Toronto-based Titan Medical has announced the signing of development and licensing agreements with medical device company Medtronic for the further development of its robotic surgery technologies, as well as a separate license for Medtronic to acquire some of its intellectual property.
Titan will receive a series of payments totalling $31m from Medtronic to license developing technologies, provided Titan reaches various milestones overseen by a joint committee. The first of these is that Titan must raise $18m of capital within four months of the development start date, which is expected to occur this month.
Titan received a senior secured loan of $1.5m from Medtronic in April to support development. The loan must be repaid by June 2023, or upon completion of Titan’s final development milestone if this occurs beforehand. The interest rate for the loan is set at 8% per annum.
In a separate venture, Medtronic has also made an upfront payment of $10m to license certain robotic assisted surgical technologies from Titan. Titan retains the rights to continue to develop and commercialise those technologies in-house.
Titan Medical is not associated with Titan Spine, which Medtronic acquired in 2019.
Titan’s technologies will help further develop the Hugo robot
Medtronic has been working hard to break into the robotic surgery space, having completed a $1.7bn purchase of Mazor Robotics in December 2018 before launching its Mazor X Stealth robotic-assisted spinal surgery platform in the US. In September 2019 it unveiled its Hugo robot system, and in February 2020 announced that it had acquired digital surgical tool company Digital Surgery for an undisclosed amount. Digital Surgery’s artificial intelligence (AI), data and analytics services will be used to help develop Medtronic’s minimally invasive therapies portfolio, alongside its various acquisitions from Titan.
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Titan has been through the wringer lately, which could go some way towards explaining why Medtronic has decided to license its technologies bit by bit, subject to the meeting of various conditions, rather than paying up outright. The company ended 2019 having made a loss of nearly $42m, with only $1.3m left in cash, having suspended the development of its single-port robotic surgery system and losing nearly half of its stock value.
In February, Titan CEO David McNally said the company needed to raise $85m to finish developing its Sport robot-assisted surgery device and pursue US Food and Drug Administration (FDA) clearance. In May, the company said it had raised nearly $5m in recent months.
Covid-19 may delay Medtronic’s robotic surgery timeline
Covid-19 means things haven’t been plain sailing for Medtronic either, having announced in May that its revenue decreased by 26% to $6bn for its fiscal fourth quarter due to the impact of the pandemic on its revenues. The company also expected first quarter revenue growth to be slightly worse than the fourth quarter.
Work on the Hugo robot has been delayed due to pandemic-related workforce disruptions. Engineers have limited access to the system’s hardware as they’re working from home, and surgeons are unable to participate in lab testing due to travel restrictions.
The company expected to make a CE submission for Hugo in the first fiscal quarter of 2021, anticipating approval later that year with a projected 2022 launch. Covid-19 related disruptions mean this timeline is now uncertain.
However, despite the challenges in its business, Medtronic’s ventilator revenue has nearly doubled and it is on track to increase production five-fold compared to pre-pandemic levels.