[Asia Economy Reporter Hyungsoo Park] L&K Biomed is rebounding after four days. The expectation that the scale of technology export (license out) will exceed previous estimates seems to be influencing the stock price. It is gaining growth expectations as the only company with the technological capability to compete with Globus Medical in the global spinal implant market.
At 9:46 a.m. on the 27th, L&K Biomed was trading at 47,550 KRW, up 11.62% from the previous day.
On the same day, L&K Biomed announced that its U.S. subsidiary, Aegis Spine, signed a supply contract with Kyocera Medical Technology (KMT), the U.S. branch of the Japanese Kyocera Group.
Kyocera leads sales in spinal and joint medical devices in the Japanese market, excluding imported products.
The global market for implantable medical devices such as artificial joints is about 36 trillion KRW, with an expected annual growth rate of 5%. The U.S. is the largest market, accounting for 61%. The Kyocera Group established KMT in California, USA, in 2019 aiming for global market expansion, and aggressively expanded its medical device business by effectively acquiring the U.S. medical device company Renovis Surgical Technologies in March 2019.
KMT purchases products from Aegis Spine and sells them across two states, Oklahoma and Nebraska. The target product is L&K Biomed’s height-expandable cage with a posterior insertion method called 'AccelFix-XT.' Both the product lineup and sales regions will be gradually expanded in the future.
Industry insiders expect L&K Biomed’s negotiating power to increase by signing the contract with KMT. As Kyocera enters both the U.S. and Japanese markets, the scale of license out could grow.
A company official said, "Based on the pilot sales results in the two states, L&K Biomed and KMT will begin full-scale negotiations. Nothing has been decided yet, and both companies will proceed with open negotiations."
L&K Biomed received FDA approval in the U.S. on September 16, 2019, for three types of height-expandable cages for lumbar use. Among them, the posterior insertion type height-expandable interbody fusion device ‘AccelFix-XT’ has achieved about 600 surgical cases in the U.S. market so far. The lateral insertion type height-expandable cage ‘AccelFix-XL’ and the anterolateral insertion type height-expandable cage ‘AccelFix-XTP’ are scheduled to be sold in the U.S. market this year.
Jae-yoon Kim, a researcher at KTB Investment & Securities, said, "By securing a full lineup of expandable cages, L&K Biomed has emerged as the only company capable of competing with Globus Medical." He added, "On December 17 last year, they signed a memorandum of understanding (MOU) estimated at 400 billion KRW with an overseas spinal implant company, raising expectations for entry into the U.S. spinal implant market."
Globus Medical is a company that developed the world’s first expandable cage and is continuously expanding its market share in the fixed cage market in the U.S. It currently has a market capitalization of 6.9 trillion KRW.
Researcher Kim emphasized, "The expandable cage clearly demonstrates its impact on the spinal implant market." He continued, "Considering the competitive situation in the U.S. implant market, the main contract and product supply related to the MOU are expected to proceed quickly early this year," adding, "Globally, only Globus Medical and L&K Biomed have FDA approval and a full lineup of expandable cages."
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