Mazor Robotics recently entered the next phase of its partnership with Medtronic, which originally started in May 2016.

The companies have achieved the desired outcome for Phase I ahead of the original plan by meeting certain sales and marketing milestones. The global market acceptance and demand for the Mazor X system was also higher than expected.

The companies’ existing agreements have been amended accordingly. Those agreements involve the conversion of their commercial relationship, with Medtronic receiving exclusive global distribution rights for the Mazor X system and making a $40 million third tranche investment in Mazor.
In the next phase, Medtronic will implement annual minimums for the purchase of Mazor X systems with the goal of selling hundreds of systems in a four and a half-year time frame. About 30 members of Mazor’s sales organization are expected to join Medtronic.

The companies will also co-develop future products for the spine market that combine Mazor’s expertise in surgical planning and precision-guided surgical systems and Medtronic’s navigation capabilities and implant systems. The first products are anticipated to be demonstrated in the next few months.

The strategic partnership has already resulted in the sale of 59 Mazor X systems since it was launched in October. The annual minimums for sale that were agreed upon are expected to significantly improve Mazor’s financial results over the next few years.

Mazor will continue to manufacture and manage revenues for Mazor X systems, disposable kits and service fees. The company will be granted certain synergy fees that are tied to the integration of Medtronic implants and its installed base.

It will also continue to independently develop and market its Renaissance Surgical Guidance System globally.

Shifting from direct sales to a strategic distribution model is expected to immediately reduce Mazor’s annual operating expenses by about $13 million. Trailing 12-month operating expenses for the company added up to $52.7 million.

The proceeds from the investment will strengthen Mazor’s balance sheet and provide the resources it needs to continue to work with Medtronic to develop new spine products as well as solutions for other potential markets.

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