Integra LifeSciences and IsoTis to Combine



    PLAINSBORO, NJ, and IRVINE, CA, Aug. 7 /CNW/ -

    - Creating a Global Leader in Orthobiologics

    Integra LifeSciences Holdings Corporation (NASDAQ:   IART) ("Integra") and
IsoTis, Inc. (NASDAQ:   ISOT) ("IsoTis") announced today a definitive agreement
whereby Integra would acquire IsoTis in an all cash transaction. This
strategic combination, unanimously approved by the Board of Directors of
IsoTis, will create a global leader in regenerative medicine. The transaction
is expected to be completed in the fourth calendar quarter of 2007. The
transaction offers a number of potential strategic benefits to Integra:

    
    -   Combination creates comprehensive orthobiologics portfolio
    -   Combined company to have one of the largest sales organizations
        focused on orthobiologics in the United States
    -   Extensive channel coverage in neurosurgery, spine and extremity
        reconstruction markets expected to drive cross-selling opportunities
        and enhanced revenue growth
    

    Upon closing, IsoTis, Inc. will become a wholly-owned subsidiary of
Integra. Integra will be one of the largest companies in the world focused on
advanced technology in orthobiologics and will have a product portfolio that
encompasses some of the largest and most trusted orthobiologic brands, such as
INTEGRA(R) Dermal Regeneration Template, DuraGen(R) Dural Graft Matrix,
Integra Mozaik(TM) Osteoconductive Scaffold, NeuraGen(R) Nerve Guide and the
Accell family of demineralized bone matrix products, DynaGraft(R)II and
OrthoBlast(R) II. The combined company will have operations in North America
and Europe with more than 2,000 employees, including approximately 300 sales
and service professionals and over 500 employees in Europe.
    Under the terms of the merger agreement, IsoTis shareholders will receive
US$7.25 in cash for each share of IsoTis common stock they own, which
represents total consideration of approximately US$51 million, plus debt to be
repaid at closing.
    "This combination brings together two well-respected industry leaders in
the regenerative medicine marketplace," said Stuart Essig, Integra's Chief
Executive Officer. "Both Integra and IsoTis provide some of the most advanced
technology addressing surgeons' needs. By combining our companies'
complementary, best-in-class products and technologies, we expect to drive
enhanced revenue growth and value creation. Integra has a track record of
successfully executing on and integrating strategic transactions and we expect
to realize the benefits of this combination in both our top line growth and
earnings per share over the long term."
    Pieter Wolters, IsoTis' President and Chief Executive Officer, said, " We
believe this transaction enables both IsoTis and Integra to reach our shared
goal of improving patient outcomes in an innovative, cost-effective manner. We
are very excited about the benefits this combination of industry leaders will
provide to shareholders, employees, business partners, physicians and
patients."

    Benefits of the Combination

    Comprehensive orthobiologic product portfolio using best-in-class
technology. Both Integra's and IsoTis' products are recognized as
best-in-class. The combined company will be uniquely positioned to offer a
comprehensive orthobiologic product portfolio.
    Extensive channel coverage. The merged company will have one of the
largest sales and service organizations focused on orthobiologics in the
United States. IsoTis distributes its products through a network of
independent distributor agents in the United States, which Integra intends to
build upon, a network of international stocking distributors, and private
label partners. Integra has direct sales organizations focused on
neurosurgery, extremity reconstruction, spinal surgery and general surgery,
with over 250 direct sales reps in the United States and over 50 sales
professionals in Europe. Integra intends to integrate IsoTis' domestic and
international sales and marketing organization and its global network of
independent orthopedics distributors into its own sales efforts and leverage
this expanded distribution.
    Cross-selling opportunities. By leveraging the combined company's product
offering and broader channel coverage, Integra and IsoTis expect to drive
cross-selling opportunities across the organization, increasing penetration of
key customer segments such as neurosurgery, spine, extremity, trauma and
reconstructive surgery. These initiatives are expected to enhance revenue
growth over the long term.
    Expanded international presence. The merged company will benefit from a
broader global platform with direct selling organizations in North America and
Europe. Today, approximately 25 percent of Integra's and IsoTis' combined
revenues are generated internationally. The companies expect to increase
growth in international revenues by capitalizing on the increased scope and
scale created by this transaction, which will include an international direct
sales and service team of over 75 associates and 200 distribution partners
selling in over 100 countries.
    Cost savings. Excluding transaction related costs and charges, the
combined organization is expected to generate recurring cost savings from
enhanced efficiency in manufacturing, purchasing, administrative, research and
sales and marketing efforts.

