Monarch Controller

Bloomberg News Reports Johnson & Johnson is Interested in Acquiring Auris Health

Posted on January 24, 2019


A report from Bloomberg News states that Johnson & Johnson is pursuing an acquisition of Auris Health, which would help Johnson & Johnson expand their footprint into robotic surgery.

Auris Health develops the Monarch Platform, a surgical robot that can identify cancerous tumors through flexible tubes that are steered into a patient's lungs by a device similar to a video game controller.

Auris is led by Frederic Moll who has founded several medical device startups, including as a co-founder of robotic surgery giant, Intuitive Surgical.

The Bloomberg report states that J&J is seeking to purchase Auris at a premium to the valuation from its latest funding round, according to the people, who asked not to be identified because the information is private. That financing valued the Redwood City, California-based company at about $2 billion.

What is the Auris Health Monarch Platform?


According to the company's Crunchbase profile, the company has raised a total of $733.3M in funding over six rounds, including the latest $220 million equity financing round led by Partner Fund Management that was announced in November.

This report comes after J&J CEO, Alex Gorsky, shared during the company's earnings call that progress in their medical device business has not been uniform across the entire portfolio. During the most recent quarter, worldwide Medical Devices sales were $6.7 billion, declining 2.2%.

Gorsky committed to returning the Medical Device business to above-market growth in 2020 through a diversified strategy which includes digital surgery and robotics as two of the main product categories to fuel the growth.

In 2015, Johnson and Johnson announced the formation of Verb Surgical, a partnership with Verily (formerly Google Life Sciences) to develop products that would change the future of surgery. Up to this point, however, there has not been any significant products to come out of the partnership. During J&J's earnings call, Gorsky provided an update and insight into the program:

"Regarding Verb, look, we were just out there, and I had an opportunity to visit but -- myself, Ashley as well as Paul Stoffels, other members of the leadership team. And I think based upon our latest update, we feel frankly even more confident in the progress that we're seeing in this platform. That includes, yes, the robotics, what I'd call the front end, but also the great work that's taking place on the back end, on the system part of it that really represents the transition in robotics into digital surgery.

And the progress that, that team has made, I think, over the last 12 months has been very strong. We believe we continue to be on track going forward. And as I mentioned several times, look, you're going to see continued news about our robotics platform over the course of 2020 and beyond. But what's so important about this is we're taking an outlook that digital surgery will be an important dynamic for the next 5, 10 and 15 years. And we want to make sure is that we get out in a timely manner but that we're also out in a manner that ensures we're competitive and ensures ultimately that we're making an even bigger difference in this area as we go forward."

Johnson & Johnson's rumored pursuit of Auris Health could be taken as their partnership isn't progressing at the speed Gorsky would like. This may be a bit of a stretch considering digital and robotic surgery cover multiple specialties and the Monarch Platform is a niche device that could immediately help compete with Intuitive Surgical.

With an acquisition of Auris, Johnson & Johnson could start strategically building out a sales team, gaining hospital contacts which could be invaluable once Verb and their team are ready to launch their systems.

Frederic Moll has been a legend in the industry with everything he's touched turning to gold. The Monarch Platform truly looks the part of something different than anything on the robotic surgery market.

J&J would be smart to make this move.