexim employs 67 people and has sold 50,000 implants to over 500 European hospitals and clinics. It is the leader on the French domestic market, with 50 percent of the vertebral compression fracture repair market and a turnover of more than $23.5 million. Its average cumulative growth on sales over the last five years was 73 percent between 2011 and 2016, while its gross margin is 72.2 percent. This financial performance is the result of Vexim's direct distribution strategy for SpineJack® in Europe, with subsidiaries set up in Germany, Italy, Spain, and the U.K. In all, more than half the company's staff are employed in sales positions. "Investment in our own distribution network and in training surgeons during the first few years in which our technology was used is now paying off. We've now conquered 15 percent of the European back traumatology market," said Gardès.

Vexim is targeting a niche market worth an estimated $1.18 billion and dominated by global giants. According to Transparency Market Research, the estimated value of the spinal trauma surgery orthopedic implants' market was just over $1 billion in 2015, of which $622.5 million was the U.S. market, $217 million the European market, and $224 million the rest of the world. This highly concentrated market is dominated by Medtronic plc, with its kyphoplasty technology; Depuy Synthes – part of Johnson & Johnson plc; Stryker Corp; NuVasive Inc.; and Globus Medical Inc.

Nevertheless, the market share of these leading companies has crumbled over the past few years due to the rise of new players such as LDR Medical, which was acquired by Zimmer Biomet Holdings Inc. in July 2016. Vexim holds just 2 percent of the global market since it is absent from the U.S., which is the biggest market in the back traumatology segment (worth 47 percent of the global market).

Synergy with Stryker to conquer the U.S. market

Vexim has achieved a dynamic financial performance and is positioned among the most attractive spinal technology med-techs on the Euronext Growth market, with a capital ratio of 3.6 percent on the amount raised. This enabled the company to successfully negotiate Stryker's tender offer launched in early 2017. These negotiations concluded with Stryker – the world's second biggest company on the spine sector, with a turnover of $11 billion – acquiring a controlling stake in Vexim at the end of this year.

Under this deal, Stryker's interventional spine division will market Spinejack technology via its network of 150 sellers throughout the U.S. In Europe, where Stryker does not have a network of sellers dedicated exclusively to back traumatology, the company has promised to hire another dozen sales staff at Vexim by 2018. This will bring Vexim's European marketing network up to around forty people. "The idea is to consolidate Spinejack technology's European position while also providing Europe's biggest commercial platform for spine traumatology," said Gardès.

For the time being, Vexim plans to file for 510(k) regulatory approval for its Spinejack technology sometime next year. Since last year, the med-tech has been running a prospective, randomized, multicenter study comparing the safety and effectiveness of its latest-generation Spinejack with balloon kyphoplasty. This FDA clinical trial is monitoring 160 patients with osteoporotic vertebral fractures for one year. These patients are spread across 13 hospitals in five European countries (France, Germany, Switzerland, Italy, and Spain). "This FDA clinical trial is ending in three months. We're on track to launch Spinejack onto the U.S. market next year," said Gardès.

Published  November 21, 2017

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