Kyphon to Acquire InnoSpine
Kyphon Inc. (Sunnyvale, CA), a manufacturer of medical devices to restore spinal function using minimally invasive techniques, has entered an agreement to acquire InnoSpine Inc. Under the terms of the agreement, Kyphon will acquire the company, which markets a proprietary technology platform for the diagnosis and potential treatment of back pain due to disk degeneration, for an initial cash payment of about $2.5 million. Kyphon might pay up to an additional $27.5 million based on the achievement of milestones and royalties on future sales.
Kyphon intends to make InnoSpine’s technology, known as functional anesthetic discography, commercially available in the second quarter of 2006. The diagnostic technology, which will be sold under the Kyphon name, uses a catheter-based system to deliver mild anesthetic to candidate disks while patients load their spines in positions that cause pain. According to Kyphon, if the pain from normal loading is relieved by anesthetic delivery to the degenerated disk, then the disk can be identified for further treatment.
FDA cleared InnoSpine’s functional anesthetic discography system in April 2005. Kyphon, which expects the acquisition to close later this month, estimates that about 200,000 patients in the United States could be indicated for the procedure each year.
The acquisition complements Kyphon’s existing focus on minimally invasive spinal therapies, says a Kyphon spokesperson. The InnoSpine addition represents the company’s move into the disk, one of three major areas of business focus for the company. The other two are cancer therapy and spinal deformity correction.
Kyphon, which has not released any revenue projections for the InnoSpine business, nor details surrounding the milestones on which the additional $27.5 million is contingent, reports that it intends to capitalize on its existing direct sales channel to move the InnoSpine technology into the market while still aggressively growing its existing business.
Kyphon’s existing business focuses on balloon kyphoplasty, a minimally invasive procedure designed to treat spinal fractures caused by osteoporosis or cancer. In June 2005, the company prevailed in a patent dispute with Disc-O-Tech Medical Technologies Ltd. (Herzliya, Israel). The ruling upheld Kyphon’s patents for kyphoplasty methods, in which a special balloon is inserted and inflated inside the fractured vertebrae before injecting a cement-like material. The court also ruled that Kyphon’s patents are not limited to kyphoplasty performed with balloon-based technology, but are much broader in scope.
Established in 1994, Kyphon anticipates full-year sales for 2005 of between $304 million and $307 million, representing revenue growth of 43 to 44% over 2004.
© 2006 Canon Communications LLC
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