All,

Here is the press release that is going out this morning announcing the closing of our CartiHeal acquisition!  This is a terrific step and adds an important medium term growth driver for Bioventus.  CartiHeal is a great fit for the company and adds a true FDA Breakthrough technology to our joint preservation focus and Pain Treatments Business Unit.  Importantly, CartiHeal falls in line with the continuum of care for osteoarthritis patients, has the potential to delay or forgo the need for a total knee procedure and leverages our commercial organization, call point and expertise in the OA space and specifically with our HA portfolio of products in Pain Treatments.

We will begin to work on integration steps with the CartiHeal team which consists of about 20 employees mostly based in Israel.  Sarah Caley will lead the integration.

As we think about CartiHeal and the excitement of gaining this technology for Bioventus I do ask you to remember the following from a market development standpoint.

Different then our other recent acquisitions, CartiHeal represents a medium term growth driver meaning it is NOT a revenue now product even though it has FDA approval.  The CartiHeal implant being a new technology, called Agili-C, does not have reimbursement established and this will take some time which is why we restructured the deal to coincide with the steps needed to unlock the full potential of CartiHeal.  The early work on market development for CartiHeal will consist of the following steps;

    • Publication of three different clinical papers on the CartiHeal technology from different clinical data sets and different authors – we expect this to occur in 2023, early 2025 and early 2026 and will be needed to obtain the full reimbursement coding in the US.  The first paper is from the IDE study that led to the FDA approval.  The additional papers will be new clinical data sets from cases completed going forward that we will start collecting this year.
    • Completion of the first 100 cases of CartiHeal in the US market by Q4 of 2023.  Each case will have to be pre-authorized through the insurance company and will take work by the surgeon working directly with each payer.  We will engage surgeons early on that have experience with the product and fully understand CartiHeal’s clinical indications and utility.  If we do this correctly it will ensure we develop the right reimbursement profile, coding and payment methodology and a strong foundation of clinical success.  This is not something we can rush quickly.
    • Internationally, we will take a similar approach and work in markets where we have a strong foundation commercially and where a pathway for reimbursement can be understood.
    • Ultimately we hope to do a more significant launch of CartiHeal by early 2024 but may be constrained in the US depending on reimbursement coding which we expect to be finalized by 2026 or 2027.

Over the next 90 days we will be working on the integration plan and what that will entail relative to organizational responsibilities within Bioventus.  It will be a small team working on CartiHeal to start with and will expand as we compete the needed steps highlighted above.

Bioventus has developed a balanced portfolio of products with many near term growth drivers and now adding CartiHeal we have a medium term growth driver which will be needed to sustain our double digit growth for many years to come!  We will discuss this further at an upcoming Town Hall meeting as well as the integration steps we will be taking with CartiHeal.

I hope you have a great rest of the week!

Best Regards,

Ken Reali