    Integra Guidance for 2008

    The companies expect to initiate programs that are expected to enhance
revenue growth in the long term. Concurrent with the signing of the merger
agreement, the companies have announced a strategic alliance whereby Integra
will sell on a private label basis IsoTis' DynaGraft(R) II and OrthoBlast(R)
II demineralized bone matrix products through its Integra NeuroSciences and
Integra Extremity Reconstruction direct sales organizations in the United
States.
    IsoTis has recently announced its intention to wind down its European
operations. This process has begun and IsoTis expects to achieve pre-tax
savings of approximately US$3-US$5 million per year from these actions. After
elimination of its European entities and facilities, IsoTis will maintain
research and manufacturing operations at a single site in Irvine, California.
    "While the transaction will be dilutive to reported earnings for several
quarters as we restructure the business, we expect the restructuring
activities surrounding the IsoTis acquisition to generate projected pre-tax
cost savings of approximately US$9 to US$11 million per year for 2008 and
beyond, as compared to IsoTis' historical 2006 results." said Stuart M. Essig,
Integra's President and Chief Executive Officer. "Substantial savings will
come from the reduction of public company costs, duplicative board and
executive management costs, redundant insurance costs, and reduced advisory,
legal and accounting fees. Additionally, by the end of 2008, Integra expects
to complete the integration of IsoTis', marketing, product development,
administrative and logistics functions into Integra's existing infrastructure
and generate additional cost savings."
    Integra expects to incur pre-tax charges related to these activities of
approximately US$3 to US$5 million. These charges are expected to be incurred
during the fourth quarter of 2007 and the first half of 2008, depending upon
the actual closing date of the transaction.
    Upon the closing of the transaction, Integra will provide more detailed
guidance regarding the financial aspects of the transaction and its expected
impact on Integra's future financial results.

    Timing and Approvals

    The transaction is subject to approval of IsoTis' shareholders, as well
as other closing conditions and approvals. The transaction is expected to
close in the fourth calendar quarter of 2007.

