by: COREY WILLIAMS
Amedica’s (AMDA) long-suffering bulls finally have reason to celebrate: The medical device maker announced closing of the sale of its spinal implant franchise to CTL Medical (private), a leading spinal device retail company, for up to $10 million. As a result of the closing, CTL Medical is now the exclusive owner of Amedica’s portfolio of metal and silicon nitride spine products, which are presently sold under the brand names of Taurus, Preference, and Valeo, with access to future silicon nitride spine technologies. Manufacturing, R&D, and all intellectual property related to the core biomaterial technology of silicon nitride remains with Amedica in Salt Lake City. Amedica will serve as CTL’s exclusive OEM provider of silicon nitride products.
Investors are clearly pleased with the deal, bidding up the stock 57% to 39 cents a share.
Amedica Chairman Sonny Bal commented,”We are pleased to have closed this transaction so quickly after the September announcement. Amedica is now free of the considerable costs and complexity attendant to retail spine sales, allowing the company to focus on the core biomaterials and OEM business instead. We will fully support CTL spine sales in terms of clinical and basic science, surgeon education, and any other necessary sales support. Most importantly, as a debt-free company, Amedica can now focus on revenue opportunities outside of spine where our R&D program is particularly strong, such as in the dental and arthroplasty markets […] In our opinion, this is the leanest, most efficient, and overall best position that Amedica has ever been in as a company, from a cash position or otherwise, with multiple strategic options going forward.”
Maxim analyst Jason McCarthy stated, “Why divest the spinal franchise? While generating revenue historically for Amedica, the bottom line is the spinal franchise is a high spend, low margin business. In addition, this is further compounded by a lack of a complete spectrum of spinal implant components. As such, more than one supplier is needed for one surgery which creates difficulties in driving sales. The company opted to divest spine to CTL, which has complementary products and now also gains the attributes of silicon nitride. Our view of Amedica and fundamental thesis was predicated on revenue growth in the spinal franchise. With that now divested, we are evaluating NewCo and the business model going forward. As such, we remain Hold rated.”