Stryker Strikes Deal to Buy Neurotechnology Company

Kalamazoo, Mich.-based medical device company Stryker Corp. will buy Surpass Medical Ltd. in an all-cash transaction for $100 million and up to an additional $35 million of milestone payments.

Surpass was founded in 2005, is headquartered in Tel Aviv, Israel, and has a manufacturing and research and development facility in Miramar, Fla. The company develops and commercializes next-generation flow diversion stent technology to treat brain aneurysms using a mesh design and delivery system. Surpass’ key product is the NeuroEndoGraft family of flow diverters, which are designed to redirect blood flow away from an aneurysm, thereby allowing a stable clot to be formed within the aneurysm pouch. The diverters are CE Marked, and are undergoing a limited launch outside the United States. Surpass will begin enrolling patients in a U.S. Food and Drug Administration investigational device exception clinical trial in the fourth quarter of 2012, which is also when the acquisition deal is expected to close.

“The acquisition of Surpass Medical further builds on Stryker’s global platform in the fast growing and highly innovative neurovascular market and helps broaden our offering in complete stroke care,” said Kevin A. Lobo, president and CEO. “We remain committed to furthering care in the interventional neurovascular space by offering patients and caregivers differentiated products that improve outcomes and help save lives.”

Stryker has been going through a lot of changes this year. The company recently closed two of its manufacturing facilities in New York, eliminating more than 100 jobs, and also abruptly lost previous CEO Stephen P. MacMillan in February. Lobo was named CEO at the beginning of October.

Leerink Swann Analyst Richard Newitter noted that Lobo’s vision is not known yet, as his appointment is so fresh, but it is safe to say that the purchase of Surpass is a comfortable one for Stryker.

“This is more a beefing up of their portfolio, rather than an expansion into new territory,” Newitter told Medical Product Outsourcing. “This year has been a ‘digestion period,’ while 2009 to 2011 saw multi-billion dollar deals take place.”

Flow diverters specifically are a new area for Stryker, but the company already has significant neurovascular holdings. Neurotechnology is a fast growing market, unlike orthopedics, a slower growing market in which Stryker has not a small stake.

Stryker provides reconstructive implants, medical and surgical equipment, and neurotechnology and spine products.