Mazor signed a commercial and investment agreement with Medtronic.
Here are five key notes on the agreements:
1. The companies signed two agreements; the first is a two-stage, multi-faceted commercial agreement for co-promotion and development and distribution of Mazor products. The second is an equity investment Medtronic made in Mazor.
2. Under the commercial agreement, the two companies set milestones to achieve by the end of 2017. If the companies achieve their milestones, they will enter into the second phase of the agreement, which would give Medtronic exclusive global sales and distribution rights for Mazor’s future spine products.
The second phase of the agreement includes annual quotas with the cumulative potential of hundreds of next-generation systems over four years.
3. Medtronic committed to purchasing 15 future systems during 2016 as part of the commercial agreement. The two companies are already co-developing synergistic products and spine applications. They plan to begin working closely to meet designated sales targets through defined methodology for cooperation.
4. Under the equity agreement, in the first tranche Medtronic will purchase newly-issued securities from Mazor representing 4 percent of Mazor’s issued and outstanding share capital on a fully diluted basis at a price per share equal to the trailing 20-day volume weighted average price of the shares. The total is $12 million. In the second tranche Medtronic will purchase newly-issued securities representing 6 percent of Mazor’s issued and outstanding securities subject to Mazor reaching operational milestones.
If all goes well, Medtronic would hold 10 percent of Mazor’s issued and outstanding securities on a fully diluted basis. Share price is determined by the average price per share during 20 trading days following milestone achievement.
5. The two companies could reach a third tranche of the equity investment where Mazor would have the right to consummate the issuance to Medtronic of securities representing up to 5 percent of Mazor’s outstanding ordinary shares on a fully diluted basis. The third tranche is subject to the second tranche consummating as well as commencing the global distribution agreement and meeting other conditions.
Medtronic could cap the second and third tranches at $20 million each.
6. Mazor will remain an independent company through these agreements and will continue to sell and support the Renaissance System through its own sales team and distribution partners. The robotic technology will maintain universal implant capability.