    Advisors

    In connection with the transaction, Thomas Weisel Partners is acting as
exclusive financial advisor to IsoTis, and provided a fairness opinion to the
IsoTis Board of Directors. Latham & Watkins LLP is legal counsel for IsoTis.
Willkie Farr & Gallagher LLP is legal counsel for Integra.
    Integra LifeSciences Holdings Corporation, a world leader in regenerative
medicine, is dedicated to improving the quality of life for patients through
the development, manufacturing, and marketing of cost-effective surgical
implants and medical instruments. Our products are used primarily in
neurosurgery, extremity reconstruction, orthopedics and general surgery to
treat millions of patients every year. Integra's headquarters are in
Plainsboro, New Jersey, and we have research and manufacturing facilities
throughout the world. Please visit our website at (http://www.Integra-LS.com).
    IsoTis is an orthobiologics company that develops, manufactures and
markets proprietary products for the treatment of musculoskeletal diseases and
disorders. IsoTis' current orthobiologics products are bone graft substitutes
that promote the regeneration of bone and are used to repair natural,
trauma-related and surgically-created defects common in orthopedic procedures,
including spinal fusions. IsoTis' current commercial business is highlighted
by its Accell line of products, which IsoTis believes represents the next
generation in bone graft substitution. For more information about IsoTis,
Inc., please visit (http://www.IsoTis.com)
    Integra shareholders: This news release contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include, but are not limited to,
statements concerning the closing of this transaction and expectations for
this newly acquired business and the expected impact of this acquisition on
Integra's future financial results. Such forward-looking statements involve
risks and uncertainties that could cause actual results to differ materially
from predicted or expected results. Among other things, Integra's ability to
successfully close this transaction on the terms contemplated and integrate
IsoTis' operations into its operations could affect the impact of this
acquisition on Integra's future financial results. In addition, the economic,
competitive, governmental, technological and other factors identified under
the heading "Risk Factors" included in section IA of Integra's Annual Report
on Form 10-K for the year ended December 31, 2006 and information contained in
subsequent filings with the Securities and Exchange Commission could affect
actual results.
    IsoTis shareholders: Certain statements in this press release are
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, including those that refer to
management's plans and expectations for, among other things, future
operations, strategies, prospects, performance and financial condition and
IsoTis' proposed acquisition by Integra. Words such as "strategy," "expects,"
"plans," "anticipates," "believes," "may," "will," "might," "could," "would,"
"continues," "estimates," "intends," "pursues," "projects," "goals," "targets"
or the negative or other variations thereof and other words of similar meaning
are intended to identify such forward-looking statements. One can also
identify them by the fact that they do not relate strictly to historical or
current facts. Such statements are based on the current expectations and
projections of the management of IsoTis only. Undue reliance should not be
placed on these statements because, by their nature, they are subject to known
and unknown risks and can be affected by factors that are beyond the control
of IsoTis. Actual results could differ materially from current expectations
and projections due to a number of factors and uncertainties affecting IsoTis'
business, including, but not limited to the following factors as well as other
factors described from time to time in IsoTis' reports filed with the SEC: the
effects of economic, credit and capital market conditions on the economy in
general and on medical device and health care companies in particular; IsoTis'
need to raise additional capital to continue operations; a competitive sales
and marketing environment; the timely commencement and success of IsoTis'
clinical trials and research endeavors; delays in receiving U.S. Food and Drug
Administration or other regulatory approvals (i.e., EMEA, CE), including the
risk that the FDA determines that IsoTis' Accell Putty and Accell TBM products
are not human tissue or class II medical devices, that IsoTis is unable to
obtain 510(k) clearance for its Accell products, that the FDA requires IsoTis
to obtain premarket approval of its Accell products prior to continuing their
marketing, that the FDA requires IsoTis to produce additional clinical data to
support approval or clearance of its products, and that the FDA imposes
compliance measures against IsoTis for the marketing of its Accell products,
including imposing fines and injunctions or causing IsoTis to recall its
Accell products; market acceptance of IsoTis' products; the effectiveness of
IsoTis' distribution channels; the development of competing therapies and/or
technologies; the terms of any future strategic alliances; changes in laws
(including increased tax rates), regulations or accounting standards,
third-party relations and approvals, and decisions of courts, regulators and
governmental bodies; litigation outcomes and judicial actions; and the
inability to obtain, or meet, conditions imposed for required governmental and
regulatory approvals and consents. IsoTis expressly disclaims any intent or
obligation to update these forward-looking statements except as required by
law. For a more detailed description of the risk factors and uncertainties
affecting IsoTis, refer to the Annual Report on Form 20-F for the fiscal year
ended December 31, 2006 of IsoTis S.A. (the predecessor to IsoTis, Inc.), and
IsoTis S.A.'s other reports filed with the SEC, IsoTis S.A.'s reports filed
from time to time with the Swiss Stock Exchange (SWX), Euronext Amsterdam
N.V., SEDAR at http://www.sedar.com and the Toronto Stock Exchange (TSX) and
the quarterly report on Form 10-Q for the quarter ended March 31, 2007 and
other reports filed with the SEC from time to time by IsoTis. Any forward-
looking statements are made pursuant to the Private Securities Litigation
Reform Act of 1995 and, as such, speak only as of the date made. IsoTis
undertakes no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.

    Important Information for Investors and Stockholders

    IsoTis will file a proxy statement and other relevant materials with the
SEC in connection with the proposed merger. IsoTis urges IsoTis stockholders
to read the proxy statement when it becomes available and any other relevant
documents filed by IsoTis with the SEC because they will contain important
information.
    Investors and stockholders will be able to obtain the proxy statement and
other documents filed with the SEC free of charge at the website maintained by
the SEC at http://www.sec.gov. Documents filed with the SEC by IsoTis will be
available free of charge on the investor relations portion of the IsoTis
website at http://www.IsoTis.com.

    Participants in the Solicitation

    IsoTis, and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from IsoTis' stockholders in
connection with the merger. The names of IsoTis' directors and executive
officers and a description of their interests in IsoTis are set forth in
IsoTis S.A.'s Annual Report on Form 20-F, which was filed with the SEC on May
11, 2007. Investors and stockholders can obtain more detailed information
regarding the direct and indirect interests of IsoTis' directors and executive
officers in the merger by reading the definitive proxy statement when it
becomes available.





For further information:

For further information: Integra LifeSciences Holdings Corporation, John
B. Henneman, III, Executive Vice President, Chief Administrative Officer,
(609) 936-2481, jhenneman@Integra-LS.com; John Bostjancic, Vice President,
Corporate Development and Investor Relations, (609) 936-2239,
jbostjancic@Integra-LS.com; IsoTis, Inc., Rob Morocco, Executive Vice
President, Chief Financial Officer, (949) 855-7155, rob.morocco@isotis.com;
Hans Herklots, Director Investor Relations, (949) 855-7195 (US callers),
+41-21-620-6011, hans.herklots@isotis.com

Organization Profile

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

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ISOTIS, INC.

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