Mazor robotics agreement with Medtronic may prove to be a major breakthrough
24 May, 2016
The $113 billion conglomerate Medtronic will initially buy 15 Mazor's robots and invest some $12 million. If the pilot succeed, Medtronic will invest more money and become Mazor’s global distributor
The $113 billion conglomerate Medtronic will initially buy 15 Mazor’s robots and invest some $12 million. If the pilot succeed, Medtronic will invest more money and become Mazor’s global distributor
The announcment Mazor Robotics agreement with global med-tech giant Medtronic drove Mazor’s stock in NASDAQ up 50%. The Caesarea, Israel, based company develops and manufactures robotic guidance systems for spinal and brain surgeries. In the first phase, Medtronic will purchase 15 of Mazor’s Renaissance robot-assisted spinal guidance systems and will invest $11.9 million in the Israeli company in exchange for 4% of its shares.
The agreement between Mazor and Medtronic has three phases. If the first phase in considered successful – Medtronic may buy another 6% of Mazor’s outstanding shares. In the third and final phase of the agreement, the Medical Devices giant Medtronic could buy another 5% of the Israeli company and will assume exclusive global sales and distribution rights for Mazor’s future spine products.
A close strategic cooperation with a global player such as Medtronic, a company with a market cap of about $113 billion, is a major breakthrough for Mazor. If the first phase proves successful, Mazor could very well become a major name in the med-tech supply field, increasing sales and revenues. Only last week, Mazor reported an operational loss of $5.2 in Q1 2016. The company’s increasing revenues were offset by high development costs, which seem now to bear fruit.
The importance of the agreement cannot be underestimated – in Q1 2015 Mazor sold only 5 Renaissance robot-assisted spinal guidance systems. In the first phase of the agreement alone, Medtronic buys 15 such systems, to be distributed by the Irish giant in the USA. But future possibilities are huge: Medtronic controls 30% of the American spinal surgery market, estimated value of $7 billion a year. If the agreement will be fulfilled fully, Mazor will produce hundreds of such systems for Medtronic. .
Mazor robotics CEO Ori Hadomi said that “the agreement features some very important points for our customers as well as our shareholders. New developments, such as synergistic implants, could generate new revenue streams for Mazor, beyond the anticipated growth in our current revenue streams from capital equipment, service agreements and disposables. The synergy between the organizations’ teams will potentially yield operational efficiency benefits for Mazor.”
Harnessing technology to aid surgeons
Mazor develops and manufactures robotic guidance systems for spinal and brain surgery. Its flagship product is the Renaissance guidance system. According to Mazor’s data, the use of the system increases implant placement accuracy. Success rates of spinal surgery performed with the system are 98.3%, while traditional surgery success rates are 90.3%.
The system can be used for the treatment of many spinal conditions including degenerative spinal conditions, spine tumors and spinal deformities. The system takes two fluoroscopic images, matching their corresponding location to the pre-operative CT, thus assisting the surgeon in planning and preforming a less intrusive, more accurate surgery. In April 2014 Mazor launched a special model of the Renaissance system for use in Brain surgery.