Healthcare giant Johnson & Johnson is acquiring Silicon Valley surgical robotics company Auris Health for $3.4 billion in cash as it looks to expand its digital surgery business.
Redwood City, California-based Auris Health may also receive up to $2.35 billion in additional payments dependent on hitting certain predetermined milestones. The company will be rolled into J&J’s medical device subsidiary Ethicon.
Auris Health was founded in 2007 by surgical robotics pioneer Dr. Fred Moll and has raised more than $700 million in funding to develop its Monarch Platform, which is meant to improve diagnosis and surgical treatment of lung cancer.
Auris’ technology – which was cleared by the FDA last year – is a flexible endoscopic tool that allows physicians to perform biopsies and treat cancerous tumors in the difficult-to-reach peripheral nodes of the lung.
“For JNJ, we do view this deal as a positive on the margin given that it does reinforce the company’s commitment to robotics and gives them earlier entry into the robotics market with an already-approved platform,” analysts at SVB Leerink wrote in an investor note.
The acquisition builds on a previous co-development and commercialization deal between the two companies to combine Auris’ Monarch Platform with J&J’s Neuwave Flex Microwave Ablation System.
Moll previously founded robotic surgical company Intuitive Surgical – a $61 billion publically traded company known for its da Vinci surgical system. As part of the acquisition, Moll will be joining J&J when the deal closes.
“We’re thrilled to be joining Johnson & Johnson to help push the boundaries of what is possible in medical robotics and improve the lives of patients across the globe,” Moll said in a statement.
“This combination is a testament to the incredible work of the Auris Health team and the innovation engine behind the Monarch Platform, which represents a huge step forward in endoluminal technology.”
J&J has been ramping up its activity in the surgical robotics, launching a joint venture with Alphabet’s Verily called Verb Surgical and acquiring French robot-assisted orthopedic surgery company Orthotaxy in 2018. Verb Surgical plans to launch its first products by the end of 2020.
“In this new era of health care, we’re aiming to simplify surgery, drive efficiency, reduce complications and improve outcomes for patients, ultimately making surgery safer,” said Ashley McEvoy, Executive Vice President, Worldwide Chairman, Medical Devices, Johnson & Johnson in a statement.
“We are very committed to our partnership with Verily on the development of the Verb Surgical Platform. Collectively, these technologies, together with our market-leading medical implants and solutions, create the foundation of a comprehensive digital ecosystem to help support the surgeon and patient before, during and after surgery.”
The Auris Health deal is expected to close by the end of the second quarter of 2019 dependent on regulatory clearance.