Wright, AlloSource in New Pact - Analyst Blog

International orthopedic devices company Wright Medical (WMGI) has forged a supply and distribution agreement with Colorado-based leading bone and tissue allografts provider AlloSource for a novel bone graft product dubbed FusionFlex Bone Matrix.

Financial and other terms of the deal have not been divulged by the entities.   

Bone graft is a surgical procedure to place new bone into spaces around a defective/broken bone. The new bone can be obtained from the patient (“Autograft”) or donated bone (“Allograft”).

FusionFlex is a flexible bone repair scaffold designed to be used in primary fusion procedures of the foot and ankle and other bone grafting applications. It offers surgeons intraoperative flexibility to graft prepared fusion sites in the foot and ankle and creates a matrix that conforms to the site. FusionFlex can deliver bone marrow to the repair sites, thereby improving the chance of a successful bone graft.   

FusionFlex is the most recent product in Wright Medical's Biologics franchise, whose stable of products includes the Xpansion Micrografting System, Pro-Dense Injectable Regenerative Graft, Pro-Stim Injectable Inductive Graft and the Graftjacket Regenerative Tissue Matrix. Full commercial launch of FusionFlex is expected in first-half 2011.

The agreement broadens the long-standing bond between Wright Medical and AlloSource for allografts products. AlloSource already supplies demineralized bone matrix (“DBM”) and cancellous bone for Wright Medical's Allomatrix product line.

Wright Medical is a global orthopedic devices company specializing in the design, manufacture and marketing of reconstructive joint devices and bio-orthopedic materials. It is a leading provider of surgical solutions for the foot and ankle market.

We feel future revenue growth will be supported by new product launches (including internally developed and those from acquisitions). Moreover, new deals in extremities, Wright Medical's fastest growing segment, are expected to bolster growth in this business.

Our views are moderated by intense competition from larger players, pricing pressure and slowdown in U.S. orthopedic reconstruction. Wright Medical competes with much larger players such as Zimmer Holdings (ZMH), Stryker (SYK), Johnson & Johnson's (JNJ) De Puy and Smith & Nephew (SNN).

These organizations have greater resources and the wherewithal for research and development efforts compared to Wright Medical. Therefore, Wright Medical needs to constantly introduce or acquire new products to keep pace with the competitive market. We are currently Neutral on the stock, backed by a short-term Zacks #3 Rank (Hold).

 
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