LONDON, UK / ACCESSWIRE / September 1, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Mazor Robotics Ltd (NASDAQ: MZOR) ("Mazor"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/'symbol=MZOR. The Company announced on August 30, 2017, that its strategic partnership with Medtronic PLC (NYSE: MDT) has entered the next phase before the schedule chalked out in the agreements, previously signed by both Companies. These agreements have been amended to reflect the current changes. Accordingly, Medtronic will invest $40 million as the third instalment in Mazor. As per terms of the agreement, Medtronic would gain exclusive worldwide distribution rights for the Mazor X system immediately on payment of the third instalment. Mazor X is Mazor's robotic spine surgery system. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Mazor/Medtronic Strategic Partnership
Medtronic and Mazor entered into a strategic partnership in May 2016 for the global distribution of certain Mazor products. The payment of the third installment before schedule is because both Companies have achieved certain pre-agreed sales and marketing milestones much in advance and because the Mazor X system has received unprecedented global acceptance, resulting in higher demand.
As per terms of the agreement in May 2016, Medtronic invested $11.9 million as the first installment and acquired 4% of Mazor's share capital on a fully diluted basis. In August 2016, Medtronic invested $20 million as the second installment and acquired 3.40% of Mazor's share capital on a fully diluted basis. Medtronic additionally acquired 7.27% of Mazor's share capital on a fully diluted basis for $31.9 million, outside the purview of the strategic agreement.
Third Instalment details
Medtronic's third installment of its investment of $40 million in Mazor will be via American Depository Shares (ADS) at $38.46 per ADS. The price represents the weighted average of the closing price of Mazor's ADS in the last 20 trading days. With the payment of the third installment, the total investment by Medtronic in Mazor is $72 million. Additionally, Mazor will also issue warrants to Medtronic to buy additional 1.21 million Mazor's ADS at an exercise price of $44.23 per ADS. The exercise price of the warrants is at a 15% premium over the per ADS price agreed for the third installment. Medtronic has the option to exercise the warrants immediately in whole or part against cash payment. The warrants have an 18-month expiry period. Medtronic's investment in Mazor will reach $125 million if Medtronic encashes its warrants. After enchasing warrants, Medtronic would own 4.2 million ADS, or 14.2% interest in Mazor, based on current outstanding ADSs on a fully diluted basis.
The third installment investment of $40 million is expected to be completed on or around September 12, 2017.
Commenting on the receipt of third installment investment from Medtronic, Ori Hadomi, CEO of Mazor, said:
"I believe that the move to this next phase reinforces our significant leadership position in the growing market for surgical guidance systems for spine procedures. Our strategic partnership will allow hospitals in new markets around the world to have access to the Mazor X and gain the clinical benefits that this technology offers."
Doug King, Senior Vice President and President of the Medtronic Spine Division, added:
"Moving to the next phase of our strategic partnership demonstrates our shared passion for transforming how spine surgery is done. Mazor Robotics' technology and Medtronic's navigation capabilities and implant systems provide spine surgeons with complete procedural solutions that advance the standard of care and will help surgeons maximize predictability and efficiency."
Joint Benefits of the partnership
The payment of the third installment will allow Medtronic to get exclusive worldwide distribution for the Mazor X system and its accessories. Medtronic must achieve minimum annual sales of Mazor X systems, but given the global acceptance and demand for the product, it has the potential to sell hundreds of Mazor X systems within the next four and half years. This would positively impact the financial performance of Mazor in the long-run.
Mazor will move a 30-member team from its current sales department to Medtronic to ensure that the sales momentum for the Mazor X system does not lose steam. Both Companies get an opportunity to explore the development of future products for the spine market that leverage the expertise of both Companies. That means the combination of Mazor Robotics' core expertise in surgical planning and precision-guided surgical systems and Medtronic's navigation capabilities and implant systems. Both Companies are already working on a joint product which is expected to debut during the fall of 2017. Mazor will become the global base for Mazor X systems where it will continue to provide after sales service. Both Companies have a joint incentive of developing and launching new products and services that will maintain innovation leadership and utilization of Mazor Robotics clinical solutions.
Impact of the investment on Mazor's operations
The commercial agreement with Medtronic will require Mazor to continue manufacturing Mazor X system, disposable kits, and offer services for a fee to Medtronic as a pre-agreed contract price. The contracted price is less than what Mazor would gain from direct sales. As per terms of the agreement, Mazor is entitled to certain synergy fees for use of Medtronic implants in Mazor Robotics' installed base. The shift from direct sales to the strategic commercial arrangement with Medtronic will immediately reduce Mazor's yearly operating expenses by approximately $13 million. Mazor's total operating expenses in the 12-month trailing period amounted to $52.7 million. Medtronic's investment will help it strengthen its balance sheet. The investment will provide Mazor with funding for developing new innovative solutions for the spine market in collaboration with Medtronic. The investment will boost Mazor's quest to develop other products and solutions focused on certain market segments for added customer value, viz., its Renaissance Surgical Guidance System, which was developed by Mazor independently and launched in 2011.
About Mazor Robotics
Caesarea, Israel based Mazor Robotics is a medical device Company that is a pioneer and a leader in the field of robotic surgical guidance systems. The Company has developed and manufactures two innovative technologies for precision guided surgery - Mazor X for spine surgery and Renaissance® Guidance System for brain surgery.
About Medtronic
Dublin, Ireland based Medtronic was founded in 1949 and is one of the world's largest medical technology, services, and solutions Companies that helps in alleviating pain, restoring health, and extending life for millions of people around the world. It caters hospitals, physicians, clinicians, and patients in more than 160 countries globally.
Last Close Stock Review
At the closing bell, on Thursday, August 31, 2017, Mazor Robotics' stock slightly slipped 0.30%, ending the trading session at $47.27. A total volume of 606.27 thousand shares have exchanged hands, which was higher than the 3-month average volume of 397.15 thousand shares. The Company's stock price soared 17.12% in the last three months, 94.85% in the past six months, and 111.22% in the previous twelve months. Moreover, the stock skyrocketed 115.65% since the start of the year. The stock currently has a market cap of $1.14 billion.
On Thursday, August 31, 2017, the stock closed the trading session at $80.62, marginally up 0.95% from its previous closing price of $79.86. A total volume of 5.66 million shares have exchanged hands, which was higher than the 3-month average volume of 4.42 million shares. Since the start of the year, shares of the Medtronic have rallied 13.18%. The stock is trading at a PE ratio of 27.84 and has a dividend yield of 2.28%. At Thursday's closing price, the stock's net capitalization stands at $109.81 billion.
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