Mazor X 560X390

Mazor introduces Mazor X and gets $20 million infusion from Medtronic

Posted on July 14, 2016 by Medtech[y] Staff

This time last year, there was significant uncertainty with Mazor Robotics (Nasdaq: MZOR) and the future of their company. While their install base was steadily improving, the stock was down to a 52 week low of $8.31 in 2015.

In May of this year, things changed. Medtronic and Mazor entered into two strategic agreements, helping give Mazor a much welcomed cash infusion and the potential to tap into Medtronic's global network.

Commercial Agreement

The commercial agreement is a two step agreement, initially with a U.S. based co-promotion phase. 

Once specific metrics are met, the second phase will include annual quotas with the potential for hundreds of next generation systems acquired over a four-year period, with Medtronic already committing to purchase 15 Mazor X systems during 2016. This future phase will also allow Medtronic to assume exclusive distribution rights for Mazor's future spine products.

If both companies meet specific milestones by the end of 2017, this will trigger the second phase of this agreement, in which Medtronic will assume exclusive global sales and distribution rights for Mazor's future spine products.

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Equity Agreement

The second agreement, in three stages, is for an equity investment by Medtronic in Mazor, paying $11.9 million for a 4% stake in the company. The second and third stages can be capped at $20 million, for a total potential investment of $51.9 million. According to a release from Mazor, the second stage investment of $20 million will be triggered with the release of Mazor X, which will be released at the North American Spine Society’s annual meeting in Boston in October.

Renaissance Guidance System

To date, more than 16,000 cases have been performed with their flagship system, the Renaissance Guidance System. The Renaissance aides in minimally invasive spine surgery, providing a 3D software mapping for surgeons which helps guide surgical tools within 1.5mm of accuracy. The increased accuracy helps cut down on fluoroscopic radiation for patients and the typical benefits of minimally invasive surgery such as reduced downtime and less post-operative pain. 

Here is a more in-depth review of Renaissance:

Mazor X

At an investor meeting in New York earlier this week, Mazor X was announced as Mazor's next generation surgical guidance system. The list price of the system is $850,000 and has already been cleared by the FDA. 

So what's the value proposition?

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Source: Mazor Investor Day

According to Mazor's press release, Mazor X was developed with the goal of enhancing predictability and patient benefit, through the combination of analytical tools, multiple-source data, precision guidance, optical tracking, intra-op verification, and connectivity technologies.

Based on the release and slide from Mazor's investor presentation, it is clear Mazor X is focused on integrating connectivity to enable better data and information for surgeons, payors and hospital customers. This could be a huge benefit in proving to an insurance company that a Mazor X helps reduce patient and insurance cost. Having a connected link could also provide secure real-time updates to necessary parties. 

“Mazor X is the culmination of a multi-year development effort to proactively address our target market, surgeon and patient needs for today’s reimbursement environment, by applying multi-disciplinary principles to achieve a Surgical Assurance platform,” commented Ori Hadomi, Chief Executive Officer. “Our pioneering experience in guidance technology, which has been used by hundreds of surgeons to place over 100,000 guided spine implants, has been leveraged in the development of the Mazor X system.”

“The Mazor X platform expands the field of spine surgery from trajectory guidance to assisting surgeons with a total patient treatment strategy. Following our recently formed partnership with Medtronic and the increased market access it provides us, the launch of the Mazor X positions us for accelerated growth and long term leadership in the spine market,” concluded Mr. Hadomi.

While Mazor X is FDA cleared, it appears there are certain features that are swill awaiting clearance (see *)

  • Pre-Operative Analytics: A suite of software-based sophisticated tools designed to pre-operatively assess spinal alignment and implement full surgical planning, facilitating a total patient treatment strategy. A key component of Pre-Op Analytics, the X-Align* module, is a combination of biomechanical logic and virtual surgical tools with computerized alignment calculations, intended to streamline the process of creating a holistic alignment plan for each patient.
  • Intra-Operative Guidance: Utilizing precision mechanics and a bed-attached, bone-mounted surgical arm to guide surgical tools and synergistic implants*according to the Pre-Op Analytics. Coupled with innovative tracking* and imaging, Intra-operative Guidance effects predictable execution of the surgical plan.
  • Real-Time 3D Verification*: The Mazor X System’s real-time verification allows surgeons to close the surgical loop and confirm – execution and reconciliation of the surgical plan using proprietary 2D fluoroscopy-based technology, visual tracking*, or intraoperative imaging systems.

*Pending FDA clearance

The Future

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Source: Mazor Investor Day

There's no denying the Medtronic partnership is huge for Mazor. With the partnership, Mazor will have the help of 700 Medtronic reps talking about their system on a daily basis and the potential for international scale if all metrics are met. 

For Mazor, who has never turned a profit and lost $15 million in 2015, having Medtronic has a partner is exactly what they needed. For Medtronic, who are working to increase their 30% marketshare in Spine, this partnership should help convert some customers as their reps can now get in front of surgeons who have not been Medtronic customers in the past. 

Medtronic has an opportunity to tap into existing, proven technology and add their engineering prowess to develop next generation robotic technology. While Medtronic would likely prefer to have the Mazor system become closed and proprietary to Medtronic implants, Mazor has committed to remain independent and keep their system open, having universal implant compatibility. Depending how the partnership goes, this can change. Money talks.

For now, this partnership appears to be a win-win for both sides.