Orthopaedic therapies and diagnostic tools developer Bioventus announced that it has exercised its call option to buy the remaining stake in Israel-based CartiHeal.

Bioventus will pay about $315m to CartiHeal and agreed to pay an additional $135m upon reaching $100m in trailing 12-month sales.

The company intends to finance the transaction using new debt.

Bioventus’ decision to execute the option comes after the US FDA granted premarket approval for CartiHeal’s Agili-C implant last month.

Agili-C secured breakthrough device designation from the US FDA in 2020.

The implant is indicated to treat International Cartilage Repair Society (ICRS) grade III or higher knee–joint surface lesions with a total treatable area of 1-7 cm2 in patients without severe osteoarthritis (Kellgren-Lawrence (KOOS) grade 0-3).

Bioventus claims that Agili-C is a low-cost alternative for cartilage regeneration and bone remodelling to delay knee replacement in patients with knee joint surface defects.

Bioventus CEO Ken Reali said: “CartiHeal represents an important breakthrough for the treatment of osteoarthritis, and we are excited to bring this complimentary product into our growing portfolio of medical devices.

“CartiHeal addresses an unmet need in joint preservation and cartilage regeneration for approximately 675,000 US patients annually, representing an estimated $1.3bn market opportunity for Bioventus.

“The CartiHeal team has done a tremendous job developing the implant, as evidenced by strong clinical data demonstrating clinical superiority over microfracture or debridement.

“We look forward to leveraging our strong existing commercial infrastructure to begin commercialising CartiHeal in the coming months.”

The deal is scheduled to conclude during the second quarter of 2022, subject to certain normal closing circumstances.

Bioventus intends to launch CartiHeal in the US during the third quarter of 2022 as a limited market release (LMR).