Dive Brief:
- Axogen said Thursday it agreed to acquire BioCircuit Technologies for $200 million to expand its offerings in peripheral nerve repair.
- In a separate statement, Axogen said it would fund the acquisition with a public equity offering expected to raise about $208.7 million.
- Axogen said its commercial infrastructure, surgeon relationships and hospital contracting would accelerate adoption and expand access to BioCircuit’s NerveTape.
Dive Insight:
BioCircuit sells a sutureless device that helps connect transected nerves without the need for microsuturing. Called NerveTape, the technology is BioCircuit’s first commercial product.
The device can speed up a nerve repair procedure by eliminating the need for the specialized microsuturing technique, Truist Securities analysts wrote to clients, adding that this benefit to clinicians should help Axogen accelerate its expansion in the nerve repair market.
“The incremental dilution from the equity raise … might be viewed as a point of contention for investors, but given the growth potential from the incoming asset, overall margin accretion, and strategic fit we think overall the transaction rationale makes sense,” the analysts wrote.
Axogen’s stock was down more than 10% to $42.46 Thursday morning.
Surgeons in multiple nerve repair settings have adopted the technology, Axogen said, and clinical experience to date confirms its performance and safety profile. The NerveTape platform may support future product development and expansion into new indications, the company added.
“BioCircuit has developed a highly differentiated technology that complements our existing portfolio and expands our ability to serve surgeons across the continuum of nerve repair,” Axogen CFO Lindsey Hartley said in a statement.
Axogen expects the transaction to add to its revenue growth and adjusted earnings in the first year after closing. The deal, approved by the boards of both Axogen and BioCircuit, is expected to close in the fourth quarter and is subject to conditions that include the completion of the spin-out of BioCircuit’s electronics research and development business.
