Tullis Health Investors

SafeOp has developed patented technology that automates SSEP’s (Somatosensory Evoked Potentials), designed to provide surgeons with unprecedented, objective feedback during surgery.

“This strategic acquisition of SafeOp marks a transformational moment for the new ATEC,” said Pat Miles. “Our answer to the need for better neuromonitoring is investing in technology that automates information to enable objective clinical decision making and eradicate non-critical operating room personnel. The integration of this key technology into our spine procedures will address unmet clinical needs and improve surgical outcomes in spine.  We expect the combination to accelerate our business by increasing procedural revenue and driving pull-through across our entire portfolio.” 

In consideration for SafeOp, Alphatec will pay $15 million in up-front cash, a $3 million convertible note, and the issuance of 3.3 million shares of common stock and warrants to purchase 2.2 million shares of common stock at an exercise price of $3.50 per share.  SafeOp will be eligible to receive an additional 1.3 million shares of common stock, subject to the achievement of performance milestones.  The issuance of the shares of common stock in the merger, including at closing, upon achievement of milestones, conversion of the notes and exercise of the warrants is subject to limitations until required stockholder approval is obtained in accordance with the NASDAQ Global Select Market rules.  

Leadership and Board Appointments

The Company also announced the following leadership and board appointments.

Dr. Luiz Pimenta will advise Alphatec as Chief Medical Officer.  Pimenta is a world-renowned spine surgeon with over 30 years of expertise, and is widely credited with pioneering innovative surgical techniques and developing new technologies to improve spine surgery.  His broad contributions have been commercialized via numerous industry partners.  Dr. Pimenta will enhance the ATEC strategy by focusing on spine innovation and medical education.

Miles continued, “I am honored and thrilled to work again with Dr. Pimenta. His decision to assume a key role in our mission is pivotal.  It speaks volumes of the surgical community’s perception of ATEC’s visceral dedication to improved outcomes through eXtreme innovation.”

Richard O’Brien, M.D., and Robert Snow, the scientific principals of SafeOp, with over 50 years of combined neurophysiology expertise will join Alphatec as executives. Prior to serving as Vice President of Development and Chief Medical Officer of SafeOp, Dr. O’Brien, a renowned inventor and neurologist, was Medical Director of Impulse Monitoring, Inc., a neuromonitoring provider. Before joining Impulse Monitoring, O’Brien spent over two decades in the neurophysiology field, as both a physician and consultant. Mr. Snow, a neurophysiologist, was SafeOp’s Vice President, Marketing for 5 years, following an 11-year tenure as co-founder and Senior Vice President of Marketing at Impulse Monitoring.

“I could not be more excited to join the ATEC family and to engage in the creation of automated tools that provide objective information for better clinical decision making,” said O’Brien.

The SafeOp development and integration effort will be led by Jim Gharib, an electrical engineer with more than 20 years of experience in the field of neurophysiology. Gharib was the technical lead of NuVasive’s neurophysiology platform from the company’s inception to its achievement of billion-dollar revenue levels. Gharib is a named inventor on more than 20 patents in the fields of neuromonitoring, spine surgery, IV infusion, and blood chemistry.

“I am exceptionally pleased to work again with Rob, Richard, and Jim, the new leaders of our adjunctive technology team,” said Terry Rich, President and Chief Operating Officer of Alphatec.  “They each have a proven history of successfully creating value in the neurophysiologic and spine marketplace. I look forward to working with each of these new leaders as we evolve into a leading spine market player.”

Three new members have joined the Alphatec Board of Directors, in connection with the above transactions:

• James Tullis, the founder and Chief Executive Officer of Tullis Health Investors, a healthcare investment firm, has over 40 years of experience in healthcare-focused investments. Prior to establishing his firm in 1986, Tullis served as an award-winning healthcare investment research analyst and Principal at Morgan Stanley, focusing on pharmaceuticals and medical devices.
   
• Jason Hochberg a partner with L-5 Healthcare Partners, and the Founder and CEO of SJS Beacon, an investment company, has over 20 years of business and legal experience.  Prior to founding SJS Beacon, Hochberg held various leadership roles throughout a 15-year tenure at LS Power, an energy investment and innovation company, serving most recently as Chief Operating Officer and as a Principal in LS Power’s private equity fund advisor.  He started his professional career at the law firm of Latham & Watkins in 1996. 
   
• Evan Bakst, a partner with L-5 Healthcare Partners, and the Founder of and Portfolio Manager at Treetop Capital, a healthcare investment firm. He has over 25 years of experience in healthcare-focused investments.  Prior to  founding Treetop Capital, Bakst was a partner for 7 years at Tremblant Capital, an equity hedge-fund manager, where he led the global healthcare group and held various other leadership roles. 

About Alphatec Holdings, Inc.

Alphatec Holdings, Inc., through its wholly owned subsidiary Alphatec Spine, Inc., is a medical device company that designs, develops, and markets spinal fusion technology products and solutions for the treatment of spinal disorders associated with disease and degeneration, congenital deformities, and trauma. The Company's mission is to improve lives by providing innovative spine surgery solutions through the relentless pursuit of superior outcomes. The Company markets its products in the U.S. via independent sales agents and a direct sales force.

Additional information can be found at www.atecspine.com.

About Safe-Op Surgical

SafeOp is a privately held provider of automated neuromonitoring technology. The Company’s EPAD device was approved by the FDA in January 2014, intended for use in monitoring neurological status by automating & recording somatosensory evoked potentials (SSEP) or assessing the neuromuscular junction (NMJ).  Functionality, including free run EMG and triggered EMG will be added later this year.

Forward Looking Statements 

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward-looking statements include the references to the Company’s strategy in significantly repositioning the Alphatec brand and turning the Company into a growth organization.  The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to:  the uncertainties regarding the Company’s ability to recognize the expected synergies and other benefits of the SafeOp acquisition; the difficulties in the integration of SafeOp post-closing; the diversion of management time to address transaction-related issues; the uncertainties related to litigation involving the acquisition of SafeOp or the private placement or limitations or restrictions imposed by regulatory authorities; the uncertainties related to unanticipated integration costs or undisclosed liabilities assumed; the uncertainties related to the acceptance of the SafeOp acquisition and its products by third parties; the uncertainty of success in developing new products or products currently in the Company’s pipeline; the uncertainties in the Company’s ability to execute upon its strategic operating plan; the uncertainties regarding the ability to successfully license or acquire new products, and the commercial success of such products; failure to achieve acceptance of the Company’s products by the surgeon community, including Battalion and Arsenal Deformity; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged delays in the process; continuation of favorable fourth party reimbursement for procedures performed using the Company’s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company’s ability to successfully control its costs or achieve profitability; uncertainty of additional funding; the Company’s ability to compete with other competing products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any litigation in which the Company is a defendant; patent infringement claims; claims related to the Company’s intellectual property and the Company’s ability to meet its financial obligations under its credit agreements and the Orthotec settlement agreement. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement.  A further list and description of these and other factors, risks and uncertainties can be found in the Company's most recent annual report, and any subsequent quarterly and current reports, filed with the Securities and Exchange Commission. Alphatec disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.