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Axonics Expands; $200M Contura Buy

Axonics Modulation Technologies Inc. is keeping its 220-person team of sales reps and clinical specialists busy.

The Irvine-based, urology-focused medical device maker (Nasdaq: AXNX) said late last month it acquired London-based Contura Ltd. and its hydrogel bulking agent for $200 million in cash and stock.

The deal follows Axonics’ first full year of sales for its sacral neuromodulation device, which treats overactive bladder issues by sending electrical impulses to nerves in the spine to resolve a communication problem between the bladder and the brain.

It generated $111.5 million in sales last year in one of the more successful rollouts of a new medical device in recent history.
Sales professionals at Axonics will have a new product to market to physicians this year: Contura’s minimally invasive Bulkamid injection, which is used as a urethral bulking agent to strengthen pelvic floor muscles and treat stress urinary incontinence (SUI) issues affecting women.

SUI is the unintentional passing of urine during activity or exertion, such as during coughing, laughing, or exercise.

“This acquisition is highly synergistic, leverages our expansive commercial footprint and gives us the opportunity to expand our [sacral neuromodulation] business around the world,” Chief Executive Ray Cohen told analysts on Feb. 25, the day the deal was announced.

“Axonics will provide urogynecologists and urologists with a complete suite of clinically differentiated incontinence solutions for their patients, thereby enhancing Axonics’ value proposition to new and existing customers.”

The Deal 

Axonics paid Contura about $141.3 million in cash and nearly 1.1 million shares of Axonics stock.

The cash portion of the deal was financed with a new $75 million term loan from Silicon Valley Bank, leaving Axonics with about $150 million cash, Chief Financial Officer Dan Dearen said.

The deal also includes a $35 million milestone payment, should Bulkamid top $50 million in 12-month sales prior to the end of 2024.  
Bulkamid, which received approvals for use in Europe in 2003, brought in about $12 million in 2019 international sales. Its product is already considered a first-line therapy option for SUI in select countries such as the United Kingdom, Cohen said.

Contura generated about $2 million in Bulkamid sales during a limited U.S. release in mid-2020. At that time, Contura established a commercial office in Irvine with five sales reps dedicated to the U.S.
About two dozen sales reps from Contura will join Axonics’ 220-person commercial sales organization, Axonics said.

Axonics also entered into a hydrogel manufacturing agreement for Bulkamid, with the rights to a technology transfer after June 2022 that would allow the company to insource its product.

Market Awareness

Bulkamid is a minimally invasive procedure that takes about 15 minutes to complete in a physician’s office or outpatient facility and generally lasts for about five to seven years.

The product addresses several shortcomings of existing bulking agents because it does not cause a chronic inflammatory response and the volume of each injection is predictable, controllable and precise, Axonics said.

While Axonics believes it can position Bulkamid as the gold standard for SUI, compared to surgical procedures commonly recommended today, it also highlighted the opportunity to grow the market.

“The much larger opportunity is to engage with physicians and to increase awareness for the millions of women suffering in silence,” Cohen said.

Axonics estimates about 20 million women in the U.S. are affected by SUI.

Axonics took a similar approach when developing and bringing its sacral neuromodulation device, the r-SNM, to the U.S. market. The company launched the first device that is rechargeable and compatible with MRI scans, in order to reduce friction and reach more physicians and patients.

About 90% of the company’s r-SNM current customers are women. Axonics’ typical patient is a 55-year-old woman suffering from bladder incontinence, Cohen told the Business Journal last year.

2021 Outlook 

Axonics has quickly grown its market reach; the firm reported revenue jumped to $111.5 million in 2020, compared to $13.8 million in 2019, when its first product got domestic approvals.

Axonics has seen its stock price more than double since last March when the pandemic hit the U.S., to about $55 a share with a $2.2 billion market cap at press time.

The company went public in late 2018, at $15 a share. The company expects about $160 million in r-SNM sales and about $15 million in Bulkamid sales in 2021, Cohen told analysts.

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